AirAsia tipped to surmount first major crisis

Yahoo – AFP, Satish Cheney, 11 Jan 2015

AirAsia passenger planes are seen parked on the tarmac of the low-cost carrier

 Kuala Lumpur International Airport 2 (KLIA2), in Sepang, on January 10, 2015

(AFP Photo/Mohd Rasfan)

Until Flight QZ8501 went down everything had gone right during a spectacular 13-year run of success for AirAsia, which unlocked a booming market of budget travellers in the region.

But as long as no serious safety lapses emerge, analysts say the robust and media-savvy business built up by the Malaysia-based group should help overcome its first major reversal.

Passengers stand near an AirAsia

information board at the low-cost carrier

Kuala Lumpur International Airport 2

(KLIA2) in Sepang, on January 10,

2015 (AFP Photo/Mohd Rasfan)

Flight QZ8501 operated by Indonesia AirAsia -- the group's Jakarta-based affiliate -- crashed in the Java Sea on December 28 en route to Singapore from Surabaya with 162 aboard. All are believed dead.

From the start, AirAsia's colourful boss Tony Fernandes publicly took responsibility, visited victims' families, and vowed to find out what happened.

Such actions are critical in restoring trust, experts say, and stand in stark contrast to Malaysia Airlines' fumbling, tight-lipped handling of the still-unsolved disappearance of Flight MH370 last March with 239 aboard.

"This is an excellent case of a crisis being handled well, to show your customers that things are being taken care of in a hands-on manner, and that the executives are not just sipping their coffees in a cosy office," said Daniel Tsang, an aerospace analyst with Aspire Aviation.

"While some passengers may avoid taking (AirAsia) flights in the short-term, AirAsia's low-cost proposition will keep drawing in first-time fliers to the airline."

If investigators uncover safety negligence on the airline's part, however, it could deeply undermine confidence.

The cause is not yet known, but the plane's Indonesian pilot had requested a course change from air traffic controllers shortly before the crash to avoid a storm.

Indonesian officials in turn have raised questions about Indonesia AirAsia, saying it did not have a license to fly the route that day, but Fernandes has rejected the claim.

AirAsia advertisements are seen at the

 low-cost carrier Kuala Lumpur International 

Airport 2 (KLIA2) in Sepang, on January

10, 2015 (AFP Photo/Mohd Rasfan)

'Everyone can fly'

Yet even if any safety lapses are pinned on the carrier, aviation analysts said AirAsia could mitigate the impact with an aggressive and public campaign to address shortcomings.

AirAsia would need to "be upfront about safety lapses, own up to error, lay out ways to avoid future (accidents), and move on", said Terence Fan, an aviation expert at Singapore Management University.

"Unless serious lapses at the airline were found, an airline typically bounces back in a few months in terms of traffic."

Taking to Twitter, Fernandes last week vowed all the facts will come out. "We never hide," he declared.

Shukor Yusof, founder of Malaysia-based aviation research firm Endau Analytics, said he would be surprised if a systemic AirAsia safety problem was found.

"AirAsia does well in cost-cutting but not to the extent of foregoing safety," he said.

Knowing the plane's fate also means AirAsia can bring closure to families, so muting long-term criticism. In contrast, the failure to find MH370 has left many victims' kin alleging a cover-up by Malaysia Airlines and Malaysia's government.

AirAsia Group CEO, Tony Fernandes,

 pictured ahead of a press conference at

 Juanda International Airport in Surabaya,

 on December 29, 2014 (AFP Photo/

Manan Vatsyayana)

A former record industry executive, Fernandes, 50, took over heavily indebted AirAsia in December 2001. He turned it into a roaring success with its rock-bottom fares and a playful image embodied by its baseball cap-wearing boss, who has been called Asia's Richard Branson.

With its corporate motto declaring "Now everyone can fly", it has won over tens of millions of travellers in a burgeoning Asian middle class previously confined to more expensive regional flag carriers, snagging several awards as the world's best budget carrier.

"Certainly AirAsia will recover as it is a very good airline and this tragedy will not impact its growth," said AirlineRatings.com editor Geoffrey Thomas.

That said, AirAsia is struggling to maintain growth rates as it matures, as rivals step up competition. In the first blow to its business, Indonesian authorities have halted AirAsia's Surabaya-Singapore flights.

But analysts note that AirAsia has continually proven itself the region's most nimble performer, and that other airlines have bounced back from tragedy to emerge stronger. These include flag carriers Garuda Indonesia and Korean Airlines.

