Asia Pacific leads air travel growth, with profits to hit $2.5 billion

Bangkok, Thailand – The Asia-Pacific region is leading air travel growth, with global profits expected to reach $2.5 billion this year and travel bookings up 22 percent for the first half of 2010 compared to the similar period last year.

The Philippines is similarly experiencing a strong growth, with an increase of 10 percent in terms of travel bookings during the first six months of the year and with bookings recovering to pre-crisis level, Amadeus vice president for airline group Asia Pacific John Chapman.

The company pointed out that the growth for the Philippines is lower given the fact that the airline travel industry was not severely affected compared to its counterparts in the region.

Chapman also noted that there has been a significant growth for low-cost carriers, which have been bringing in new concepts and changing the way people shop for travel.

But he pointed out that the airline industry remains under pressure, given the economic crisis which has cut back business travel spending and has consumers more aware of travel costs.

He said that fierce competition among the carriers is driving focus towards efficiency. “Airlines are now looking at new revenue streams and new channels to market. Technology has become a source of competitive advantage, although some airlines with legacy systems may find it more difficult to implement new technological trends especially in the area of information technology since they already have their existing systems,” Chapman added.

The industry situation, he noted, has given rise to ancillary services and falling passengers yields have prompted airlines to unbundle their airfares and charge for additional services. “There has been a 43 percent increase in global airline ancillary revenues from 2008 to 2009, although it is less prominent in Asia so far. Low-cost carriers are leading area but legacy airlines are now implementing programs along this line,” he said.

Chapman, in an interview with reporters here, noted that there airlines are opting more for customer self-service, which can cover from online booking of flights all the way to checking in. “In some countries, travelers can even check in using their Blackberry phones or iPhones. But customer self-service has notably improve the customer experience, improved customer service itself, and translated to savings for airline companies,” he explained.

He said that airlines are also beginning to seek IT solutions that are capable of managing passenger experience end to end.

In Asia-Pacific, many of the leading players are on their way to IT transformation. Qantas became the first airline globally to complete migration to Amadeus’ Altea customer management system (CMS). Cathay Pacific and Singapore Airlines are implementing the Altea system by 2011 and 2012, respectively. Amadeus has also entered into a memorandum of understanding with Asiana Airlines and Thai Airways for an implementation of Altea.

Altea covers three areas: reservation, inventory, and departure. Qantas and V Australia are implementing the whole suite while KLM, Lufthansa, Air France and British Airways are using the first two as their own platform.

In the Philippines, Chapman revealed that they are in talks with Philippine Airlines for the implementation of the Altea airline IT system. Amadeus currently takes care of PAL travel distribution needs on a non-exclusive basis, allowing PAL to hook up with travel agencies globally. The company also handles Cebu Pacific on an exclusive basis and is set to enter into similar agreements with SeaAir and Zest Air.