Japan Airlines - Orient Aviation

MAIN STORY‘Time to think out of the box’There is certainly potential forfurther industry restructuringand consolidation in the Asia-Pacific region, accordingto JPMorgan Asia-Pacific’sregional transport analyst Peter Negline.But he stressed that private equity capitalfrom big international investment playerswill not be the only mechanism driving themarket.“Private equity is one of the catalysts,but it may not be the only thing that propelschange,” he said.“I think there are quite a few [developments]that are particularly interesting, butsuffice to say it is time to think outside thebox.”Negline believes broader issues areat play involving fundamental industrychange, with the airline industry becomingmore pragmatic “as people have watched thesuccess of the KLM and Air France mergerin Europe, on one level, while the stressescaused by the spike in oil prices which isstill fresh in everyone’s minds, must haveeveryone thinking about their options”.He and other analysts will not talk about‘Private equity is one of thecatalysts, but it may not be theonly thing that propels change’Peter NeglineRegional Transport AnalystJPMorgan Asia-Pacificindividual deals, but the regional industry isawash with unconfirmed reports of possibleinvestments.A cashed-up Singapore Airlines is saidto be interested in a stake in Garuda, as wellas investing in a Chinese carrier. AirAsiachief, Tony Fernandes, has reportedly saidprivately he wants to buy a slice of thePhilippines carrier, Cebu Pacific.Negline believes there will be consolidationin China, but he would not expand.Elsewhere, the analyst believes historicallegacy issues may prevent some deals.“But it may not constrict all of them...there are developments in India and China.“The only places that are reasonably[quiet] at the moment are Taiwan and Korea,but you have to wonder when things are goingto happen there”.Interestingly, he also believes the ambitiousexpansion plans of Malaysia’s AirAsiaare bound to have an “action/reaction”consequence in the region.AirAsia is due to take an average of 20new aircraft annually for the next six years,so this may well be a catalyst for change initself, said Negline. 16 ORIENT AVIATION February 2007