opinion

Center of Asia Pacific Aviation Low Cost Carrier in North Asia Summit Highlights

July 3, 2019

LCCs has been making headlines  over the past 20 years as they disrupted market after market. And ever since, full service airlines have been learning from the often revolutionary methodology applied by the LCC model, in such areas as ancillary revenue as well as operational efficiencies and cost reduction. Equally, as LCCs proliferated and entered new markets, many sought to diversify, creating systems that mimicked their older peers.      CAPA – Centre of Asia Pacific for Aviation looked closely at the industry in North Asia at its CAPA LCCs in North Asia Summit, which had more than ten hours of agenda content. Here’s some insights and observations from delegates during the event at the Radisson Blu Cebu, in the heart of Cebu City. Route development crucial for tourism in the Philippines      Philippine Department of Tourism Undersecretary Benito Bengzon Jr, speaking on behalf of Secretary Bernadette Romulo-Puyat, said the whole aviation industry in the Philippines is working together to pave the way for enhanced connectivity and a seamless experience for passengers. Mr Bengzon noted that route development is essential for the development of tourism for the Philippines, given its archipelago geography. The Philippines has seen arrivals growth of 10.2% p/a for the last three years. According to Mr Bengzon this is faster than international growth to the rest of Southeast Asia, which has averaged 6.3% for the period. The Philippines has a “build, build, build programme” when it comes to airport infrastructure, he added. Philippine CAA believes country is 20 years behind in airport infrastructure      Civil Aviation Authority of the Philippines (CAA) Director General Captain Jim C Sydiongco said the Philippines is “20 years behind in airport infrastructure” and there is a need to enhance connectivity and mobility throughout the country. We are ushering in a “new Philippines” with “affordable airport service” and are entering a “new age” of airport infrastructure and service levels, he said. Excess capacity is a concern in the Asia Pacific region as air transport risks becoming ‘collateral damage’ to global uncertainty CAPA – Centre for Aviation chairman emeritus Peter Harbison said excess capacity is a concern in Asia Pacific. Mr Harbison noted that in a high growth market like Asia it is very difficult to know what the market is going to be like in three or four years. Regional carriers “need to be thinking ahead” he stated. Mr Harbison added that the industry outlook is “uncertain”, stating: “All of us are part of the collateral damage that is being done to the global economy due to the outcome of uncertainty and instability”. This is “gradually and incrementally” becoming a bigger and bigger issue for the airline industry. Air Black Box: Price the key driver of increasing aircraft seat densities      Air Black Box company founder Timothy O’Neil-Dunne said “price” is the key factor that is pushing the increasing seat densities onboard aircraft, and that there will be more pushback on this in markets like the US rather than in Asia. This is due to there being certain expectations already built into the market. Aviation in Asia is in the phase of the “emancipation of the traveller” Mr O’Neil-Dunne said, noting that the market is price sensitive, while US and European airline passengers are used to the standards that were previously offered by full service carriers and have different expectations.      Collins Aerospace: Airlines need to bring in expertise from other industries to harness their data      Collins Aerospace sales director APAC Stephen Robinson said more and more airlines are seeing a need to bring in IT staff from other industries, in order to “harness their data and understand” what the data benefits are. He said airlines are in a “moment of change” concerning the generation of information. Mr Robinson noted that given aircraft renewal timelines, some airlines are stuck with legacy aircraft that are not set up to produce large volumes of operational data, while their newer aircraft are generating very large volumes of information. According to Mr Robinson, airline in the situation have to consider whether to retrofit older aircraft with new digital technologies, which will allow them to pull more useful information from more of their fleet. Kiwi.com: A lot of data in the airline industry is still ‘static’      Kiwi.com head of airline partnerships Marco Van Ieperen said the company sees a lot of data that is “static” in the airline industry. He highlighted the example of airport connecting times, noting Kiwi.com has over 60 data points when calculating minimum connecting times, whereas the industry usually just has a single average time it defaults to. SITA: Airline data is ‘crude oil’ that needs refinement to become useful      SITA vice president – North Asia, Australia, Pacific Islands & ASEAN Growth Markets Sanjeev Kumar said while airlines collect a lot of data, this is not being “harnessed to its full potential”. Mr Kumar said