Asia-Europe traffic rises, but Mid-East carriers grab it

Planes from Emirates Airlines (left) and Middle East Airlines are seen on the tarmac at Rafik Hariri international airport in the Lebanese capital, Beirut, on Nov 21, 2015.
Planes from Emirates Airlines (left) and Middle East Airlines are seen on the tarmac at Rafik Hariri international airport in the Lebanese capital, Beirut, on Nov 21, 2015. PHOTO: AFP

Air traffic between Asia and Europe is growing but instead of airlines on both sides benefiting, Middle Eastern carriers are cashing in, said a top European Commission (EC) official.

Passenger traffic between the European Union's 28 member states and Asean's 10 nations has grown by about 5 per cent per annum in the last few years but the number of direct flights has largely stagnated, said the EC's new director-general for mobility and transport, Mr Henrik Hololei.

"The growth that is being generated is going via elsewhere," he told The Straits Times recently during his first official trip to South-east Asia.

"The Middle Eastern carriers are playing their cards very wisely, but it does not mean that European or Asean carriers should not get their fair share of the growth," Mr Hololei said.

This year, Middle Eastern airlines, including Emirates and Qatar Airways, have added 21 per cent more seats on flights to Europe compared with last year.

GETTING A FAIR SHARE

The Middle Eastern carriers are playing their cards very wisely, but it does not mean that European or Asean carriers should not get their fair share of the growth.

MR HENRIK HOLOLEI, EC director-general for mobility and transport

Nine in 10 travellers who fly on these carriers are transit passengers, including those who originate from Asia.

By contrast, Asean carriers, including Singapore Airlines, have increased capacity to Europe by just 1 per cent this year.

With demand for air travel between Europe and Asia expected to increase threefold in the next 20 years, "Asean and EU countries should benefit as much as possible and not just leave it to other countries or other airlines to benefit", Mr Hololei stressed.

This is what a proposed EU-Asean open skies deal aims to do.

If it materialises, the agreement will be the first bloc-to-bloc air deal in aviation history.

The plan is to remove all restrictions, including on the number of flights, that carriers on both sides can operate between the two areas.

This will pave the way for airlines to operate freely and move quickly, based on market conditions, instead of being shackled by government and other regulatory restrictions.

Formal negotiations are expected to start in the second half of next year. Even without an EU-Asean deal, carriers are already forging partnerships, Mr Hololei noted.

"It was with great pleasure that I read about the joint venture created between SIA and German Lufthansa. It's a very positive development between a major European carrier and a very significant Asian carrier. I hope it results in some good revenues and profits for both but most important also for the travelling public...

"Other airlines will be surely watching to see how well this partnership works out," he said.

Singapore Airlines and Lufthansa announced earlier this month a wide-ranging partnership to operate key routes between Europe and Singapore jointly and to significantly expand codeshare ties and deepen commercial cooperation.

The two carriers also intend to coordinate schedules to provide customers with more convenient connections, and to offer joint fare promotions, among other initiatives.

More direct flights between Asia and Europe will benefit travellers but the fares must be attractive too, said a spokesman for Dynasty Travel, Ms Alicia Seah.

"Today, if a traveller books early, say three or four months before departure, the fare difference between direct and indirect flights is not much. It's about $1,400 for a return economy seat," she said.

"But if the booking is done two or three weeks ahead, flights via Dubai, for example, can be 30 per cent to 40 per cent cheaper than flying direct from Singapore. The savings are considerable."

A version of this article appeared in the print edition of The Straits Times on November 30, 2015, with the headline 'Asia-Europe traffic rises, but Mid-East carriers grab it'. Print Edition | Subscribe