View Full Version : Get ready for the big bang

11th Dec 2003, 23:49
Both Geoff Dixon and Chris Corrigan now that their both cashed up should both be looking
at getting amongst this SE Asian action instead of concentrating
on NZ with only 4 million population, if they don't you can bet the Americans
and Europeans will.

The opportunities to start an Asian based LCC has never been
better, my first choice would be Subic Bay where Federal Express
has operated safely for many years now, I'm sure if Geoff or Chris
approached Congressman Dick Gordon whose wife is also the
the Mayor of Olongopo and Subic they might find themselves
with a possible deal.

In the article below I believe Peter Harbison is right on the money.

my 2 cents
Merry Christmas



Fri "The Australian"

Tiger leads low-cost boom
By Steve Creedy
December 12, 2003

Get ready for the big bang.

The flurry of low-cost carrier launches in Asia may just be the tip of the iceberg with an explosion of new airlines still to come.

Analysts at the Centre for Asia Pacific Aviation (CAPA) believe the potential for Asian point-to-point operations has barely been tapped.

"There are approximately 240 cities in Asia with populations of over half a million, of which 130 have populations over a million," said CAPA managing director Peter Harbison.

"The opportunities for these point-to-point operations, if the regulatory structure will allow it, are just so mind-boggling that I don't even like to talk about it publicly."

Mr Harbison was commenting after Singapore Airlines announced plans to enter into a partnership to set up a low-cost carrier called Tiger Airlines and entrepreneur Richard Branson revealed he was talking to Asian partners about replicating his success with Virgin Blue.

Partners in the independently operated Tiger will include the David Bonderman-Bill Franke aviation partnership Indigo Partners and Irelandia Investments, the family investment vehicle of Ryanair founder Tony Ryan.

Analysts have already raised concerns that the new carrier, which will draw on the expertise of Ryanair, will cannibalise SIA's passengers, particularly those of its subsidiary Silkair.

Similar concerns have been raised about the Qantas move to establish its low-cost domestic carrier, JetStar.

But SIA says Silkair will continue as a lower cost, full-service airline on routes that are marginal for mainline SIA operations.

The new carrier is expected to make money from the first year and joins a slew of low-cost carriers already in the region.

Carriers have been launched in Thailand, Indonesia and the Philippines in response to government moves to boost tourism and relax aviation regulations.

"If you look at the convergence of events - the economic development, the fact that GDP levels are going up and rapidly rising internet usage - they're all coming together in a way that means that all you need is that magic ingredient of a little liberalisation allowing point-to-point operations and there will be just massive, massive explosions of traffic," Mr Harbison said.

He dismissed suggestions low-cost carriers would struggle in Asia because of the need to rely on international markets.

While he conceded that cross-border operations were "a little bit harder", he said liberalisation was occurring as tourism authorities and airports sought ways to get some of the low-cost action.

"All these pressures are coming together simultaneously, making things very, very exciting," he said.

The CAPA boss said he believed Australia was too far away and its routes too thin to be an attractive destination for the low-cost carriers.

He also did not believe Qantas's international subsidiary, Australian Airlines, would be squeezed out by the Asian low-cost start-ups.

"Australian is a lower cost version of Qantas to operate the tourism-dominated routes," he said. "It's not no-frills, its low-frills. It's not under four hours, it's eight hours.

"It's part of this same phenomenon but it's different."


12th Dec 2003, 09:47
Correct to an end I think -

A city of 500 000 people would sound like it could support an airline service on the face of it but the socio-economic demographic of many of these cities is such that the vast majority of the population will never afford to fly on an aeroplane in their lives. Looking at macro figures like GDP as a measure of wealth is making a pretty BIG assumption about a population - and internet usage in Asia increasing - I know it's pointing toward the development of disposable income - but i think it's mre accurately an indicator of the growth of telecommunications infrastructure able to support data at a usable speed and the ever reducing cost of internet access.

My guess is that the airlines current fixation on the Aus & NZ is a compromise between per capita wealth & population mass.

The cost and difficulty of developing & maintaining an airline product in many developing asian economies might not be sufficiently supported in a very low yield market. - YET.

The key is the word YET - These developing economies are doing just that and the opportunity to start early while it's cheapest might prove fruitful - the problem is that attempting to time markets in such a way is a rather foolhardy thing to do as it is fraught with danger.

We will see - I would love to go back and work in SE Asia for a while.

12th Dec 2003, 10:20
Would have to agree with you there Pullock. Just looking at World Bank figures for some South East Asian economies, the average annual incomes for Indonesia $690 US, Malaysia $3,400 US , Phillipines $1030 US, Cambodia $270 US. There is no question regarding population and the low cost of manpower, however Boeings like running on US dollars.