he believes that if data is the “new oil”, for airlines it is still “crude oil” and needs to be refined before it is useful. In addition, the available technology needs to be leveraged properly to produce benefits for passenger personalisation and revenue benefits. LCCs have capability to ‘not only survive but potentially thrive’ in a downturn, but sector remains volatile      Cebu Pacific Air chief executive adviser Mike Szucs said LCCs have the capability to “not only survive but potentially thrive at the expense of others if there is a downturn”. He noted there is “uncertainty out there” with the economic sector and the aviation sector has “certainly been volatile in line with any uncertainty out there in the world”. He described Cebu Pacific as  a “complex” LCC, with a mixed fleet and mixed operational models. Alongside its point to point short haul operations with narrowbody aircraft, the carrier also operates regional services with turboprops and long haul flights with high density widebody aircraft. Peach Aviation will ‘grab the opportunity’ presented with the A321LR      Peach Aviation executive advisor Patrick Murphy said the carrier will “grab the opportunity” with the A321LR, which will arrive at Peach in 2021. Mr Murphy said the A321LR is a “good airplane”, but the “jury is still out” on the A321XLR and the carrier is “not interested in operating low cost long haul”. He said Peach is “growing nicely”, with nearly six million passenger p/a in 2018. Tourism in Japan is a key government policy and there are still “massive growth opportunities”. Mr Murphy noted the Japanese government is encouraging development particularly in regional areas, not just Tokyo. He added that he “want[s] to do with Peach in Asia” what Ryanair has achieved in Europe. Cebu Pacific Air: A321XLR will be a great addition and will put new markets on the agenda      Cebu Pacific Air chief executive adviser Mike Szucs said the A321XLR coming in 2024 will be a “great addition to the fleet”. Mr Szucs said the addition of the aircraft to the carrier’s fleet will “put new markets on the agenda”, including India. He also stated the A321XLRs will not operate out of Manila Ninoy Aquino International Airport, but instead will be based in Davao and Cebu allowing direct international services. Philippines AirAsia: CAB has encouraged airlines to fly outside of Manila      Philippines AirAsia head – government affairs and policy Desiree Bandal said the Civil Aeronautics Board (CAB) has encouraged airlines to fly not just to Manila but to other destinations in the Philippines. She said this encourages growth outside of Manila, which promotes regional development in the form of projects such as hotels. She highlighted Philippines Air Asia “believes in the point to point model”, and we “now fly international destinations from many secondary destinations” and believes in launching more flights from secondary airports. T’way Air: Competition is ‘super intensified right now’      T’way Air senior vice president Hyung Yi Kim said competition in the Asia Pacific is becoming “super intensified right now” with restrictions in slot allocations and a large amount of capacity coming into the market. Spring Airlines: Chinese LCC growth constrained by lack of key resources, primarily slots      Spring Airlines president Zhijie Wang reported LCC penetration is about 10% in the Chinese domestic market and about 14% of international capacity. Mr Wang said he does not think this is going to grow, due to a “lack of key resources”, primarily slots. He explained that Chinese LCCs cannot secure the slots they to expand due to limited airport capacity and pressure from the ‘Big Three’ Chinese mainline carriers. He described the ‘Big Three’ and high speed rail as the biggest competitors to domestic LCCs. Mr Wang said there has been some air travel growth between major cities but “the price is low” due to rail competition. He also noted it is “very hard to change minds” concerning the public perception of LCCs and low cost travel in China. Eastar Jet plans medium haul network expansion and 60 aircraft in fleet out to 2025      Eastar Jet chief executive officer and president Jong Gu Choi said the carrier plans to introduce new medium haul routes as it expands its fleet. Eastar Jet plans to grow its fleet from 23 aircraft in 2019 to 60 by 2025 and expand its route network to 48 destinations over the same period. Cebgo: Philippines still has a long way to go in terms of air travel penetration      Cebgo president and CEO Alexander Lao said the number of air trips per capita in the Phillipines has risen from about 0.2 to 0.5 per person p/a. Airlines have been a beneficiary of strong domestic tourism growth, due to its nature as an archipelago according to Mr Lao. We still have a “long, long way to go” compared to other states such as Malaysia or Hong Kong he said. He described ASEAN open skies is a “relatively slow burn”, and “small little steps have been taken” although the process is a very lengthy one. Mr Lao said he thinks “we are very far away” from ASEAN open skies, but noted that progress has been made.

