Connect with us

Tourism

South east Asia’s budget airline dilemma

Thaiger

Published 

 on 

South east Asia’s budget airline dilemma | Thaiger

South east Asia’s low-cost carriers are staggering as demand plunges, and countries are ever-wary about re-opening their borders, raising questions whether they will be needing any new planes in the short to medium term.

Malaysia’s AirAsia Group and Vietnam’s VietJet are publicly canvassing their cashflow and funding problems. Indonesia’s Lion Air has shelved a planned flotation this year. But prior to the ‘disruption’, there were questions raised about whether new aircraft ordered during a frenzied decade of new plane orders by south east Asian carriers would ever end up actually being delivered. Whilst the high-profile owners were popping the champagne with sales executives from Airbus and Boeing, bankers and leasing bosses were scratching their heads wondering how it was all going to happen.

The three main regional companies, all with ‘franchises’ in countries outside their home bases, have a collective 938 planes on order. They lease most of their existing fleets of 480 aircraft. They all had plans to nearly double their fleet in the next few years as the new aircraft come off the assembly line.

As the region starts to re-open airports and start up the engines on their grounded fleets, the flights, for now, are almost entirely domestic. Despite getting almost no help, compared to their national carrier cousins – Singapore Airlines, Thai Airways (currently wading through bankruptcy proceedings), Garuda, Vietnam Airlines, Malaysia Airlines – they have been the first to rebound and get back into the sky after the first wave of Covid-19 subsided (well, in some countries).

The lower cost structures gave them the flexibility to benefit first from any the glimpses of recovery. They also have a lower cash-burn due to their smaller financial footprint.

But, barring their return to domestic routes, the prospects of international flights remain dim… for now. Even when the shutters are up and the borders re-open, the flights will remain limited as the flying public won’t be cashed up to travel with economies in tatters and unemployment rampant – the last thing on people’s minds will be discretionary spending on travel. The makes aviation pundits worry if the backlog of new orders will ever go ahead, at least in the next decade or so.

Robert Martin, CEO of BOC Aviation in Singapore, told Reuters. that one area he was concerned about “is all those low-cost carriers who ordered too many aircraft”.

“I think there will still be work to be done on those during the third quarter.”

For the past decade, the region’s burgeoning middle class, growing disposable incomes, open skies policies and support from governments and regulators, made the ASEAN countries lucrative prospects for plane-makers and aircraft leasing companies.

Boeing predicted, just five months ago at the Singapore Air Show, that SE Asian airlines will need 4,500 airplanes over the next 20 years. A few months down the track and the impacts from the pandemic have almost completely closed down regional international aviation – employees are being furloughed, shiny new aircraft remain undelivered, passengers are sparse and manufacturers and leasing companies are absorbing losses.

From a position of high demand earlier in the year, is now the prospect of mass cancellations on aircraft orders. The International Bureau of Aviation now estimates there will be an oversupply of up to 2,500 planes globally over the next 20 months.

Singapore-based aviation analyst Brendan Sobie notes that, even with domestic recovery, you don’t have international.

“They are carrying too large of a fleet and can’t fully utilise the fleet because you can’t operate it back of clock on international flights at night.”

Despite this, VietJet only last month, told its shareholders it plans to go ahead with 12 new Airbus jets to the fleet this year.

Before the pandemic kicked off in the region VietJet had ordered planes from both Airbus and Boeing so it could launch subsidiaries in multiple countries. So far the only offshoot has been in Thailand – Thai VietJet – where it competes against Thai Air Asia and Thai Lion Air.

AirAsia says they expect to reach 70-75% of normal capacity by the end of the year, assuming everything keeps heading in the right direction. But the pandemic has already proven that nothing is set in stone and there have been as many backward steps as forward ones. They’ve already told Airbus they won’t be receiving any of the scheduled new planes this year.

