In the news: Airlines take centre stage with Asia Pacific carriers reporting a dip in profits, Malaysia Airlines and Radisson in loyalty partnership and Vietnam looks to technology to lower operational costs
Aviation: Rising costs halved Asia Pacific airline profitability in 2018
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Last year, the aggregated net earnings of Asia Pacific (APAC) airlines dropped by almost 50% to US$4.7 billion from 2017’s US$9.6 billion due to rising costs.
Explained the Association of Asia Pacific Airlines (AAPA) when releasing the airlines’ preliminary financial performance figures: “Continued expansion in the global economy underpinned further growth in air passenger and air cargo markets, but airlines faced an increasingly challenging operating environment marked by significantly higher jet fuel prices, adverse currency movements and rising pressures on non-fuel cost items.”
The decline is despite a healthy 6.9% growth in international passenger traffic, in revenue passenger kilometre (RPK), stimulated by rising incomes, further expansion of airline networks and widespread availability of competitive airfares.
AAPA said collectively the region’s carriers achieved operating revenues totalling US$204.7 billion last year, a 10.4% increase compared to 2017’s US$185.4 billion.
However, the airlines’ operating expenses grew by 12.5% to US$194.6 billion, driven by a significant 27.5% rise in fuel costs to US$54.5 billion in tandem with the 29.8% jump in global jet fuel prices to an average US$85 per barrel.
Non-fuel expenditure increased by 7.6% to US$140.1 billion, attributed to higher staff costs as well as landing fees and enroute charges.
Andrew Herdman, director general of AAPA, said the region’s airlines “are operating in highly competitive markets, and were not able to pass on the full cost impact of significantly higher fuel prices we saw in 2018.”
He forecasts APAC airlines will face “significant headwinds” in persistent cost pressures, stiff competition and more volatility in oil and currency markets.
“Whilst air passenger markets remain relatively resilient, the weak sentiment surrounding air cargo markets is a warning signal that trade disputes are doing real damage to the economy and could further undermine global growth prospects going forward.”
Herdman added the carriers remain “undaunted”, and will continue to evolve and adapting to the market place. They are “continuously reviewing their business plans, implementing measures to improve efficiency and carefully managing costs whilst seeking opportunities to maximise revenue.”
Loyalty: Malaysia Airlines partners with Radisson in point-conversion programme
(Image credit: Radisson Hotel Group)
Malaysia Airlines is bringing more rewards and offers to members of its frequent flyer programme, Enrich, via a point-conversion programme with Radisson Rewards, the loyalty programme of the Radisson Hotel Group.
The airline said the partnership will provide Enrich members staying in any of the Radisson hotels with “an enhanced experience from time of booking to checkout …” They also get enjoy member only rates, have access to exclusive benefits, and earn free nights across the hotel group’s portfolio of over 1,100 hotels globally.
Under the programme Enrich members, who are also Radisson Rewards members, are able to convert their loyalty points into Miles. They receive one Enrich Mile for every 10 Radisson Rewards points redeemed from earned spend in US dollars at any of the properties under the group brands – Radisson Collection, Radisson Blu, Radisson, Radisson RED, Park Plaza, Park Inn by Radisson and Country Inn & Suites by Radisson.
Malaysia Airlines’ group chief marketing and customer experience officer, Lau Yin May, said with the partnership members of both programmes can now enjoy in-air and on the ground benefits.
Efrem Berman, Radisson Hotel Group’s vice president of global loyalty, said Malaysia is “an excellent addition” to its portfilio of more than 35 global airlines and welcomed the ability for Radisson Rewards members to “auto-convert or redeem their points at will into all of our global partner programme.”
Aviation: Vietnam Airlines sees benefits from utilising technology solutions
(Image credit: Vietnam Airlines)
Vietnam Airlines is expanding its alliance with Sabre Corporation with the implementation of company’s AirVision In-Flight solution to lower operational costs, as well as improve efficiency.
According to Sabre, In-Flight “can help an airline to drive cost savings of up to 10% of their total catering budget by enabling a seamless integration between the airline and its catering partners, regardless of their location, thanks to its automated planning and communication capabilities.”
The technology company quoted findings from a joint business value workshop that the solution can also “contribute to a reduction in meal wastage to led ess than 1 percent and inventory costs by close to 4% over the next five years.”
Vietnam Airlines’ executive vice president Trinh Ngoc Thanh said benefits from In-Flight, apart from optimising onboard catering and provisioning, is having “a connected view across all our catering functions and provide advanced integration and automation capabilities that will positively contribute to our margin.”
The carrier recently extended its agreement with Sabre to utilise its passenger service system (PSS) SabreSonic, and renewed a long-term content distribution agreement through its Global Distribution System (GDS).
Vietnam Airlines is a member of the SkyTeam Alliance, and operates 97 routes to 22 domestic and 29 international destinations.
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