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BSP's Guinigundo bids goodbye to the public service

July 1, 2019

41 years after he joined government, Bangko Sentral ng Pilipinas Deputy Governor Diwa Guinigundo bows out of the public  service tomorrow (July 2), having reached mandatory retirement age.       His retirement comes a day short of BSP’s own 26th anniversary.       The “passionate presence” of DG Diwa, as he is fondly referred to at the BSP, will sadly be missed.       Having worked with him during my past term as monetary board member (MBM)  of BSP, DG Diwa struck me as a great communicator.       He was  the  go-to official for explanations of the BSP's policy moves or positions on different economic issues. Gifted with the uncanny ability to simplify and communicate the most technical of economic concepts, he  was one of BSP’s most valuable assets in bringing central banking closer to the people.       Finance Secretary Sonny Dominguez, who sits In the monetary board, credits DG Diwa, “the consummate monetary policy economist”, for “pushing for measures to boost economic stability and inclusive growth. He was also instrumental in the establishment of Asean initiatives including peer review and BOP support mechanisms.”      MBM Jun de Zuniga says:  “DG Diwa is the eminent bibliographer, authority and history of the monetary policies of the BSP, its Philippine peso currencies and even on the artifacts and art collections of the BSP. This formidable talent is backed up by his 41 years of unqualified dedicated service, excellent academics and superior leadership qualities. Truly he serves for God and Country.”       MBM Peter Favila  describes DG Diwa as  “a formidable force in central banking… both for stirring (sometimes vigorously) the policy discussion within the BSP, as he never shies away from a healthy debate among colleagues and staff, and in raising the BSP profile in the the international central banking community. His intellectual heft is matched only by his passion for mentoring and ensuring his people are well equipped and ready to take on the challenges of the New Economy.”        “Immeasurable” was MBM Tony Abacan’s assessment of DG Diwa’s impact to the BSP. “His international engagements helped put the BSP amongst the “looked up to” central banks in the world. His institutional memory having worked with the BSP for more than 40 years and his innate technical knowhow about the economy and beyond, provided more engaging and meaningful discussions at every meeting of the Monetary Board.”       Abacan was referring to DG Diwa’s  international engagements, as follows:      In 2001-2003, DG Diwa  was Alternate Executive Director in the Philippines’ constituency at the International Monetary Fund in Washington, DC. Earlier he was Head of Research at The SEACEN (Southeast Asian Central Banks) Centre in Kuala Lumpur in 1992-1994.       Since 2000, DG Diwa  has co-chaired with Bank Negara Malaysia the SEACEN Experts Group on Capital Flows and in 2010-2013, the ASEAN Senior Level Committee on Financial Integration. He also chairs the SEACEN Task Force on SEACEN membership.       For the period 2009-2012, he chaired the Executive Meeting of East Asia and the Pacific (EMEAP) Monetary and Financial Stability Committee of EMEAP central bank deputies that are tasked to conduct regional and global surveillance.       Guinigundo  received his AB Economics degree from the University of the Philippines in 1976, cum laude, and earned his MS in Economics from the London School of Economics and Political Science as a Central Bank scholar. At that time, he also obtained his Marriage Degree when he married another Filipino scholar, who became Mrs.  Apple Guinigundo.        He began his career in public service as senior manpower development officer at the Department of Labor’s National Manpower and Youth Council.       From there, he moved to the Central Bank and has served it ever since.      When Guinigundo  took over the Monetary Stability Sector (MSS)  from Governor Say Tetangco in 2005, the sector was newly realigned and included the Monetary Policy Sub-sector, the Regional Monetary Affairs Sub-sector, Monetary Operations Sub-sector, and Cash Management Subsector.      He was likewise given administrative supervision over the  Corporate Affairs and Corporate Planning Offices.       A research guy,  DG Diwa   worked the ranks of the research sector up to the Managing Director level.       He headed BSP’s Department of Economic Research (1994-2000) at an exciting time—when BSP was starting to lay down the groundwork for the shift of the monetary policy framework from monetary aggregate targeting to inflation targeting.       The MB approved the transition in 2000 until it was formally implemented in 2002 after a series of public consultations all over the Philippines.      Among his  other responsibilities , DG Diwa  also chaired  the Committee on Artworks and Paintings, fully supporting the production of two art books featuring the BSP gold and painting collections. He was also chair of the Currency Management Committee and the Numismatic Committee, the last two in which I also served as Board Advisor.       Good job, DG Diwa.  You have struck  a very healthy  balance between your oversight of the BSP’s primary responsibility of maintaining price and monetary stability, your ministry of the Gospel and your  successful  family life.       Note: Please feel free to share the foregoing article via Facebook and/or Twitter.