Lion Air, the first airline to suffer from the Boeing 737 Max debacle, has threatened to cancel its order for any more 737 Max jets. Lion Air Flight 610 was a scheduled domestic flight from Jakarta to Pangkal Pinang. On October 29, 2018, the plane crashed into the Java Sea 13 minutes after takeoff, killing all 189 passengers and crew. An Ethiopian 737 Max crashed in similar circumstances months later, causing the grounding of the entire world fleet of 737 Max jets.

Whilst the low-budget carriers continue to get their fleets back into the skies they still have hundreds of planes gathering dust and have a long road ahead before they will be needing any new planes. Even so, they may find it easier, and cheaper, to lease older, unused planes that are laying idle from the rest of the world’s fleets.

South east Asia's budget airline dilemma | News by Thaiger

📱 Download our app on Android or iOS for instant updates on your mobile
📧 Subscribe to our daily email newsletter
👍 Like/Follow us on Facebook
🔔 Subscribe to or Join our YouTube channel for daily video updates

1 Comment

1 Comment

  1. Avatar

    rinky stingpiece

    Tuesday, July 21, 2020 at 9:55 pm

    A dilemma is a difficult choice between two options; these airlines only have one choice, and that’s to cut their losses and reduce their outgoings as much as possible before they go bust.
    Hanging onto orders made on the basis of projections in a pre-covid world seems rather unwise.

Leave a Reply

Your email address will not be published. Required fields are marked *

If you have story ideas, a restaurant to review, an event to cover or an issue to discuss, contact The Thaiger editorial staff.

Politics

Malaysia joins calls to hold emergency ASEAN summit over Myanmar political situation

Avatar

Published

on

Malaysia joins calls to hold emergency ASEAN summit over Myanmar political situation | Thaiger

Malaysia is joining calls to hold an emergency ASEAN summit to discuss the political turmoil in its neighbouring country of Myanmar. Malaysian PM Muhyiddin Yassin says he supports Indonesia’s president who originally proposed the emergency meeting.

Muhyiddin says the continued use of lethal violence against unarmed civilians was unacceptable, and urged Myanmar’s military leadership “to change its course and choose a path towards peaceful solutions.”

“There is no question about it, the use of live ammunition against peaceful protests is unacceptable. This deplorable situation must stop immediately.”

“We in Malaysia, and the larger ASEAN community, cannot afford to see our brotherly nation of Myanmar become so destabilised at the hands of a selected few, who seek to promote their own vested interests.”

Since the coup, Indonesia has led efforts within ASEAN to seek a peaceful solution to the crisis. Its president called for democracy to be restored and violence to be halted, joining other nations in condemning the military-led violence against anti-coup protesters.

“I will immediately call the Sultan of Brunei Darussalam as head of ASEAN to as soon as possible hold a high-level ASEAN meeting to discuss the crisis in Myanmar.”

ASEAN members discussed the political situation in Myanmar earlier this month, with the Thai Foreign Ministry now joining the growing list of countries to pressure the military to hold talks with political dissidents to end the conflict. But, Thailand still hasn’t outright condemned the coup. Many say Thailand may be wanting to get more involved as it prepares to see an influx of Myanmar nationals fleeing to Thailand to escape the increasing violence in their home country.

Just recently, the military coup leader in Myanmar made statements that indicated the military was okay with pending sanctions from the international community, implying that the government was willing to be isolated from the world.

Myanmar’s most powerful Buddhist group has also criticised the military’s use of violence and has appeared to break from historically aligning itself with the government. The group says it will stop activities in an apparent move to protest the political situation.

The United Nations has also criticised the violence against anti-coup protesters in Myanmar, citing women and children are among the victims killed as increasing concerns of civilian casualties mount.

