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 Creaking Airports Hamper SE Asia Carriers

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PostSubject: Creaking Airports Hamper SE Asia Carriers   Creaking Airports Hamper SE Asia Carriers EmptyWed Mar 28, 2012 9:13 pm

March 25, 2012


It's a scene repeated endlessly at most of Southeast Asia's main airports - planes forced to circle overhead or idle on the tarmac and passengers stuck in long lines at immigration desks, security checkpoints and baggage carousels.

And it's likely to get worse in capitals such as Jakarta, Bangkok and Manila in years to come as overcrowded airports and outdated infrastructure are twinned with a huge spike in the number of aircraft in the region.

Southeast Asian carriers have ordered USD$47 billion worth of aircraft for the coming decade but the deals could be under threat because of the inability of airports to keep pace. That could be a blow to manufacturers Boeing and Airbus.

"You can buy as many aircraft as you like but if the infrastructure does not keep up then you are going to see a degraded service that may prevent you from executing plans to grow the airline," Andrew Herdman, director general of the Association of Asia Pacific Airlines said.

The problem could force low-cost carriers such as Malaysia's AirAsia and Indonesia's Lion Air - the world's biggest buyers of passenger jets - to delay or even cancel some orders from Airbus and Boeing.

Jakarta's Soekarno-Hatta Airport now serves more than 51 million passengers a year, more than twice its design capacity when it was built in the mid-1980s.

Bangkok's main Suvarnabhumi Airport is often beset by two-hour immigration queues and is running over capacity less than six years after it opened, which led Thailand's government to encourage low-cost carriers to move to the old Don Muang Airport to help ease congestion.

Passengers can wait for hours at Kuala Lumpur's overcrowded budget terminal, the hub for AirAsia. After clearing immigration lines that can be at least 50 people long, the walk to the plane at the tarmac can be hundreds of metres (yards) with only a strip of corrugated steel overhead as cover against the elements.

With pressure from AirAsia and scenes of chaotic check-ins, government-linked operator Malaysia Airports is rushing to complete another budget terminal that is due to be up and running by April 2013.

Projected construction costs have nearly doubled to MYR3.9 billion ringgit (USD$1.27 billion) as the planned capacity of the new airport has been expanded to 45 million passengers a year from an initial plan of 30 million.

TIME IS MONEY

Jakarta's airport is infamous for planes sitting for nearly an hour on the tarmac before take-off or circling overhead as they await their turn to land. One-hour flights between Singapore and the Indonesian capital can easily drag to two hours or more because of the overcrowded runway.

The hundreds of bankers and executives who fly regularly from Jakarta to Singapore on Monday mornings need to leave home in the dark to catch a 6 am flight and often they still get caught in traffic jams on the toll road to the airport.

That has led to tense times for airline executives dealing with what they politely refer to as "influential" passengers who get to the airport late or get stuck in traffic.

Airline sources said these passengers do not hesitate to call them or even the chief executive on their mobile phones to ask for the plane to wait for them.

"It is a common problem," one of the sources said. "We could never entertain these kinds of requests unless they are the president or the vice president of Indonesia. But some customers can be quite impolite and scream at us."

The number of low-cost carriers (LCC) and their routes have expanded rapidly in Southeast Asia over the last 10 years. Analysts and industry executives see more growth ahead due to a lack of reliable alternatives and strong economic growth.

"Ten years ago, the airports in this region would probably not have foreseen that LCC demand could be as strong as it is today," Chin Yau Seng, chief executive of Singapore-based budget carrier Tiger Airways said.

Airport congestion makes it tougher for carriers to keep their on-time performance and pushes up operating costs as planes waste fuel waiting to take off or land.

"If this problem persists for the long run, airlines in general will have to take into account all the additional costs that they have to incur and pass them on to customers," Edward Sirait, a director at Lion Air said.

"If customers cannot accept those additional costs then airlines, whoever they are, will have to rethink their investment decisions and spending."

Lion recently firmed up an order for 230 Boeing 737s worth USD$22.4 billion, eclipsing the record for the world's biggest commercial aircraft deal set by AirAsia when it signed up to buy 200 Airbus A320neo jets for USD$18 billion.

Despite the growth and big orders, Southeast Asia remains a market that has been under served by carriers.

Con Korfiatis, vice president of Garuda Indonesia's budget carrier Citilink, said only 300 single-aisle jets serve the country's population of 230 million, compared with 3,000 in the United States, which has 310 million people.

Boeing sees Asia-Pacific carriers as the biggest buyers of planes over the 20-year period to 2030 as they are expected to acquire 11,450 passenger jets valued at USD$1.5 trillion - more than a third of global demand.

RACING AGAINST THE CLOCK

A number of airports in Southeast Asia are expanding but some industry watchers say the efforts may not be enough to keep up with additional capacity and demand.

Standard & Poor's analyst Shukor Yusof said Indonesia and the Philippines are among the laggards in developing facilities for airlines, while Singapore and Malaysia tend to move ahead.

"Malaysia has done a fairly good job in managing and operating various airports," he said. "Indonesia certainly lacks the infrastructure to meet the increase in capacity with its domestic carriers expanding and acquiring new aircraft."

Singapore's Changi Airport plans to build a fourth terminal that will boost total capacity to 82 million passengers a year from the current 73 million when it is completed in 2017.

Despite Changi's reputation for planning ahead, the Centre for Asia Pacific Aviation (CAPA) said the fourth terminal might not be enough to meet the expected surge in air travel.

"A third runway and a fifth terminal will eventually be needed for Singapore to maintain its status as a leading hub," CAPA said in a recent report, adding those two things would have to be ready by the end of this decade.

Changi's average annual passenger growth has been 12 percent in each of the past two years, far higher than the average for the past seven years of 8 percent.

That momentum carried on in January with an annual growth rate of 12.1 percent and in February with 11.2 percent.

"At 12 percent per annum growth rate, Changi would reach the post-Terminal 4 capacity figure of 82 million in 2016, just as Terminal 4 finally opens. Even based on 8 percent rate, a fifth terminal would be needed by the end of this decade," CAPA said.

At Jakarta's Soekarno-Hatta, a major overhaul is in the works. It introduced a third terminal last year as it looks to boost capacity to 62 million passengers per year by 2014, a substantial jump from the 51 million the clogged airport now handles.

It also plans a third runway and fourth terminal that could potentially triple its capacity, measured by aircraft movement, but the plan has been hindered by land acquisition issues that might force authorities to build an entirely new airport elsewhere.

In the meantime, airport users must just do their best.

"Your job as a passenger who is flying out from Jakarta is as complicated as the pilot," said one executive at a European investment bank who asked not to be identified.

"You need to check the weather, the traffic warnings on the radio and other things before you leave your home or the hotel."

(Reuters)
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