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The Japanese model of longevity

July 1, 2019

What will it take for some family businesses to go on for centuries while others succumb and die early? My quest for corporate longevity continues and my research has led me to the land of the rising sun, Japan.       We are experiencing an era where it is hard enough to keep an organization running for a decade. Therefore, being competitive is no longer a powerful leverage against the onslaught of a volatile, wired and borderless marketplace. With new jargons being invented like disruption, millennial market, IOT (internet of Things), block chain, YOLO (you only live once), the watchword has now pivoted to not just being relevant but resilient. The latter fundamentally means several notches higher than survival.      So how did Japanese family-run businesses not only managed to stay afloat and survived for centuries? Authors Hendrik Schwartz and Prof. Dr. Marc-Michael H. Bergfeld raised an even difficult and challenging contention: how do you stay relevant and resilient when your business is over 400 years old and already in the 15th generation? How can you transition to a complex and multi-generational period and get confronted with hundreds of family members, each trying to outdo one another to promote their respective interests?      In their research, the authors clearly concluded that the “Japanese social value system is very different from its Western comparisons and also dissimilar to its continental Asian counterparts.” They pointed out that the Japanese model “entailed strong cultic features and a very strong corporate identity that permeates every aspect of company life and most importantly – and for many people unknown – a substantially different system of family guidance and administration, that has continued to define the nature of Japanese society since the Edo period.”      They went on to identify that the “ie” system, a patrilineal household, is at the core of the traditional Japanese family. It is a very complex kinship unit, a very complex multigenerational family system that is based on primogeniture.       In this particular system, only one child inherits. All of the other children in any generation are expected to eventually leave the family and go establish themselves in some other family or some other social institution. The chosen successor, usually the eldest son, inherits the family, everything to do with the family, and the rest of the children have to find their own way in the world. The “ie” system lineage is important and meticulously recorded. In theory, the “ie” should last forever and in principle never dies as it embodies all of its deceased and future members.       In his book, The Living Company, Dutch business theorist Arie De Geus analyzed 30 centuries-old businesses for common traits and this includes several enterprises in Japan. De Geus attributed their success to four commonalities:      1.    Long-lived companies were sensitive to their environment and remained in harmony with the world around them.      2.    Long-lived companies were cohesive, with a strong sense of identity. No matter how widely diversified they were, their employees (and even their suppliers, at times) felt they were all part of one entity.      3.    Long-lived companies were tolerant and generally avoided exercising any centralized control over attempts to diversify the company.      4.    Long-lived companies were conservative in financing. They were frugal and did not risk their capital gratuitously.      To be continued...       esoriano@wongadvisory.com

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Feng shui for reviewers and exams!

July 1, 2019

Yes there is feng shui to review for and pass competitive examinations - professional regulatory licensing or even elementary, high school, college, masters degree tests up to getting a driver's license!      Let us review the key tips together now:      Mental conditioning - to achieve a balanced wellbeing and be in good health, when studying, sit by charging your spine or chakras (life energy centers) with the back of your chair towards your lucky direction! And to be in good health with restful sleep always sleep in the same direction with the orientation of your headboard. Eat, and work in the same manner! Exercose om the gym or anywhere likewise.      This increases your mental alertness, reception and retention of memory aside from clarity of mind for understanding the lesson or subject on hand.      Physical conditioning - make sure the feng shui orientation of your bedroom door, study or review area, kitchen layout of cooking appliances, like the bedroom and study table are in conformity with your proper feng shui as professionally advised by a genuine feng shui expert or master.      Wear your lucky colors, use it in the interiors of your bedroom or review quarters, and especially on the day of the examinations, if wearing uniform at least as underwear(s)!      When taking exams orient yourself as much as possible to similar lucky orientation directions per feng shui for flexibility, alertness, concentration and mental acuity and dynamism!      Eat wholesome balanced diet for physical conditioning especially the day and night before the exams. Never engage in mental drug stimulants, alcohol or alternatives like energy drinks that may hamper your good chi or balance of life energies by causing disease or dis-ease that distracts your focus of mind and understanding as well as comprehension.      Beyond feng shui, good writing skills even penmanship will be of great help in communicating your answers clearly with brevity.      In most instances, some opt to stay with a study group or review team in a quartered area apart from the usual house they stay in. They should have the place feng shuied for superb results, otherwise it may hamper success factors especially when it comes to health, and emotional wellbeing. Fear may set in due to bad feng shui decors ie, hotel or room artworks and other bad feng shui factiors (ie distractive romantic affairs, illicit or not!).      The usual read, recite, review and even rewriting key note points aid in understamdomg amd retemtion skills!      Now to the last feng shui tip: lucky charms! These work only if the above conditions outlined are fulfilled accordingly with proper feng shui guidance from a real geomancer.      Use of Crystal Charms - one may opt to use a globe etched crystal ball for greater concentration and understanding thereby allowing a competitive edge when it comes to technical knowledge and applications! This is the superb amulet of all to be used atop study table, carried in school or handbag during exams. If not available in your area, a clear quartz crystal will do as a substitute.      Strategic Feng Shui Review and Exam Positioning - if you want excellent scholarship benefits of review and competitive examination taking, position yourself during review and tests facing towards the northeast angle (bring a compass) or its opposite southwest. This attracts global understanding and knowledge beneficially.      Again use your lucky color in wardrobe or if allowed, ink of pen color!      Lucky Food to eat during review sessions: peanuts as food for the brain holds true even in feng shui traditions.      So there, read, recite, review and rewrite what you understood of this article so you will be able to practice it diligently and apply it to your success in examinations or tests!      No need to cheat, cheer up and good luck for the rest of your journey in academic and professional examinations for the rest of your life, whether in preschool now or graduate school or reviewing for the bar or nursing, mechanical engineering, whatever! Kong hei exam results!