Asean Open Skies Set to Go Ahead Despite Year of Disasters in 2014

Jakarta Globe, Erwida Maulia, Jan 06, 2015

Asean Open Skies, set to be fully effective by the end of the year, is expected
 to boost connectivity and people's movements in the region, and in turn spur
regional economic growth. (Antara Photo/Widodo S. Jusuf)

Jakarta. The recent crash of Indonesia AirAsia Flight QZ8501 in the Java Sea will not deter Indonesia’s aviation industry from embracing the opportunities offered by the Asean Open Skies policy, a scheme to liberalize the regional aviation market that came into effect on Jan. 1.

Under the new policy, Southeast Asia’s skies will be transformed into a single aviation market, part of the Association of Southeast Asian Nations’ (Asean) Economic Community commitments that have been agreed upon by heads of the 10 members states of bloc.

Asean Open Skies, set to be fully effective by the end of the year, is expected to boost connectivity and people’s movements in the region, and in turn spur regional economic growth.

Three major tragedies afflicting Southeast Asia’s aviation sector last year — the loss of two Malaysia Airlines flights and the AirAsia tragedy — have raised questions as about whether Asean will remain on track for its Open Skies plan.

On Sunday, Indonesian Transportation Ministry spokesman J.A. Bharata said the policy was still on course.

“We’re currently revamping our airlines, evaluating their compliance with existing regulations to further improve passengers’ safety,” Bharata said, adding that the moves were conducted to support Indonesia’s implementation of the policy.

The renewed scrutiny comes in the wake of the crash of Flight QZ8501, which went missing shortly after departing from Juanda International Airport in Surabaya on Dec. 28, en route to Singapore with 162 people on board.

The Transportation Ministry has since declared that the carrier did not have permission to fly that route on a Sunday, although Singapore officials say it was cleared at that end for the flight.

Indonesian officials did not say why Flight QZ8501, a regularly scheduled flight, was allowed to operate without permission. Indonesia’s acting director general for air transportation, Djoko Murjatmodjo, said last week that all airlines operating in the country would be evaluated for any route violations.

Arif Wibowo, the chairman of the Indonesia National Air Carriers Association (INACA), said on Monday that the AirAsia crash and subsequent scrutiny of airlines’ compliance with safety regulations would not deter the local aviation industry from taking up the opportunities offered by the Open Skies policy.

“Asean Open Skies is a political will of the government. We’ll face it head-on; we’re used to free competition after all,” said Arif, also the newly appointed chief executive officer of national flag carrier Garuda Indonesia.

He added some local airlines, including Garuda’s low-cost unit, Citilink, had been applying or preparing to apply for permits to operate more flights bound for other Southeast Asian countries.

“They’re conducting procedures for that; some of them have applied for flight permits,” Arif told the Jakarta Globe.

He added the local industry’s major concern surrounding the implementation of Asean Open Skies remained competitiveness issues.

“Are local airlines competing on a level playing field [with other airlines in the region]?” Arif said, echoing the concern expressed by executives of several Indonesian airlines just last month.

They said they were not ready to face Asean Open Skies, citing tax policies, airport inefficiencies and high aviation fuel costs in Indonesia that make local airlines less competitive than their Southeast Asian counterparts — especially those from Singapore, Malaysia and Thailand.

Aviation expert Arista Atmadjati of Yogyakarta’s Gadjah Mada University said on Monday that local airlines would have to brace for the new policy because it was part of the government’s commitment to supporting Asean integration under the Asean Economic Community scheme.

The liberalized market will boost flight frequency in the region, but this should not be a source of concern, Arista said.

He cited as an example the busy route near Indonesia’s Belitung Island, where Flight QZ8501 had its last contact with air traffic control.

When the incident occurred, six other planes were flying in the area, and two others were approaching; but even so, the high-traffic air space was not yet overcapacity, according to Indonesia’s state navigation operator, AirNav.

“According to the head of AirNav [...] that air space can accommodate up to 14 flights,” said Arista, also a marketing analyst with Garuda.

The Transportation Ministry said in September that five cities — Jakarta, Medan, Surabaya, Denpasar and Makassar — were ready to fully open their skies in 2015 to embrace the new Asean policy.

Hemi Pramuraharjo, a spokesman with the ministry’s Directorate General of Aviation, said last month that the government planned to open more takeoff and landing slots to foreign airlines at airports in those five cities.