Beer Can Dreaming
13th Dec 2003, 13:27
Seeing that Richard Branson is so adept at slashing the existing wages/conditions of the industry, watch him do the same in third-world asian countries where the yearly pay is measured in a few thousand $US if that.

I reackon Sir Richard may even set up shop in non-christian countries to avoid having to pay for the annual Christmas party!!

Whats that I hear you say Sir Dick, free rice all around??

13th Dec 2003, 17:50
Dow Jones

Malaysia's AirAsia Confirms In Talks With Virgin Blue

KUALA LUMPUR (Dow Jones)--A senior official of Malaysia's sole budget carrier AirAsia Bhd. confirmed Thursday the airline is in talks with Richard Branson's Virgin Blue Holdings about possible collaboration on a low-cost airline venture in Asia.

"I confirm we have had talks with Virgin, but right now it is just talks. It is still in the early stages of discussions," AirAsia's Chief Executive Tony Fernandes told reporters.

Fernandes declined to reveal more details about the discussions between the two airlines.

Branson said earlier he is eager to expand Australian budget carrier Virgin Blue's operations and has had discussions with investors looking to set up low-cost carriers in Asia.

Earlier Thursday, AirAsia's Chairman Pahamin Rajab said the airline plans to increase its fleet to 30 aircraft by December 2004. Currently AirAsia operates 11 Boeing 737-300 aircraft.

AirAsia declined to elaborate on its plans to undertake an initial public offering as part of its plans to list the airline on the Kuala Lumpur Stock Exchange.


Tiger Air seen starting cat fight for Asia
By Doreen Siow

SINGAPORE, (Reuters) - Singapore Airlines Ltd's defensive decision to launch a budget carrier would cannibalise its own market and sets the stage for an expensive price war with budget rivals, analysts said on Wednesday.

Asia's largest carrier by market value has teamed up with the founder of Irish discount airline Ryanair , Europe's biggest carrier by value, to launch Tiger Airways in the middle of next year, serving the Southeast Asian region with a population of about 500 million people.

"The trick for these operators will be to see who will be the last man standing," said Christopher Gee, a strategist at JP Morgan Chase.

"Tiger Airways has four shareholders who are very deep pocketed and they have more access to capital than any other operator out there."

Tiger will be the second budget carrier to start up in the city state, competing with ValuAir, which is being set up by former staff of Singapore Airlines.

Malaysian discount airline Air Asia is also trying to win business from Singapore's four million people.

Analysts said the start up costs for budget carriers could be as low as $30 million.

"The move was expected. But their choice of partners shows they are going out there to make some money from this venture," Gee said. "I think the market is going to give them the benefit of the doubt in this."


"There's a vast group of entrepreneurs all over Asia. For small businesses, this gives them an opportunity to fly," said Ryanair founder Tony Ryan, adding he saw 10 percent of the Asian market being low cost within 10 to 15 years.

Budget airlines may be proliferating in Asia, but analysts say the region is much less fertile for them than North America and Western Europe and their eventual market share will be lower.

Landing rights are not so freely available in Asia, and long distances tend to minimise the efficiencies that budget airlines get by quickly turning around their planes. It's also harder to sell longer flights without food.

Analysts said the emergence of low-cost carriers would affect Singapore Airlines' short haul routes the most.

Singapore Airlines did not given a breakdown on how much short haul routes contributed to group revenues of S$6.8 billion ($3.94 billion) last year.

However, it said the East Asian region, which includes China and Japan and Southeast Asia, accounts for a third of revenues.

ING Financial Markets analyst Philip Wickham estimated 15 percent of Singapore Airlines' passenger revenue, or about S$100 million of forecast net profit, was from routes with flight times under four hours from Singapore.

While Tiger Airways released no details on its planned destinations, Wickham expects the carrier to operate flights between Singapore and Bali, Bangkok, Ho Chi Minh City, Hong Kong, Jakarta, Manila and Phuket.

Singapore Airlines will hold 49 percent of Tiger Airways. State investment agency Temasek Holdings will have 11 percent, the investment vehicle of Ryan will have 16 percent and Texas financier David Bonderman and former America West head William Franke will have 24 percent through Indigo Partners LLC.

Goldman Sachs analyst Jean Louis Morisot said he was concerned Tiger Airways would compete with Singapore Airlines, that it was difficult to achieve low costs in Singapore and that the new alliance left an uncertain role for Singapore Airlines' existing regional carrier, SilkAir.