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Malaysia AirAsia could become SE Asia's largest airline in 2019

July 1, 2019

AirAsia has regained market share in its original home market of Malaysia after accelerating short haul expansion. Malaysia AirAsia’s in-service fleet has expanded by 10 aircraft this year, driving 17% seat capacity expansion as utilisation and average seat density have also increased.      Malaysia AirAsia’s market share in Malaysia has exceeded 40% for the first time this year as it has benefitted from capacity reductions at Malindo and Malaysia Airlines. As a brand, AirAsia will account for nearly 55% of all passenger traffic in Malaysia in 2018 when an 8% share for Malaysian long haul LCC AirAsia X and approximately a 5% share for the group’s overseas affiliates are included.      Malaysia AirAsia is planning more double digit capacity expansion in 2019 as it adds another five or six aircraft, including its first A321neo. The short haul LCC is planning to deploy the A321neo on high frequency routes, resulting in a 28% seat capacity increase compared to the A320ceo, or a 24% increase compared to its new A320neo fleet, without having to mount additional flights.

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Family unity is at the heart of Christmas

June 28, 2019

Working over the holidays is a fact of life for most entrepreneurs and their active family members. And with that reality comes the stress of business and family vying for your attention. What can you do to find a happy balance at holiday time? As a business leader how do you manage emotions as a result of so many factors.       Emotions cannot be avoided and can aggravate conflict in the family and business. I am also aware just how much of a burden entrepreneurship can take on the active family members. Understandably, December is a time when many family businesses begin closing the annual books - and family members who had all year to dream about hefty dividends often get disappointed when they realized to their dismay the numbers do not add up.  Dividend Sharing can be a Major Source of Conflict      Stress due to expectations of a bigger dividend share and discovering that the value is smaller can easily be a source of tension. Especially when you worked so hard and the sharing is equal among working family members.  In my coaching work all over Asia, I have learned over many years of advising family owned enterprises that there are several effective strategies you can use to take the pressure off and I’m happy to share them below to serve as a guide for every family member wishing that the holiday season can be a wonderful occasion to finally bring peace and unity within the family.  No. 1 Family Unity above Self       For starters, every family member must look at the big picture and be reminded that family unity must be the overarching value over ANYTHING! Those who feel aggrieved must never forget that whatever hurts they are going through must give way to a mindset that espouses stewardship and a vision of a happy, secure future for all family members.  No. 2 Create a Growth Vision to Inspire the Next Gen      The key is if you want your family to understand stewardship and unity, you have to have some open, honest discussions about the future. I am in Singapore now and a couple of families from other countries flew here to meet me precisely to reinforce the importance of family unity and vision. When there is family unity, harmony follows. When there is a powerful vision, growth naturally follows.      On top of a governance compass that we crafted two years ago, we also created a succession process on how to transition the successful business to the next generation set of leaders comprising five adult children. No. 3 There is No Success without Succession      Succession can be a complex event but when there is ample time to prepare, the transition and wealth transfer phase can be a wonderful and joyous event for the family.  To quote Montxu Aboitiz, a 4th generation member President and CEO of listed firm Aboitiz Equity Ventures (AEV):      “We have passed the baton down seven times since the company’s beginnings in 1889. Sustainability is key in the company and that AEV has always taken very seriously the capability to pass the company down generation to generation.”      The 130 year-old Aboitiz family runs one of the largest and oldest conglomerates in the Philippines. They have a constitution to ensure the sustainability of its wide range of businesses and have strictly followed family governance rules that is why they continue to reap the benefits of a successful business generation after generation.        To be continued...       esoriano@wongadvisory.com

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