He noted that currently 72 percent of flight slots in the country’s main gateway, Soekarno-Hatta International Airport outside Jakarta, were filled by domestic flights.

“The ideal figure should be 35 percent domestic, 65 percent,” Hemi said.

“We will be pushing for that, not just for Soekarno-Hatta, but for all five airports that will be opened up during the Open Skies policy,” he added. “We want to have a balanced proportion. If foreign airlines can’t enter Indonesia, then the impact will be that our airlines can’t go to their countries. It’s an issue of reciprocity.”

Arista said giving more slots to foreign airlines from around the region should not be a problem as long as the requests were properly examined before being approved by the Transportation Ministry.

“Although they all compete to enter Indonesia, given the size of Indonesia’s aviation market, which is the largest in the region, the granting of slots should be limited,” he said.

“It should be managed and approved by the air transport directorate general, taking into account the capacity of the airports in question and so on.”

The capacity of the five airports will determine whether the implementation of the Open Skies policy can run smoothly, especially because extra slots — according to the ministry’s plans — will mainly be given outside airports’ regular operating hours.

“Do those airports have enough human resources for extended operating hours? Do they have enough supporting facilities?” Arista said.

He added, though, that he was confident that by July or August, the five airports would be ready to fully accommodate Asean Open Skies, citing ongoing expansions of some of the airports that are expected to complete by that time.

Further Coverage

Editorial: Airlines Must Adapt to Liberalization

Wreckage of missing AirAsia flight likely to be found soon, says expert

Asia's vastness, its many overwater flights and less than 100 percent radar coverage make aviation there difficult, Heinrich Grossbongardt tells DW. He is certain wreckage from AirAsia flight QZ8501 will be found soon.

Deutsche Welle, 28 Dec 2014

DW: How likely is it that bad weather alone can cause a passenger plane to go off the radar?

Heinrich Grossbongardt: Weather can be a contributing factor. In all weather-related accidents we have seen in the last years, weather was one factor, but there have always been many others as well.

What are some of those other factors that may have played a role in this case?

It's pure speculation at the moment, but it can be a combination of weather plus some technical issues; or weather plus some - to put it carefully - wrong decisions made by the crew. Right now anything is possible.

In the next few hours, will see communication between the aircraft and air traffic control being released, we will certainly see radar data being released and that might give a first indication as to what actually happened.

Considering flight MH370, which went missing last March in a similar area, one question that arises is are regulations different in Asia to the rest of the world? Is it a particularly difficult spot for aviation?

AirAsia flight QZ8501 went off air traffic
control radar at around 5:30 a.m. on
Sunday, December 28, 2014

In Asia, we certainly have much wider areas where air traffic control is limited by the factor that there are overwater flights. If an aircraft is losing altitude, for example, at a certain point, it will become invisible for the air traffic control, simply for physical reasons - it disappears behind the horizon.

In the Western world - in Europe, or in the US - we have next to 100 percent radar coverage all over the region. So you won't find any spots where an aircraft is not visible to air traffic control radar. That is different in Asia, just because of the vastness of the region and the relatively long overwater flights, even on short-distance flights.

Weren't there any lesions that were learned from flight MH370, especially in that region, that may have been applied to aviation?

The thing which has been learned by Malaysia Airlines is that everybody is working on implementing a solution which allows aircraft tracking with the help of satellites. But in the aviation world, the Malaysia Airlines incident just happened yesterday, so to speak. Because finding a solution and implementing a solution and making sure it really works is a matter of at least two or three years. And we are just a couple of months behind Malaysian Airlines.

AirAsia flight QZ8501 went off the radar at around 2220 UTC on Saturday. Is there any likelihood any survivors will be found?

Unfortunately, when an aircraft goes missing over water, the likelihood that someone survives the crash is only very slim.

Do you think the position of wreckage of this aircraft will be located more easily than MH370?

Aviation expert Heinrich Grossbongardt

Definitely. I think that is something which is completely different. This is, for an example an A320, which is a short-range aircraft. It doesn't have the vast range of the A330 of thousands and thousands of kilometers. This was only a short-haul flight so the aircraft would have limited amount of fuel.

And in the case of MH370, what made it so difficult and which was unprecedented, is that someone made the aircraft go off the radar by switching off certain systems. At the moment, we don't have any indication that this is a similar situation.

The weather was bad, this might be a contributing factor and I am pretty sure that in the next few days, we will find at least bits of the wreckage.

