Tae Hoon Oum - Shaping Air Transport in Asia Pacific

Shaping Air Transport in Asia Pacific

TAE HOON OUM

The University of British Columbia

Vancouver, Canada

CHUNYAN YU

The University of British Columbia

Vancouver, Canada

First published 2000 by Ashgate Publishing

Reissued 2019 by Routledge

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Tae Hoon Oum and Chunyan Yu 2000

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ISBN 13: 978-1-138-70476-3 (hbk)

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Tae Hoon (Tae) Oum, MBA, PhD

Dr. Oum is UPS Foundation Professor of Management, Faculty of Commerce and Business Administration, The University of British Columbia, Vancouver, Canada. Prior to joining UBC in 1983, he taught at School of Business, Queens University at Kingston, Canada. He was also a Visiting Professor at Osaka University, Korea Transport Institute, and Shanghai Jiaotong University. Towards the later stage of writing this book, Tae Oum was the Albert Winsemius Visiting Professor at Nanyang Business School, Nanyang Technological University, Singapore.

Dr.Oum specializes in policy analysis, demand modelling, cost and productivity analysis, globalization and competitiveness issues of transportation and telecommunications industry. He has published and edited over 20 books and several major conference proceedings, published over 100 papers in academic and business journals, have written numerous research reports for Canadian and foreign government agencies, major corporations, and the World Bank on the transportation and telecommunications policy and management topics. He has also advised many Canadian and other government agencies, major airlines, and telecommunications firms in North America, Asia and Europe.

He is the president of the Air Transport Research Group (ATRG) of the World Conference on Transport Research (WCTR) Society. He is an Editor of Journal of Transport Economics and Policy, and serves on the Editorial Boards of Transport Policy, Journal of Air Transport Management, Journal of Air Transportation World Wide, Transportation Research E, Journal of Air Transport World Wide, International Journal of Maritime Economics. He is also a member of International Advisory Group (IAG) of the Pacific Economic Co-operation Council (PECC).

Chunyan Yu, Msc (Business Administration), PhD

Dr. Yu is a post-doctoral research associate at the Faculty of Commerce and Business Administration, The University of British Columbia. She specializes in productivity and efficiency analysis, cost structures and other industrial organization issues, and public policy analysis involving transportation industries. She has published a number of papers in various international journals. She has conducted a number of applied econometric research projects on air and rail transportation industries including a report to the Royal Commission on Passenger Transportation, Canada. She has written her PhD dissertation entitled, Alternative Methods of Efficiency Measurement, and Applications to Transportation Industry (University of British Colubmia, Vancouver, Canada: 1995).

During the 1980s and 1990s, strong economic growth led to rapid increase in the demand for air travel in Asia Pacific, sustaining annual growth rates in excess of 10 percent. There were wide expectations that the Asia Pacific would be the engine of growth for the worlds travel industry well into the 21st century. It was predicted that the demand for air travel in Asia Pacific would grow by 7.4 percent per annum between 1995 and 2010, twice the rate that was forecasted for the rest of the world. Also, by the year 2014, over half of all air passenger movements would be associated with travel to, from and within the Asia Pacific. The prospects for the aviation sector in the Asia Pacific appeared to be excellent, and confident airlines and airports embarked on expansion plans. Growth was the driving force setting the agenda for policy makers, and governments allowed the private sector to participate in aviation in a broad scope through privatization and formation of new airlines.

During this period, major institutional, regulatory, and structural changes occurred in the international air transport industry. The most significant change was the formation of open skies continental blocs in Europe and North America. Major carriers in Europe and the United States have made tremendous efforts to penetrate the Asia Pacific market through negotiations of open skies and/or liberal bilateral agreements and formation of strategic alliances. These developments have made significant impact on the aviation industry and air carriers in the Asia Pacific, and led governments and airlines to face increasing competition in international airline markets. The major challenges that governments and airlines are facing include how to deal with the U.S. and European mega carriers attempt to align with multiple partner airlines in Asia; how to maintain cost competitiveness relative to non-Asian carriers while dealing with the rapidly rising input prices, currency appreciation, etc.; how to deal with the rising consumer power and declining airline yields; and how to balance between the need for liberalization in order to develop hub airports and the historically perceived need to protect flag carriers. On top of these challenges, the recent economic crisis has led to the emergence of a host of new challenges: currency devaluation, and sharp fall in Asias wealth and international purchasing power, etc. All these have resulted in the substantial decline in air travel and freight transport demand.

There are a number of books on the airline industry in Asia Pacific. They are mostly proceedings of theme oriented conferences, with articles examining various aspects of the air transport markets in the region. The main aim of this book is to provide a comprehensive assessment of the current markets and outlook for the industry in the Asia Pacific region. It also examines options for improvement and development of the regulatory system and industry structure which will draw on experiences from both within and outside the region. The short and long term effects of the current economic crisis on Asian airlines and air transport markets are also discussed. During the past few years, we exerted significant efforts to understand current problems and issues in the airline industry through consulting/advising major airlines and government agencies, interviewing airline executives, participating in industry and academic conferences, communicating with practitioners and researchers in the field, and through published materials and information, etc. Tae Oum and his colleagues have written numerous monographs, research reports and papers on the related topics. This book draws on many of these reports and papers, but covers a wider range of issues to appeal to a broader audience.