Seoul Incheon International Airport

British and Irish airport investments continue busy merger and acquisition activity

If there was any doubt that the UK & Ireland remains one of the most dynamic air transport markets in the world that suspicion was dispelled by the level of recent and potential activity in airport M&A.

With Edinburgh Airport about to change hands, Glasgow Prestwick and Manston (Kent) airports may follow this year, as will London Stansted, later. Cardiff Airport’s CEO resigned after a politician complained about lack of investment by the operator and there are plans to re-open Plymouth Airport under new ownership.

Meanwhile, in Ireland, the case has been made for a change of ownership at Shannon Airport - but not an outright privatisation – signaling the potential break-up of the Dublin Airport Authority.

British Airways resumes Seoul service with more Asian destinations to come as BA integrates bmi

British Airways is making one of its first significant network changes following the acquisition of bmi (by parent company International Consolidated Airlines Group) with the Dec-2012 resumption of services to South Korea's Seoul, which BA last served in 1998. BA will operate six weekly Boeing 777-200 flights on the route. "British Airways is delivering on its promise to increase long haul flying to Asia following IAG’s purchase of bmi," the carrier said in a statement.

Following the bmi acquisition IAG CEO Willie Walsh spoke of a number of routes BA would look to launch with the London Heathrow slots bmi would bring to IAG. Mr Walsh named South Korea, as well as Indonesia and Malaysia, as specific examples. 

AirAsia Japan plans launch with domestic and Korean flights

Japan's aviation scene, which had few significant movements over the past decade, will be turned on its head in just five months, encompassing the time three new low-cost carriers will enter the market, the latest of which is AirAsia Japan. Preliminary schedules show AirAsia Japan and Jetstar Japan, both based at Tokyo Narita, will compete head on from Tokyo to Fukuoka, Okinawa and Sapporo. The market, which has grown accustomed to the presence of two main carriers and a handful of smaller ones with little movement in fares, will be inundated with new and aggressive competition offering typical LCC fare stimulation. Adjustment time will be brief as AirAsia Japan within two months is due to enter short-haul international markets.

Yet despite the compactness of LCC activity, preliminary nuances in strategy are emerging between the carriers. Jetstar is favouring domestic flights, partially replicating its extensive domestic operations in Australia and New Zealand whereas AirAsia has a greater regional emphasis, reflecting its experience in Indonesia, Malaysia and Thailand. Peach is more conservative but building both a domestic and international network. 

Asiana to focus over medium term on expansion of long-haul network and fleet

Asiana Airlines has unveiled a new medium-term business plan which envisions capacity and fleet growth of 25% over the next four years as the South Korean carrier aims to break into the top 10 global airline rankings. Asiana plans to focus over the medium term on expanding its relatively small long-haul network as opportunities for short-haul expansion become more limited due to bilateral constraints and increasing competition from LCCs.

Asiana’s medium-term fleet plan includes 17 additional aircraft, taking the fleet from 71 aircraft currently to 83 aircraft by the end of 2013 and 88 by the end of 2015. Narrowbody passenger, widebody passenger and freighter aircraft will all be added over the next four years. But the biggest capacity growth will be seen in the widebody passenger segment, which will grow from 32 to 40 aircraft.

The additional widebodies, including six A380s, are designed to give Asiana an opportunity to build up its long-haul network and close the gap with its Asian peers, which have much bigger operations in North America and Europe.

Jetstar-JAL LCC, "Jetstar Japan" to commence service by Dec-2012

Japan Airlines Corp, Jetstar Airways and Mitsubishi Corp confirmed plans to establish a LCC JV in the Japan market by Dec-2012. Jetstar Japan will be Japan's third new LCC announced this year, following hard off the heels of All Nippon Airways' announcement last month that it plans to establish a JV with leading low cost airline AirAsia, AirAsia Japan, in addition to its previously announced LCC, Peach. The JAL JV would add another piece to the complex jigsaw that is now transforming the Asian airline market. The potential market growth as these successive ventures are introduced can be measured in the hundreds of millions of new passengers. Removal of highly restrictive regulatory conditions and the scale of opportunities as new city pair market options emerge mean literally that the sky is the limit for growth upsides.