Aviation expert Heinrich Grossbongardt is the managing director of Expairtise Communications in Hamburg, Germany.

Indonesian Air Carriers Nose Up, Engines Idle, in Effort to Stall Asean Open Sky

Jakarta Globe, Muhamad Al Azhari, Dec 22, 2014

Residents look at an airplane near Yogyakarta's Adisucipto International
Airport, in this Aug. 3, 2014, file photo. (JG Photo/Boy T. Harjanto)

Jakarta. Indonesia’s aviation industry is not ready to face the Asean Economic Community’s plans for a single market by the end of 2015 unless the government helps reduce airlines’ costs by simplifying tax codes, curbing airport inefficiencies and reducing the cost of jet fuel, executives from airlines operating in the country said.

Under the AEC framework, the Association of Southeast Asian Nations (Asean) aims to create a single aviation market by end of 2015 through an “open sky policy” that would see conciliation of its 10 member states’ varying trade regulations.

Asean’s member states of Indonesia, Malaysia, the Philippines, Thailand, Vietnam, Singapore, Brunei, Cambodia, Laos and Myanmar are collectively home to more 600 million people.

Domestic carriers have resisted fully joining a truly unified regional aviation market by actively lobbying the government to protect or mitigate perceived threats posed by competitors in Singapore, Malaysia and Thailand.

While Indonesia could potentially offer foreign carriers plenty of access points, only five airports have been opened to the open sky policy that the bloc’s members states agreed to schedule for takeoff by the end of 2015.

Those airports are Banten’s Soekarno-Hatta International Airport and airports in Surabaya, Medan, Makassar and Bali.

Airlines have taken recently to remind the government that they are not ready for such liberalization.

Sunu Widyatmoko, the president director of Indonesia AirAsia, the local affiliate of Malaysia-based AirAsia Group, said airlines operating in Indonesia, Southeast Asia’s largest economy, feel over-burdened by many inefficiencies that have weakened their competitiveness and ability to offer cheaper ticket prices compared to regional rivals, especially those from Singapore.

“We are not operating on a level playing field,” said Suno, who has been the chief of IAA since July 1.

“From the cost side, we lose. We are being burdened many factors, including taxes, airport inefficiencies and most importantly higher fuel prices,” he said.

Sunu’s remarks came during a recent informal meeting with the Jakarta Globe at which he was accompanied by Dharmadi, who sits on IAA’s board of commissioners.

Dharmadi, who served as IAA’s president director from Dec. 2007 until handing over duties to Suno in July, highlighted the problem of dangerous ambiguities in Indonesia’s tax system.

He said tax officers in Indonesia often lack understanding about the nature of the aviation business.

Dharmadi pointed to a Ministry of Finance regulation that states airlines can enjoy zero import duties and zero value added tax for imported spare parts.

In practice, however, to secure this benefit, airlines must submit their request to the government beforehand. It then takes the tax office five working days to approve the request.

“Can you imagine if we are forced to do that? We will have our planes not flying for five days. That will hurt our business,” said Dharmadi, who prior to joining AirAsia, had more than 32 years of experience at national flag carrier Garuda Indonesia.

Another issue is that Indonesia still charges airlines an operational lease tax — an excise no longer charged elsewhere in the world.

Dharmadi said the Indonesian National Air Carriers Association (INACA) met with the finance minister and coordinating minister for the economy to discuss these issues. According to Dharmadi, the two ministers promised a quick solution.

“If we can resolve this, it can reduce some burdens,” he said. Others, however, still remain.

According to Dharmadi, the cost of jet fuel in Indonesia is 12 percent higher than that paid by elsewhere by regional rivals such as Singapore.

Airlines operating in the country thus have no other choices but to “squeeze” Pertamina, which holds a monopoly on the country’s jet fuel distribution, on its terms, service conditions, and high fuel prices. “That is not healthy,” said Dharmadi.

Some inefficiencies that may contribute to higher jet fuel prices, including refinery capacity limitations; the cross subsidy system that covers high distribution costs in remote areas and fees the energy company has to pay to regulators, he said.

Dharmadi also called on airport operators — principally the domestically dominant state firms Angkasa Pura I and II — to invite the airline industry’s input whenever they plan to expand some airports.

Indonesia’s airports suffer from capacity problems, both in terms of passenger terminal throughput and aircraft slots.

Indonesia’s busiest airport, Soekarno-Hatta, now handles 62 million passengers per year — almost three times its original design capacity.

