19 Oct, 2012
“Boutique” ASEAN Airlines To Regroup, Rebrand for New AEC Era
Two medium-sized ASEAN airlines, Bangkok Airways and Royal Brunei Airlines, are regrouping and restructuring their financial and operational structures in preparation for the era of open skies under the 2015 ASEAN Economic Community (AEC). Bangkok Airways, which positions itself as Asia’s first “boutique airline”, is preparing for a public listing in the first half of 2013 and RBA, as part of a heavy-duty restructuring, is to unveil a rebranding campaign that will also see it assume a “small but stylish” mantle, similar to a boutique operation.
Both plans were unveiled at the Aviation Outlook Asia Summit organised by Terrapinn on the sidelines of the ITB Asia 2012 in Singapore.
In his presentation, Bangkok Airways President Mr Puttipong Prasarttong-Osoth, said the airline will issue its IPO in the first half of 2013. He said the company’s shareholders see transformation into a public entity as being necessary to raise its capital base in order to prepare for near and mid-term growth prospects. He declined to say how much money the airline plans to raise, but identified five reasons for it:
1. Build a new aircraft hangar at Bangkok’s main Suvarnabhumi airport in addition to the current limited space hangar at the Thai capital’s secondary Don Mueang airport. The new hangar will be enough to handle maintenance services for 10-15 years.
2. Deleverage existing debts to improve the balance sheet;
3. Invest in I.T. systems and hardware for operational growth
4. Fund the set-up costs for new stations / destinations and route expansion.
5. Take up additional ownership of the aircraft fleet, most of which is presently leased.
Mr. Puttipong said that as Bangkok Airways gears up for the AEC 2015, it will build on its current business model as a regional feeder airline for the millions of tourists who come to Bangkok from abroad. 90% of Bangkok Airways’ customers fly into Bangkok via international carriers and then transfer to onward points. This business is projected to grow continue to expand with AEC in 2015. With industry forecasts projecting aviation traffic within Southeast Asia region growing from 87 to 629 billion revenue passenger kilometres in 20 years, Bangkok Airways will increase frequency on existing routes, expand its network to new destinations and grow codeshare opportunities using Thailand as a hub to the AEC countries.
He identified three threats stemming from the AEC: higher competition, loss of national identity, and potential loss of aviation workforce. In response, Mr. Puttipong said, the following strategies have been set:
To counter higher competition, Bangkok Airways must focus on its core values and honour its customer pledge as a boutique airline. For example, he said, it provides lounge access to all classes of passengers.
To counter the potential loss of national identity, the airline must continue to market Destination Thailand as its core identity.
To counter the potential loss of workforce, the airline must continue to invest in ensuring the staff have clear career paths and ensure employee engagement through activities and welfare.
He said the airline will launch a daily flight from Bangkok to Vientiane, the Laotian capital, adding to the current daily flight to Luang Prabang. It will also boost frequencies to Yangon, Phuket and Krabi. The overall goal is to be the world’s best regional airline within five years in the Skytrax rankings.
In his presentation, Mr Dermot Mannion, Deputy Chairman, Royal Brunei Airlines, said the rebranding, to be unveiled in early November, will seek to position RBA as a “small but stylish airline located in an interesting and attractive location.” He said the airline is rationalising both its fleet and routes in order to become a more regionally focussed airline that will be relevant both on price and service quality.
Discussing the regional aviation environment, Mr. Mannion noted the growth forecasts for the entire Asian region and the fact that Brunei itself is a rich country with oil and gas resources and one of the world’s highest per capita incomes. At the same time, RBA faces increased regional competition from both legacy and low-cost carriers, such as Indonesian carrier Lion Air which has got 200 aircraft on order over four years and can be expected to “go for everything” in its expansion strategy.
One key aspect of the RBA restructuring is to pull out of the Kangaroo route. All its Australian routes were eliminated in 2011 and replaced with only one service to Melbourne which was relaunched in March 2012. Mr. Mannion, who formerly headed Aer Lingus and worked for Emirates before moving to RBA, said there was no way for RBA to compete against Emirates, Qatar Airways and Etihad on the UK-Australia route. He said the Gulf airlines were growing so strongly on this sector that even Asia Pacific carriers had cut back on their capacity.
Describing it as a process of having “to take one step backward in order to take two steps forward,” he said that as part of the drastic restructuring, the route reduction was accompanied by a voluntary retrenchment of 25% of the staff, “a difficult but necessary move.” Work was also being done to improve airport facilities at Bandar Seri Begawan and enhance the customer focus to ensure that “the competition is beaten on every flight, every day, every time.”
In terms of fleet rationalization, the airline’s entire fleet of 767ER aircraft would be replaced with the next generation Boeing 787-800 Dreamliner aircraft in 2013, making RBA the first carrier in Southeast Asia to operate it. Pending arrival of these aircraft, a fleet of Boeing 777-200ER is being used. A new airport terminal is also coming up in 2014 and a partnership has been forged with SimpliFlying (an aviation strategy firm) to enhance customer engagement via social media. RBA can now be found actively engaging with its fans on facebook, followers on twitter and instagram.
Mr. Mannion said that although the macroeconomic picture for Brunei is very strong, the airline faces the limitation of a small population base of 400,000. Hence, he said, it will focus on strategically important regional routes. RBA will be repositioned in the mid-range “between the premium carriers and best of the rest.”
Finally, he said, Brunei itself is known as an abode of peace, hospitality, tranquility and ecotourism and RBA is working closely with Brunei Tourism to bring more inbound visitors with a focus on the regional market and Islamic religious tourism. The huge potential of China is also well-recognised. Roadshows have been carried out in Shanghai and Hong Kong as well as in Melbourne and next week in Jakarta. It is also seeing the early stages of the religious tourism market from the Middle East. Said Mr. Mannion, “Brunei is a traditional, conservative country which has stood still in a fast-moving world but people are looking for that.”
Read more: http://www.travel-impact-newswire.com/2012/10/two-boutique-asean-airlines-to-regroup-rebrand-for-new-aec-era/#ixzz29uPz3Sj9
