Asia is the largest continent in the world, both in land mass and people. With a population of over four billion, it is also one of the most important aviation markets. In this three-part series, we will examine the future of Asian aviation through different geographic realms.
According to the latest edition of IATA’s 20-Year Air Passenger Forecast, Asia Pacific will be the biggest driver of demand from 2015 to 2035 with more than half of the new passenger traffic coming from the region. China will replace the US as the world’s largest aviation market (defined by traffic to, from and within the country) around 2024. India will displace the UK for third place in 2025, while Indonesia and Japan will be ranked 5th and 7th respectively.
Of the five fastest-growing markets in terms of additional passengers per year over the forecast period, four will be from Asia.
First, let’s take a look at East Asia(Japan & China)
The aviation industry in East Asia has recorded significant growth over the past few years. The total seat capacity of Eastern Asia airlines experienced double-digit growth in the four-year period of 2009-2013. It has established itself as one of the world’s fastest growing aviation markets and has huge potential for more rapid growth.
East Asian aviation market
China is by far the largest aviation market in East Asia. In a distant second place comes Japan, followed closely by South Korea. The East Asian market was not always like this before.
Japan
Japan was the most important aviation market in East Asia less than 20 years ago. Combined, Japanese carriers transported over 109 million passengers. The two major carriers in Japan are ANA and Japan Airlines.
ANA
All Nippon Airways (ANA) is the largest airline in Japan based on fleet size. In 2016, ANA carried over 52 million passengers.
Japan Airlines
Japan Airlines is the second largest airline in Japan by fleet size. Something they are not very well known for, but should be, is having some of the most comfortable 787s out there. Some of Japan Airlines’ 787-8s only seat 161 passengers. Japan Airlines also chose passenger comfort over profitability and went with a 2-4-2 configuration in economy.
The market in Japan Aviation.
Overall, the problem with Japan is that passenger numbers aren’t booming as they are in China. Passengers tend to fly with carriers from their home countries. In nearly all cases, Japanese tourists prefer to fly with Japanese carriers because it makes the travel experience easier.
Due to language barriers, many travelers prefer to fly with their home carriers since it is easier to understand them. Many lost-in-translation events can happen while traveling and language barriers can always detract from an experience.
Both Japan Airlines and ANA have alliance partners with whom they can closely cooperate.
China
On the other hand, China is a huge source of passengers. With the largest population in the world in a rapidly industrializing country, there is a significant push to increase passenger numbers. With three major international airlines, China will definitely be a major aviation force in 2050.
Air China
Flag carrier Air China operates its largest hub at Beijing’s Capital International Airport. With over 400 aircraft in its fleet and another 100+ on order, Air China is preparing for massive growth. Once Beijing’s second airport opens, there will be a significant increase in airline capacity. By effectively using these additional slots, Air China can maintain their competitive edge in China’s capital. As the flag carrier, undoubtedly there will be a significant push from the Chinese government to keep Air China successful afloat.
In the future, Air China will have to contend with competition once Beijing’s new airport opens for business. However, the carrier currently benefits from a near monopoly on long-haul routes out of Beijing. These lucrative routes bring plenty of profits and passengers on Air China metal. For example, Air China is the only Chinese airline to serve long-haul destinations to Star Alliance hubs like Johannesburg, Frankfurt, and Washington-Dulles.
China Southern
China Southern is China’s largest airline by fleet size. Boasting their expectations for a 2,000-plus fleet , China Southern is well on its way to this goal with over 600 aircraft in service and more than 200 on order.
However, what China Southern needs to reconcile is Guangzhou. Though a major hub for China Southern, Guangzhou has a distinct lack of foreign carriers operating there. Notably absent are European carriers like British Airways, Lufthansa, Air France and KLM, as well as American Airlines, and Qantas.
Guangzhou is a major destination in China, however even as the best commercial city, major foreign airlines don’t seem to find a reason to operate there. Some of the decision is no doubt politically motivated, but, even China Southern has its sight on expansion from Beijing Daxing.
Despite this, Guangzhou still lacks notable connections to destinations like Chicago, Dallas, and Munich. Furthermore, while Beijing and Shanghai have a major tourist draw, Guangzhou lacks this particular attraction. Much of it, in fact, is lost to nearby Cathay Pacific hub in Hong Kong.
China Eastern
China Eastern is China’s second largest airline by fleet size. With close to 550 aircraft in operation, China Eastern maintains Shanghai as a major hub. While China Eastern doesn’t have the same ambitious plans as China Southern, they still will be a force to reckon with in 2050.
China Southern, as of now, doesn’t have any major international partners. Though they’ve recently become closer with American Airlines, China Eastern and Delta have solidified their strategic partnership. This puts China Eastern ahead of Air China and China Southern.
Inaugurating new routes and building up partnerships takes years. For airlines, it is important to gain passenger recognition and trust with new routes. As Delta becomes closer with China Eastern, they put themselves ahead of the competition with access to mainland Chinese tourists. The same is true for China Southern. Connections from interior destinations lacking long-haul flights to the United States will be a huge market
Part two: Looking into Eastern Asia Aviation (Hong Kong and South Korea)
