North Asia’s expanding LCC€¦ · Share your thoughts #CAPASummit Source: CAPA – Centre for Aviation. CAPA Cost Database. Airline CASK: Asia Pacific US cents per ASK 20 18 16

11-12 June, 2018

Share your thoughts #CAPASummit

North Asia’s expanding LCC markets

Peter HarbisonExecutive ChairmanSeoul, 11-Jun-2018


1. The effects of fuel prices on the market2. Global markets; N Asia still lags SE Asia3. A highly competitive LCC marketplace4. Local fleet profiles

Where to, North Asian LCCs?


The growing impact of oil

Source: oil-price.net

Jet fuel prices have risen almost 50% since their 2017 lows


130

125

120

115

110

105

100

95

90

85

80

Passenger yield / Load Factor / Passenger growth

2011 2012 2013 2014 2015 2016 2017

140

120

100

80

60

40

20

Barre

l pric

e ($

)

10%

8%

6%

4%

Airline operating profit (EBIT)January 2011 = Index 100

$

$

Passenger growth

Profit

Load factor

Average ticket price

Oil barrel price

Source: IATA Air Transport.

Oil price/pax/fares index

2017 was a fairytale yearIt was not a normal year


$20 $30 $40 $50 $60 $70 $80 $90 $100

6.2%

9.9%

12.3%

13.7%

14.6%

14.5%

25.3%

33.7%

40.4%

45.9%

31.3%

26.7%

21.4%

15.4%

8.3%

31.4%

23.0%

Low CostCarrier

Full ServiceCarrier

Fuel impact on operating costs

Source: CAPA – Centre for Aviation;CAPA Cost Database; OAG.

Increasing fuel costs impact LCCs more –reducing the cost advantage

Share your thoughts #CAPASummit Source: CAPA – Centre for Aviation. CAPA Cost Database.

Airline CASK: Asia PacificUS

cent

s per

ASK

20

18

16

14

12

10

8

6

4

2750 1000 1250 1500 1750 2000 2250 2500 2750 3000 3250 3500 3750 4000 4250 4500 4750

Average Trip Length (km)

Full Service Carrier Low Cost Carrier

Qantas7.25 US cents

AirAsia Berhad3.06 US cents


201819881988 1998 2008 2018

114 545 2,775 5,638 Source: CAPA Fleet Database

LCC fleet growth 1988-2018


LCCs by regionMain Groups

• AirAsia Group• AirAsia X Group• Cebu Pacific Group• Grupo Viva• Indigo Partners• Jetstar Group• Norwegian• Southwest• Tiger Airways Holdings• VietJet Group• Volaris• Wizz Air• Lion Group

o (Batik & Malindo are FSCs)

Europe DOM: 41.2%

INT: 9.0%

JapanDOM: 51.9%INT: 23.2%

AustraliaDOM: 26.4%INT: 14.5%

GlobalDOM: 32.4%INT: 12.5%

South KoreaDOM: 50.4%INT: 34.2%

Source: CAPA – Centre for Aviation & OAG. Period: Jan-Jun 2018

ChinaDOM: 9.6%INT: 14.0%

Asia PacificDOM: 28.5%

INT: 8.1%India

DOM: 68.7%INT: 21.6%

IndonesiaDOM: 52.6%INT: 39.8%Philippines

DOM: 60.4%INT: 30.1%


30% of all aircraft inservice are with LCCs

LCC global market shares: in service

Source: CAPA Fleet Database



LCC global market shares: orders

50% of the world’s LCC aircraft orders are in Asia Pacific


Global LCC Fleet5,638 in service4,785 on order


Fleet-to-order ratio

Asia Pacific LCC Fleet1,692 in service2,249 on order

On Order

In Service

47%2,249

30%1,692

LCC Globally APAC


Source: CAPA Fleet Database.

Asia Pacific LCC Orders1,692 in service

2,249 on order

1,548

57675

2525

21 airlines

91% of orders are for narrowbodies


60% of the world’s 112 LCCs are in Asia Pacific/Middle East • Highly competitive; LCC vs LCC• High growth• With two or three exceptions they are all small• Consolidation?• Market exit?

But North Asia still lags……..

North Asian LCCs remain at an early stage of evolution


The growth of Korea’s LCC fleet

917

26 3140

5062

81

103

121

0

40

80

120

160

0

10

20

30

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Net Additions Total



Korea vs Japan LCC fleet ages12.1

5.1

13.111.9 11.8

10.1

2.7

5.24.4

3 2.8

0

5

10

15

AirBusan

AirSeoul

EastarJet

Jeju Air Jin Air t'way AirAsiaJapan

JetstarJapan

Peach SpringJapan

Vanilla

Korea Japan

Korea fleets mostly second hand and older


• LCCs account for much of the recent growth – with limited impact on FSCs

• New smaller widebody twins and long haul narrowbodiescreate economic feasibility where previously not possible

• Together they are creating new city pair opportunities, bringing local economic growth

New entrants, new aircraftare changing network growth

Share your thoughts #CAPASummitSource: IATA.

The number of unique city pairs

has doubled in 20 years, exceeding

20,000 for the first time in 2017

City pair growth

1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017

Num

ber o

f uni

que

city-

pairs

US$/

RTK

in 2

014U

S$

4.00

3.50

3.00

2.50

2.00

1.50

1.00

0.50

22,000

22,000

22,000

22,000

22,000

22,000

22,000

22,000

22,000

22,000

22,000

Real cost of air transport

Unique city pairs


LCC fleet growth in

Asia Pacific2008-2018

Source: CAPA Fleet Database. As at 28 Feb 2018.


Thankyou very much!Enjoy the Summit

Documents

North Asia’s expanding LCC€¦ · Share your thoughts #CAPASummit Source: CAPA – Centre for Aviation. CAPA Cost Database. Airline CASK: Asia Pacific US cents per ASK 20 18 16