The airport is currently expanding its third terminal to serve up to 20 million more passengers annually.

Still, Dharmadi criticized the ongoing development for the third terminal.

“You can build a lavish airport with big terminals, but if you don’t add runways, it will not boost traffic,” he said.

Furthermore, he called on regulators and airport operators to not charge high airport taxes for low-cost carriers, as it deters passengers from flying with them.

Meanwhile, government officials are proceeding to with plans for Indonesia to accept the AEC’s Asean Open Sky.

Hemi Pramuraharjo, a spokesperson with the aviation directorate general at the transport ministry, said the government plans to open more takeoff and landing slots to foreign airlines as part of the country’s commitment to implement the open sky policy under the AEC framework.

“We want to have balanced proportions. If foreign airlines cannot enter Indonesia, then the impact will be that our airlines cannot come to their countries. There is reciprocity issue,” Hemi said on Dec. 18.

He said currently 72 percent of flight slots in the Soekarno-Hatta are filled by domestic flights and the remainder for international flights. Indonesia wants to boost international flight slots to 30 percent and reduce the domestic flight slots to 70 percent, he added.

“The ideal figure should be 35 percent, 65 percent for international flights and domestic [flights, respectively]. We will be pushing there, not only for Soekarno-Hatta, but also for five airports that will be open during the Open Sky,” Hemi said.

However, an INACA executive was furious to hear about the plan.

Bayu Sutanto, who heads the chartered flights division at INACA said the plan to add slots for international flights is a “careless” plan, considering the nation’s airport infrastructure is not supportive.

He also questioned the ability of the government to negotiate with other countries to open their markets.

Bayu, an executive from Trans Nusa, a carrier that offers specialized flight services in Indonesia’s eastern areas, such as East and West Nusa Tenggara, Bali and Makassar, said the transport ministry should involve the local industry whenever they plan to take any major decision.

“We are the ones who know when Garuda Indonesia is blocked from opening flights in other countries, but government turns a blind eye,” he said.

Bayu pointed to Malaysia as an example of a country that, he says, always consults with the aviation industry before opening their airports up to foreign players.

However, former Garuda chief Emirsyah Satar rebutted the accusation that the local airline industry is seeking the government’s protection from the open sky policy.

“We want to have an equal, level playing field with foreign carriers. We just want to be competitive, no more,” Emirsyah said.

With additional reporting from Investor Daily

Uber-Heated Battle as Mobile Apps Rattle Southeast Asia’s Taxis

Jakarta Globe, Bhavan Jaipragas, Oct 13, 2014

A smartphone displaying the Uber app of the timing and availability of taxis within
the area at Raffles place financial district in Singapore. (AFP Photo/Roslan Rahman)

Singapore. Southeast Asia’s notorious taxi market is undergoing a shakeout as Uber and homegrown mobile booking applications gain popularity in a region that has long endured inefficient cartels and price-gouging drivers.

San Francisco-based Uber, which allows customers to hail taxis or private vehicles via smartphones and pay with a credit card, is expanding rapidly in the region while fending off legal and regulatory challenges in various markets across the world.

Founded in 2009 and backed by Google Ventures, the investment arm of the Internet giant, Uber now operates in Malaysia, Indonesia, Thailand, the Philippines and Vietnam after first entering Southeast Asia in Singapore last year.

The firm, whose valuation was placed at $18.2 billion after an investment drive in June, employs smartphone and satellite technology to match taxi supply and demand.

A list of the world’s 10 worst cities to hail a taxi compiled by industry website tourism-review.com in March included Jakarta, Kuala Lumpur, Manila, Phnom Penh and Bangkok.

In Singapore, locals grumbled in pre-Uber days about vanishing taxis during peak periods, with cabbies refusing to pick up roadside passengers while waiting to earn extra fees from reservations made via antiquated phone-in booking systems.

In some cities, it was not uncommon for cabbies to demand exorbitant fares before taking passengers at peak periods, during heavy rain and floods, or at times of day when taxis are scarce.

Regulatory tangles

Uber executives say they welcome competition and are more than ready to go head to head with the likes of Malaysia-based GrabTaxi, Indonesia’s Blue Bird, and Easy Taxi, a regional player backed by German startup incubator Rocket Internet.

“As long as people are giving people options, that’s a good thing,” Michael Brown, Uber’s Southeast Asia general manager, told AFP in an interview.