SOURCE: Bangkok Post

📱 Download our app on Android or iOS for instant updates on your mobile
📧 Subscribe to our daily email newsletter
👍 Like/Follow us on Facebook
🔔 Subscribe to or Join our YouTube channel for daily video updates

Continue Reading

Myanmar

Thailand calls on Myanmar military to release detainees and to de-escalate the situation

Avatar

Published

on

Thailand calls on Myanmar military to release detainees and to de-escalate the situation | Thaiger
Photo via Wikimedia Commons

Thailand is urging Myanmar to release everyone who was detained by the military following last month’s coup. Thailand’s Ministry of Foreign Affairs released a statement today calling on a de-escalation of the country’s situation where many have been injured and even killed in protests.

“As a neighbor, sharing a long common border, and with the Myanmar and Thai peoples having close interactions in many aspects, Thailand continues to follow developments in Myanmar with much concern. As with other countries, we are saddened by the loss of lives and the sufferings of the people of Myanmar due to escalating violence in the country.

We call for de-escalation of the situation and release of detainees. We also urge all parties concerned to seek a peaceful solution for Myanmar and its people through dialogue via any constructive channels.”

Thailand has been preparing temporary facilities, in areas bordering Myanmar, to help Burmese citizens who are leaving Myanmar to escape the crackdown from the military and police following the recent takeover.

Recently, there have been trilateral talks held between the foreign affairs ministers of Thailand and Indonesia with a senior Myanmar military official.

SOURCES: Thai PBS World| Ministry of Foreign Affairs

📱 Download our app on Android or iOS for instant updates on your mobile
📧 Subscribe to our daily email newsletter
👍 Like/Follow us on Facebook
🔔 Subscribe to or Join our YouTube channel for daily video updates

Continue Reading

Economy

Britain to apply for membership with Asia Pacific free trading bloc

Thaiger

Published

on

By

Britain to apply for membership with Asia Pacific free trading bloc | Thaiger

In the wake of Britain’s Brexit and separation from the EU trading bloc, the UK is now applying to become part of the free trade bloc made up of 11 Asia and Pacific nations. The Comprehensive and Progressive Agreement for Trans-Pacific Partnership also includes Australia, Canada, Japan and New Zealand, a potential market population of around 500 million. The countries generate more than 13% of the world’s income.

The request will be made formally tomorrow by the UK International Trade Secretary. Negotiations are expected to start in March and continue during the northern hemisphere Spring.

There would also be the potential for faster and cheaper visas for business people travelling between participating nations.

The Comprehensive and Progressive Agreement for Trans-Pacific Partnership was formed in 2018 and includes, in alphabetical order, Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam. Former US President Donald Trump pulled his country out of the free trade bloc back in 2016.

The UK hopes the deal will reduce trade tariffs between the member countries. It includes a promise to eliminate or reduce 95% of import charges – although some of these charges are kept to protect some home-made products, for example Japan’s rice and Canada’s dairy industry.

In return, countries co-operate on trade regulations, quality controls and food standards. Member countries can negotiate separate trade deals as well within the bloc. The UK is the first non-founding country of the CPATTP to apply for membership and, if accepted, will be the bloc’s second biggest economy after Japan.

But the International Trade Secretary warns that the short-terms gains for UK households and business will be limited. The UK already has trade deals with 7 of the 11 countries. The reality is that CPTPP nations account for less than 10% of UK exports, a fraction of what it was doing with the EU.

But commentators say that the real advantages could emerge in the future, particular if the US joins, as President Biden has hinted. That would allow a back door deal for trade with the US without necessarily having an individual trade deal with the US.

In total, CPTPP nations accounted for 8.4% of UK exports in 2019.

The Regional Comprehensive Economic Partnership, or RCEP was hammered out late last year and is a free trade agreement between the Asia-Pacific nations of Australia, Brunei, Cambodia, China, Indonesia, Japan, Laos, Malaysia, Myanmar, New Zealand, the Philippines, Singapore, South Korea, Thailand, and Vietnam.

The 15 member countries account for about 30% of the world’s population (2.2 billion people) and 30% of global GDP as of 2020, making it the biggest trade bloc in history.