Besides competitors in its home market and in Malaysia, Tiger Airways will also be facing competition from other regional start ups, including AirAsia's joint venture carrier in Thailand with Prime Minister Thaksin Shinawatra's Shin Corp Public Co. British tycoon Richard Branson's Virgin Blue group has also expressed interest in setting up a low-cost carrier in Thailand with flag carrier Thai Airways . ($1=1.724 Singapore Dollar)


Al E. Vator
13th Dec 2003, 20:34

If the oft-quoted Peter Harbison is such a damned expert why doesn't he put his money where his big mouth is?

What of consequence has he ever done in Aviation except talk?

If I could find his quote I would - but it was not so long ago that his mouth was spouting out that for Singapore Airlines "It was not a matter of if, but when they would start a low-cost Australian carrier". So when specifically will this be Mr-Know-It-All-Expert?

Why do we waist space on this bottom-feeder. The Townsville Refueller is far more up to date with reality than this aviation clingon.

Additionally, having experienced it first-hand, I have to sadly say that Australian Airlines is an enigma. It is a full-fare airline with basically no service. Why would you pay the same as say QF, SQ or CX for WAY, WAY less service? This is not a formula which gurantees sucsess, particularly in Asia. Please take note Ms. Staines.

The GENUINE low cost carrier is here to stay in Asia but it will be based out of somewhere practical like KL or Seletar but definitely not bloody Subic Bay. It will be an exiting and rewarding period for many involved in aviation but only the most astute will survive.

Get a grip on reality and for crying out loud, ignore self-serving, non-achieving buffoons like Harbison.

13th Dec 2003, 21:37
Al E. Vator, you ask “What of consequence has he (Peter Harbison) ever done in Aviation except talk?”

Ask that question of anyone employed by Compass 1. Mr Harbison planned and ran “Operation (I forget the name)”, the extremely questionable coup that saw Compass 1 closed down and its aircraft seized and quickly moved offshore three days before Christmas, buying Ansett another 11 years before it collapsed, where AN senior management have since admitted it would – and should – have collapsed within two weeks back in 1991 had Harbison’s ‘operation’ not been implemented.

In the US, there would have been a Congressional Inquiry by now into the extremely questionable nature of the seizure of Compass assets after the unspeakable bob’ork gave the go ahead for the Government to demand payments of Compass that were later found to be totally spurious. (Ahhh, , the beauty of having ‘mates’ in high places.)[/i]

Maybe one day we’ll see a Royal Commission into the Compass shutdown and Harbison’s Operation Whateveritwas, but I suspect it won’t happen before the bodgie and quite a few others are safely underground. Why? Because the first rule of a Royal Commission is you don’t hold one unless you know the conclusions it’s going to come up with, and I suspect there are far too many people in Canberra on both sides of the House who know exactly what those conclusions will be and [b]definitely don’t want them aired in public.

Not that the Great Unwashed seem to give a FR’sA…

14th Dec 2003, 00:21
Al E. Vator


Good luck

14th Dec 2003, 04:30
Al E Vator

re Seletar

Well at least the runway at Subic is long enough to use, not to
mention a 70mil domestic population in the Philippines.

Subic Bay International Airport:




Channel News Asia
Tuesday October 14, 10:17 PM

CAAS may lengthen Seletar Airport runway for AirAsia flights

SINGAPORE : The Civil Aviation Authority of Singapore said it was prepared to lengthen the runway slightly at Seletar Airport if Malaysian budget carrier AirAsia chose to fly from there.
It has also confirmed that landing fees for all new airlines would be waived for the first two years to help their businesses take off.

AirAsia's chief executive Tony Fernandes had said it wanted to fly out of Seletar rather than Changi because it would be cheaper and cut ticket costs.

He has complained that the Seletar runway is not long enough to cope with his planes.

At the moment, the runway only caters to smaller charter and private planes.

The CAAS said even if AirAsia picks Seletar, it could still use Changi as a stop-gap measure until the runway changes are ready.

Local start-up ValuAir earlier said it would prefer to fly out of Changi, while Singapore Airlines still has not decided whether to start up a budget airline. - CNA


Al E. Vator
14th Dec 2003, 07:45
Wiley...yes you are quite correct about this unpleasant Harbison character. What I should have said is "what has he done for aviation which is constructive".

It is a sad reality that talentless cling-ons like this person fester at the bottom of the aviation fraternity like dags on a sheeps' posterior.

Having such parasites is inevitable I guess given the growth of the industry but I do wonder how such individuals have any self-respect and I am amazed they are in a position to be quoted by the media. Harbison is neither independent nor an expert.

17th Dec 2003, 07:04
with regards to Subic, although I have never landed there in a fixed wing aircraft, was having a beer the other week with a skipper from FEDEX who told me it wasn't exactly his favourite airport to land a heavy MD-11 at night. They have had a few incidents there over the last couple of years and told me the place is in quite a state of disrepair.