Peter Harbison, executive chairman of Centre for Aviation, Sydney talks about the promise that lies ahead for Japan's tourism with the entry of low cost airlines, and what needs to be tackled.

1. Peter Harbison

2. *The menu
 Global issues affecting aviation
 The Asia Pacific LCC market
profile
 LCCs in Japan
 The impact of LCCs for Japan

3. *Global issues affecting
aviation
 Unprecedented global economic uncertainty (ie it
#1
is not all bad – but could be…)
 China is driving the region’s economy and
Europe/N America will be slow for at least two years
 Possibly 3-4 years of substantial global slowdown;
air freight data point to at least several months of
reduced growth, even for Asia

4. *Global issues affecting
aviation
Fuel prices will rise significantly by 2021, affecting
airline profiles. This will mean higher yields in the
#2
interim (= slower growth), until more efficient aircraft
and alternative sources are available (currently much
more expensive)
Environmental pressures to accelerate new
fuels, but also to hinder airline growth globally
Industry competition will intensify, with large
casualties likely = changing airline scenery
Chinese airlines will become much more dominant
internationally

5. *
The future hubs will be in Asia/Middle
East

6. *
 Lion Air – more than 350 Boeing MAX
and -900s
 AirAsia/AirAsia X - up to 300 A320s
include neos
 IndiGo – 225 Airbus neos and others
 Cebu Pacific – 54 A320s, neos and A330s
 Jetstar – 62 A320s (and several 787s)
 Tiger – 61 A320s
More than 1,000 orders from LCCs alone

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15. *What makes an LCC?
 Culture, attitude, innovation
 Deregulation
 Seating density
 Aircraft utilisation
(these 2 alone can reduce legacy costs by 40%)
 Reduced distribution/marketing costs
 Unbundled pricing
 Pressure on external costs, eg
 airport charges
 ground handling

16. *LCCs make everything easier
 Like user-friendly websites - legacy
airlines in Asia, nurtured on agency
relationships and high yielding
passengers, have been slow to deliver
 Consequently, online ticket sales in Japan
have lagged most other countries
 With over 100 million internet users and
the highest GDP per capita of any large
nation, the %age should be much higher
 LCCs will change all that…..

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29. *Peach vs ANA #1
 Peach price - KIX-CTS rtn – JPY12,000
Time taken 4 minutes
 ANA price – Osaka ITM-CTS rtn - JPY80,000
Time taken 20 minutes…..
 Any difference in product?
 Small difference in ownership?

30. *Peach vs ANA #2
 Peach price - KIX-HKG rtn – USD406
 ANA price – Osaka ITM-HKG rtn – USD850

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32. *The LCC impact in Japan
 Much, much bigger than anyone expects!!
 Airlines, Trains, Toll roads - competition
 Regional centres - tourism
 Regional councils - airports

33. *The LCC impact in Japan
 New entry, prices and frequency will:
 drive changes in travel behaviour
 more services to regional airports
 more frequent short trips
 new travellers
 force legacy airlines to restructure
 undermine balance of pricing between
airlines, shinkansen and toll roads
 Help move away from Tokyo-focus
 Low cost airline thinking will
 produce innovations across all sectors

34. *The LCC impact in Japan
 There are around 95 airports in Japan
 Most are loss-making
 With new entrant airlines and
deregulation, their owners have the chance
to attract airlines to serve their airport
 This also offers the possibility to stimulate
regional economic growth – at a time when
the regions desperately need it
 a great new opportunity for the hospitality
industry!

35. “LCCs in
North Asia”
 Macau, 4,5,6 September
 Venetian Hotel

36. Change
is
in
the
air…
Peter Harbison