“What makes Uber bristle is when special interests try to protect monopolies and keep new entrants and new competitors out,” said Brown, who is based in Singapore.

Despite threats to have it banned in Jakarta and Kuala Lumpur, Uber continues to operate there.

The firm is also facing legal threats in San Francisco and other major cities including New York and Frankfurt.

It is has also run into opposition in Seoul, where officials believe it should follow South Korean laws regulating taxi or rental car companies.

“Uber insists that it is acting as an online broker connecting drivers and customers rather than acting as a rental car company,” a Seoul city official told AFP.

“We do not agree with their characterization of their business.”

Authorities in Kuala Lumpur and Jakarta also say its car-hailing service makes use of private vehicles that do not comply with strict regulations that traditional taxi operators come under.

Uber has vehemently denied the accusations.

The firm does not own its own limousine or taxi fleet. Instead, its app allows customers to summon cars in its network, usually from a private car company.

It takes a cut of the total fare from the driver, which is paid electronically. Other taxi app players allow their members to take cash.

“Up to this day our principle remains that this taxi service is illegal,” Muhammad Akbar, head of Jakarta’s transport authority, told AFP.

In Malaysia, authorities say they began a crackdown on private cars using Uber on Oct. 1, fining drivers up to 10,000 ringgit ($3,070).

Giving people options

Commuters and market analysts say unyielding bureaucrats are not seeing how taxi apps like Uber have the potential to significantly improve the standard of living of city dwellers.

Jakarta resident Winda Rezita said the arrival of Uber in the Indonesian capital was a relief.

“When I am too lazy to drive in Jakarta’s heavy traffic jams or when there’s a long taxi queue at the mall, I just switch on the app,” the e-commerce business founder told AFP. “It’s so much better than waiting outside a building or standing in a long queue.”

Daphne Kasriel-Alexander, a consumer trends consultant at research firm Euromonitor International, said “inadequate and overburdened public transport systems” coupled with the emergence of more middle-class consumers have boosted the usage of taxi-hailing apps in Southeast Asia.

Expansion plans

GrabTaxi, which first launched in Malaysia in 2012 and has since expanded to Singapore, the Philippines, Indonesia, Vietnam and Thailand, is aiming for further growth.

Unlike Uber, the firm, backed by Singapore state investment firm Temasek Holdings, has so far avoided regulatory difficulties.

Its app mainly matches customers with registered taxis. A recently launched function called GrabCar allows for booking of private vehicles just like Uber, but so far it has not been flagged by authorities.

“We’re the leading taxi booking app in Southeast Asia including Singapore, and we are well-positioned to extend our lead,” Lim Kell Jay, GrabTaxi’s general manager in Singapore, told AFP.

The firm says it gets one taxi booking every two seconds in the whole region, with more than 300,000 people using it at least once a month.

Taxi drivers say they hope the intense rivalry between the apps will continue.

A Singaporean taxi driver who only wanted to be known as Tan said his revenue has increased by 20 to 30 percent since he signed up with UberTaxi last month.

The service connects Uber users to registered taxis, just like rival GrabTaxi.

“With the apps like Uber, it’s like a win-win. You (passengers) wait around less, and we drivers don’t have to roam around hunting for passengers, saving time and petrol,” he told AFP.

Agence France Presse

Related Article:

Four Uberpop taxi drivers arrested, face fines of up to €4,200

Thailand's ruling junta approves China rail links worth $23bn

Transport project further consolidates China's power in the region and will be finished by by 2021

The Guardian, Kate Hodal, Friday 1 August 2014

Thai army chief General Prayuth Chan-ocha unveiled plans connecting the
 country's northern border with the south-east. Photograph: Athit
Perawongmetha/Reuters

Thailand's ruling junta has approved a $23 billion (£13.6bn) transport project that will see two high-speed railways link up directly with China by 2021, in a move seen as a further consolidation of Chinese power in the region.

The National Council for Peace and Order (NCPO), headed by Gen Prayuth Chan-ocha - who took control of Thailand in a bloodless military coup in May - unveiled plans this week connecting the northern border town of Nong Khai with Map Ta Phut, located south-east of Bangkok. Chaing Khong, just south of the Laos capital Vientiane, will also be connected to Ban Phachi, in the central Ayutthaya regions.

The railway lines will link up directly to Kunming, in China's southern Yunnan province, in what analysts have termed Chinese "high-speed railway diplomacy".

