Airlines urged to stay innovative
Quality necessary to be competitive in challenging aviation sector
PUTRAJAYA: Airline companies have been urged to stay innovative if they want to remain efficient and competitive in the ever-growing and challenging aviation sector.
Speaking at the World Aviation Economic Forum, politician Tan Sri M. Kayveas said: “For continuous progress for this group, there needs to be complete unity, harmony and efficient work style when you’re facing challenges.”
“The challenges are in terms of finance, positioning and competing with the world market,” he said in his keynote address at the launch of the event yesterday.
Kayveas said the global aviation sector was constantly growing, and with it, heightened challenges.
“With those kind of challenges, the organisation needs to be prepared to be innovative and creative to compete in the world market of aviation, which is expected to grow bigger than what it is today.”
In December, the International Air Transport Association (IATA) had forecast global industry net profit to rise to US$38.4bil (RM150bil) in 2018, an improvement from the US$34.5bil (RM135bil) expected net profit in 2017.
It said strong demand, efficiency and reduced interest payments will help airlines improve net profitability in 2018 despite rising costs.
“The year 2018 is expected to be the fourth consecutive year of sustainable profits with a return on invested capital (9.4%) exceeding the industry’s average cost of capital (7.4%).”
IATA noted that the aviation industry will face longer-term challenges – many of them are in the hands of governments.
“Aviation is the business of freedom and a catalyst for growth and development. To continue to deliver on our full potential, governments need to raise their game – implementing global standards on security, finding a reasonable level of taxation, delivering smarter regulation and building the cost-efficient infrastructure to accommodate growing demand.
“The benefits of aviation are compelling – 2.7 million direct jobs and critical support for 3.5% of global economic activity. And the industry is ready to partner governments to reinforce the foundations for global connectivity that are vital to modern life.”
IATA said airlines in Asia Pacific are forecast to see profits of US$9bil (RM35bil) this year, up from US$8.3bil (RM33bil) last year.
“Passenger market conditions vary across the region. Domestic markets have strengthened in China, India and Japan. New low-cost market entrants in the Asean region are intensifying competition and contributing to keeping profitability low.
“But there has been a pause in competitive pressures from the “super connectors” on long-haul routes as they face various challenges in their home markets.”
The two-day World Aviation Economic Forum, held at the PICC Putrajaya International Convention Centre, will see 32 participating countries including China, the US, South Korea and France.
Meanwhile, in his keynote address, Parti Ikatan Bangsa Malaysia’s Tan Sri Abdul Kadir Sheikh Fadzir highlighted the benefits of doing business in Malaysia.
“Malaysia is in the heart of Asean. It is multicultural and its people speak multiple languages – and is a good place to invest in.”