Increasing Demand for Air Travel and Expanding Market Opportunities in Asia-Pacific: How to Stay Agile and Responsive in the Competitive Environment?

The airline industry in Asia-Pacific is seeing a dramatic growth due to the increased demand for air travel, and as European airlines have been facing stiff competition from Asian state-backed carriers (which offer cheaper fares and greater connections), many operators are now facing tough competition from Asian airlines. . reducing routes to Asia.

We are already seeing major airlines, such as Lufthansa, Air France-KLM, and Virgin Atlantic cancel or reduce their direct flights to many major Asian economies, and if we take the German carrier as an example, we see that their direct flights to Asia. they dropped from 14 to only 2 places – Singapore and Bangkok. Earlier this summer, Lufthansa even asked the European Union to take action, insisting that European airlines face very unequal competition from Chinese airlines and those in the Gulf and Bosphorus.

Calling on the public sector is absolutely necessary, however, we cannot sit around waiting for new industrial policies to happen. Developments in the Asia-Pacific aviation space will definitely not wait, and the private sector needs to be bold when looking for alternatives, otherwise, many airlines risk losing market share in promising, competitive and exciting areas.

Dealing with Unequal Competition

Even if many costs (such as fuel and aircraft ownership) do not vary greatly by location, European carriers are constantly faced with challenges such as rising taxes and fees, high regulatory requirements, additional climate policy requirements, and inadequate infrastructure. Sweden, for example, is paving the way in Europe for better regulations by abolishing the airline tax in the country, but in general Europe is still struggling with other political conditions that weaken the international competitiveness of European airlines.

China, for example, is a country that has been playing a key role in transforming the global aviation industry. Since the country’s national carriers have not received strict sanctions or a ban on Russian aircraft flying, a large number of foreign carriers have lost market share in China as they have had to postpone operations in the country.

In the past, foreign airlines held the majority of international capacity, reaching a peak of 60% in June 2009. However, there has been a change, as Chinese airlines now hold a majority of the market at 62%, while foreign carriers have experienced a decline to 38 % of market share (Source: Cirium).

Another important player is India, which expects to see a significant increase in the number of air passengers in the coming years, positioning the country as the third largest market for civil aviation. With the rapidly growing market estimated to be around $40 billion by 2027, and Indian consumers becoming more ambitious in their spending patterns, the country presents lucrative growth prospects that are already understood by many aviation stakeholders. The German airline Lufthansa recently announced that it will work on a metal-neutral partnership with Air India on routes between India and Europe, among other initiatives to protect its strategic advantage in the region, showing that it understands what is at stake.

“There is an imbalance fueling international competition that is hurting European carriers in Asia, resulting in many of them being kicked out of the game – before they even get a chance to play. We cannot wait for changes in regulatory policies. Airline workers need to change the way they think in order to survive,” said Espen Høiby, CEO at AAP Aviation.

When trying to enter challenging markets, other factors that enter into this equation – as well as those mentioned above in this piece – are operational resources, local expertise, and labor costs. In a market where the end customer really sees value for money and expects the highest value for money service, maintaining valuable routes while ensuring the highest standards of competitive pricing, seems impossible. But we dare not say that it is not.

Creating New Opportunities Instead of Fighting Existing Ones

Major European carriers are actively responding to the challenges of the Asia-Pacific by trying to adapt their operations mainly through partnerships with other airlines, a way that puts them in a position where conditions shape the strategy and bind them to the environment. .

This is because at the same time cooperation with other airlines (competitors) may be a quick way out to get air at the top, it may also prove dangerous when it comes to maintaining brand identity, service concept and company standards. Maintaining all those parts of an airline eg, in a country like India (with 1.4 billion people, 28 states and 8 union territories, and thousands of languages ​​spoken) means getting real local knowledge, with experts who not only understand the country. a multicultural background but also has experience from international airlines, which enables them to work with a natural respect for both the service concept of the airlines and the cultural expectations of the country.

These are characteristics that are difficult to maintain when partnering with your competitors, but an opportunity that we have been able to offer our customers with our Total Crew Management™ model – which enables airlines to recover traffic through our local bases in various countries in Asia-Pacific, and access a diverse talent pool around the world.

Since 2013 we have been encouraging the industry to review the traditional operating model and switch to more sustainable and cost-effective methods, as we saw the need to provide airlines with a new way to engage, recruit, and empower their members, while opening new ones. opportunities for growth, efficiency, and competitiveness in a changing aviation environment.

As the market in Asia-Pacific continues to evolve, it raises an important question: Is adopting workforce management solutions the best way forward for airlines aiming to remain competitive? Evidence suggests that those who anticipate and adapt may be more protected in this tough, growing, and exciting market.