China is looking to build a 3,000km (1,860m) high-speed line from Kunming all the way down to Singapore, passing through Laos, Thailand and Malaysia — a project that would increase China's GDP and those of the involved nations by $375b, a former Chinese railway chairman told the China Daily.

According to China Railway Corp, it appears the Kunming-Singapore line will be constructed in four stages, from Kunming to Vientiane, Vientiane to Bangkok, Bangkok to Kuala Lumpur, and Kuala Lumpur to Singapore. Construction of the Thai lines is planned to begin next year as part of the new eight-year 741.4 billion baht ($23.3bn) infrastructure development project connecting Bangkok and other key cities with airports, seaports, border areas and cargo depots, the Bangkok Post reported, with some 106 new trains added to the existing fleet. Six dual-track railway lines will also be constructed under the same scheme.

The two routes comprise nearly 1,400km in total but unlike many other high-speed trains, which generally run at a speed of 200 km per hour, will only be able to run at 160 km per hour until further investment would allow a higher-speed system.

Map of the planned route

Chinese officials involved in the project have described the deal as a major scoop for the Chinese government, which had earlier struck a deal with former prime minister Yingluck Shinawatra — only to see the project initially rejected by the junta when it came to power.

Now the military government has approved the project, "there will be huge room for cooperation [between China and Thailand]," Yang Yong of the China Railway Corp told China Daily, adding that Chinese engineers had been involved in feasibility research for the high-speed lines, and Chinese companies were directly helping to modernise Thailand's railway system.

The effect of high-speed rail is likely to change South-east Asia and the way it does business for good, says Geoff Wade of the College of Asia and the Pacific at the Australian National University.

"When the people of the mainland countries soon find, through the convenience of [high-speed railways], that Kunming is their 'closest neighbour' but a few hours away, the Yunnan capital will gradually emerge as the hub of the Greater Mekong Region and will eventually become, in effect, the capital of mainland Southeast Asia," Wade wrote on the Australian Strategic Policy Institute Blog.

Related Articles:

'Made in China' high speed trains going global

China joins plans to build 'Panama Canal on land'
China's railway diplomacy steams ahead in West Africa

China mulls constructing high speed railway to the US

Ford Bullish on Indonesia’s Car Market

Jakarta Globe, Muhamad Al Azhari,  January 06, 2012

Senior executives at Ford Motor Company have said
 Indonesia could host a production facility for the US
automaker in the near future as the country shows
potential  to overtake Thailand as the biggest car market
in Southeast Asia. (AFP Photo/File) 

     

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Belligerent companies like RIM BlackBerry can take a leaf from Ford Motor and General Motors press releases and/or their corporate/commercial commitment.

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New Delhi. Senior executives at Ford Motor Company have said Indonesia could host a production facility for the US automaker in the near future as the country shows potential to overtake Thailand as the biggest car market in Southeast Asia.

Thailand is currently Ford’s primary production hub in Southeast Asia, producing 425,000 units annually that serve demand in the region.

“We think Indonesia will be the largest market in Asean. I cannot say exactly when. Thailand is a larger market today, but we believe Indonesia will pass Thailand eventually,” Joe Hinrichs, Ford’s president of the Asia Pacific and Africa, said at a dinner with journalists in New Delhi on Wednesday.

“We believed Indonesia’s growth potential is significant, and I am so excited about Ford’s presence there.”

The reporter was in New Delhi at the invitation of Ford, which paid for the trip.

Thailand was the largest car market in Southeast Asia in 2010, with 857,00 units sold, while Indonesia came second with 764,000 units sold.

Bullish Indonesian automotive executives in December estimated that the nation was on track to sell about 870,000 units in 2011.

Sudirman Maman Rusdi, the chairman of Association of Indonesian Automotive Industries (Gaikindo), has projected that Indonesia could sell 1 million units by 2013.

Analysts say consumer-related sectors, including automotive, will see stronger demand as rising per capita incomes and a low-interest environment spur consumption.

Alan Mulally, president and chief executive of Ford, echoed Hinrichs. “Over time, we’ll have our operation there, too, because the market is great,” he said.

He also did not mention a specific timeframe for the siting of an Indonesian production facility.

Ford introduced a new compact sport utility vehicle, called the Ford EcoSport, at the Auto Expo 2012 in New Delhi. The company did not indicate when the product would enter the Southeast Asian market, but it said it would be the third out of eight products the company aims to introduce by mid-decade.

Ford does not manufacture in Indonesia. Rival carmaker General Motors announced last year that it would invest $150 million to reactivate its assembly plant in Bekasi.