Unifying the preexisting bilateral agreements between the 10 member ASEAN and 5 of its major trade partners, the RCEP was signed on 15 November 2020 at a virtual ASEAN Summit hosted by Vietnam.

With the US locked out of RCEP and currently not part of CPATPP, plus its ongoing trade war with China, the US economy is waging an expensive gamble with its isolationist trade policies.

📱 Download our app on Android or iOS for instant updates on your mobile
📧 Subscribe to our daily email newsletter
👍 Like/Follow us on Facebook
🔔 Subscribe to or Join our YouTube channel for daily video updates

Continue Reading
Thailand News Today | Thai Airways in rehab, All go for Songkran | March 4 | Thaiger
Thailand2 months ago

Thailand News Today | Thai Airways in rehab, All go for Songkran | March 4

Phuket’s nightlife. Yes, bars and clubs are still open | VIDEO | Thaiger
Tourism2 months ago

Phuket’s nightlife. Yes, bars and clubs are still open | VIDEO

Thailand News Today | Covid passport talks, Thai Airways heads to court | March 2 | Thaiger
Phuket2 months ago

Thailand News Today | Covid passport talks, Thai Airways heads to court | March 2

Phuket Thai food treats you need to try | VIDEO | Thaiger
Tourism2 months ago

Phuket Thai food treats you need to try | VIDEO

Thailand News Today | Bars, pubs and restaurants ‘sort of’ back to normal | Feb 23 | Thaiger
Thailand2 months ago

Thailand News Today | Bars, pubs and restaurants ‘sort of’ back to normal | Feb 23

In search of Cat & Dog Cafés in Phuket Town | VIDEO | Thaiger
Tourism2 months ago

In search of Cat & Dog Cafés in Phuket Town | VIDEO

Thailand News Today | Gambling crackdown, Seafood market to reopen, Vlogger challenge | Jan 21 | Thaiger
Thailand3 months ago

Thailand News Today | Gambling crackdown, Seafood market to reopen, Vlogger challenge | Jan 21

Thailand News Today | Covid testing for visas, Business impact, Vaccine approval | January 19 | Thaiger
Thailand3 months ago

Thailand News Today | Covid testing for visas, Business impact, Vaccine approval | January 19

Thailand News Today | Weekend Bangkok bombs, Thailand fires, Covid update | January 18 | Thaiger
Thailand3 months ago

Thailand News Today | Weekend Bangkok bombs, Thailand fires, Covid update | January 18

Thailand News Today | Stray car on runway, Indonesian quake, 300 baht tourist fee | January 15 | Thaiger
Thailand3 months ago

Thailand News Today | Stray car on runway, Indonesian quake, 300 baht tourist fee | January 15

Thailand News Today | Governor off respirator, sex-trafficking arrest, condo prices falling | January 14 | Thaiger
Thailand3 months ago

Thailand News Today | Governor off respirator, sex-trafficking arrest, condo prices falling | January 14

Thailand News Today | Chinese vaccine, Thailand ‘drug hub’, Covid update | January 13 | Thaiger
Thailand3 months ago

Thailand News Today | Chinese vaccine, Thailand ‘drug hub’, Covid update | January 13

Thailand News Today | Bangkok may ease restrictions, Phuket bar curfew, Vaccine roll out | January 12 | Thaiger
Thailand3 months ago

Thailand News Today | Bangkok may ease restrictions, Phuket bar curfew, Vaccine roll out | January 12

Thailand News Today | Covid latest, Cockfights closed down, Bryde’s Whale beached | January 11 | Thaiger
Thailand3 months ago

Thailand News Today | Covid latest, Cockfights closed down, Bryde’s Whale beached | January 11

Thailand News Today | Southern floods, Face mask fines, Thai Air Asia woes | January 8 | Thaiger
Thailand3 months ago

Thailand News Today | Southern floods, Face mask fines, Thai Air Asia woes | January 8

Follow Thaiger by email:

Trending