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Clogged, creaking airports hold back carriers in SE Asia

Tuesday, March 27, 2012
By Harry Suhartono, Reuters


SINGAPORE -- It's a scene repeated endlessly at most of Southeast Asia's main airports — planes forced to circle overhead or idle on the tarmac and travelers stuck in serpentine lines at immigration desks, security checkpoints and baggage carousels.

And it's likely to get worse in capitals like Kuala Lumpur, Jakarta, Bangkok and Manila in years to come as overcrowded airports and outdated infrastructure are twinned with a huge spike in the number of aircraft in the region.

Southeast Asian carriers have ordered US$47 billion worth of aircrafts for the coming decade but the deals could be under threat because of the inability of airports to keep pace. That could be a blow to manufacturers like Boeing and Airbus .

“You can buy as many aircraft as you like but if the infrastructure does not keep up then you are going to see a degraded service that may prevent you from executing plans to grow the airline,” Andrew Herdman, director general of the Association of Asia Pacific Airlines, told Reuters.

The problem could force low-cost carriers such as Malaysia's AirAsia Bhd and Indonesia's privately held Lion Air — the world's biggest buyers of passenger jets — to delay or even cancel some orders from Airbus and Boeing.

Jakarta's Soekarno-Hatta International Airport now serves more than 51 million passengers a year, more than twice its design capacity when it was built in the mid-1980s.

Bangkok's main Suvarnabhumi Airport is often beset by two-hour immigration queues and is running over capacity less than six years after it opened, which led Thailand's government to encourage low-cost carriers to move to the old Don Muang Airport to help ease congestion.

Passengers can wait for hours at Kuala Lumpur's overcrowded budget terminal, the hub for AirAsia. After clearing immigration lines that can be at least 50 people long, the walk to the plane at the tarmac can be hundreds of meters with only a strip of corrugated steel overhead as cover against the elements.

With pressure from AirAsia and scenes of chaotic check-ins, government-linked operator Malaysia Airports is rushing to complete another budget terminal that is due to be up and running by April 2013.

Projected construction costs have nearly doubled to 3.9 billion ringgit (US$1.27 billion) as the planned capacity of the new airport has been expanded to 45 million passengers a year from an initial plan of 30 million.

Time is Money

Jakarta's airport is infamous for planes sitting for nearly an hour on the tarmac before takeoff or circling overhead as they await their turn to land. One-hour flights between Singapore and the Indonesian capital can easily drag to two hours or more because of the overcrowded runway.

The hundreds of bankers and executives who fly regularly from Jakarta to Singapore on Monday mornings need to leave home in the dark to catch a 6 a.m. flight and often they still get caught in traffic jams on the toll road to the airport.

That has led to tense times for airline executives dealing with what they politely refer to as “influential” passengers who get to the airport late or get stuck in traffic.

Airline sources said these passengers do not hesitate to call them or even the chief executive on their mobile phones to ask for the plane to wait for them.

“It is a common problem,” one of the sources said. “We could never entertain these kinds of requests unless they are the president or the vice president of Indonesia. But some customers can be quite impolite and scream at us.”

The number of low-cost carriers (LCC) and their routes have expanded rapidly in Southeast Asia over the last 10 years. Analysts and industry executives see more growth ahead due to a lack of reliable alternatives and strong economic growth.

“Ten years ago, the airports in this region would probably not have foreseen that LCC demand could be as strong as it is today,” Chin Yau Seng, chief executive officer of Singapore-based budget carrier Tiger Airways, told Reuters.

Airport congestion makes it tougher for carriers to keep their on-time performance and pushes up operating costs as planes waste fuel waiting to take off or land.

“If this problem persists for the long run, airlines in general will have to take into account all the additional costs that they have to incur and pass them on to customers,” Edward Sirait, a director at Lion Air, told Reuters.

“If customers cannot accept those additional costs then airlines, whoever they are, will have to rethink their investment decisions and spending.”

Lion recently firmed up an order for 230 Boeing 737s worth US$22.4 billion, eclipsing the record for the world's biggest commercial aircraft deal set by AirAsia when it signed up to buy 200 Airbus A320neo jets for US$18 billion.

Despite the growth and big orders, Southeast Asia remains a market that has been under served by carriers.

Con Korfiatis, vice president of Garuda Indonesia's budget carrier Citilink, said only 300 single-aisle jets serve the country's population of 230 million, compared with 3,000 in the United States, which has 310 million people.

Boeing sees Asia-Pacific carriers as the biggest buyers of planes over the 20-year period to 2030 as they are expected to acquire 11,450 passenger jets valued at US$1.5 trillion — more than a third of global demand.

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