Although a small player in the Indonesian car market compared with Japanese giants such as Toyota and Mitsubishi, Ford has seen strong growth in its car sales. In the first 10 months of 2011, it sold 13,819 units, a 152 percent rise from the same period in the previous year.

U.S, Indonesia Agree on F-16 Transfer

U.S. Department of Defense, by Karen Parrish, American Forces Press Service

WASHINGTON, Nov. 18, 2011 – The U.S. and Indonesian presidents issued a joint statement today from Bali, Indonesia, reaffirming their deepening engagement and announcing the planned transfer and upgrade of 24 Excess Defense Article F-16s to the Indonesian air force.

President Barack Obama is in Indonesia participating in the East Asia Summit. The summit has occurred annually since 2005, following the annual Association of Southeast Asian Nations leaders’ meeting. The United States and Russia participated in the summit for the first time this year.

Obama’s joint statement with Indonesian President Susilo Bambang Yudhoyono today noted the two leaders affirm the summit is the region’s premier forum for leaders to discuss strategic political and security issues.

According to a White House fact sheet, Indonesia’s addition of 24 F-16s will allow that nation’s government to significantly bolster air defense capacity without compromising the defense budget and other national priorities.

The fact sheet notes that when the regeneration is complete, the aircraft will be updated with advanced modular mission computers, improved radar and avionics, and the capability to carry and field more advanced weaponry and sensors. At least 30 Indonesian pilots will receive F-16 training in the United States, and mobile training teams from the United States will train Indonesian aircraft maintainers.

According to the fact sheet, the Defense Department is currently working with the Indonesian Ministry of Defense to develop a letter of offer and acceptance for the 24 aircraft while awaiting completion of the final required congressional notification. The notification is expected to be complete and the offer and acceptance letter ready to be signed in early 2012.

The U.S. government is working to begin delivery of aircraft by July 2014, as requested by the government of Indonesia.

The new agreement represents the largest transfer of defense articles in the history of the U.S.-Indonesia bilateral relationship, the fact sheet said.

The joint statement also reflected discussion between the two countries on issues including human rights, clean energy, education, climate change and environmental projects.

Related Article:

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Joint Statement

Indonesia to buy 24 refurbished US F-16 fighters

Business class filling up in Asian airlines

Reuters, by Laura MacInnis, Fri Oct 16, 2009 12:59pm EDT

GENEVA (Reuters) - Asian airlines are starting to sell more premium as well as economy seats, outperforming other regions where economic fears continue to weigh on travel, the International Air Transport Association said on Thursday.

In its latest industry snapshot, IATA said that increasing numbers of passengers were taking long-haul flights within Asia alongside the export-driven economic rebound that has put China and other countries on a steadier footing.

"The strongest rise in economic and business activity has been seen in the Asia-Pacific regions, where private sector balance sheets are less encumbered with debt and bad assets," it said, describing full cabins in the Far East.

However, the Geneva-based group cautioned that short-haul European business travel "remains extremely weak" and North Atlantic flights are just starting to show improvement. "The turnaround in economy travel has been driven by consumer confidence in major economies, which has been rising since hitting a low in February," it said, while warning that the breakaway Asian results reflect "the uneven nature of the current economic upturn."

IATA Director-General Giovanni Bisignani said earlier this week in New York that global airlines would have to wait until the middle of 2010 for sustained improvement in business class demand, which powers profits in the sector.

International trade flowing from and to developed economies must pick up "to warrant a substantial improvement in premium travel," Thursday's Premium Traffic Monitor said.

"The upturn in premium travel numbers still appears fragile, given the still modest rise in international trade and other cross-border business activity," it said.

"Given the volatile month to month past pattern in premium traffic and the relatively weak upturn in world trade, some fall back in premium travel in September would not be unexpected."

In economy class, which makes up 90 percent of traffic but a lesser share of revenues, around 70 percent, IATA said that "a further rise in consumer confidence will be necessary to generate positive growth."

IATA, whose 230 members include British Airways (BAY.L), Cathay Pacific (0293.HK), United Airlines (UAUA.O) and Emirates EMIRA.UL, has said the global airline industry will lose $11 billion in 2009 as a result of the recession.

"Premium revenues are now improving but, at an estimated 30 percent down year-on-year in August, there is an awful long way to go before positive growth resumes," it said on Thursday.

(Editing by Stephanie Nebehay and Rupert Winchester)

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