2012 PATA ANNUAL CONFERENCE:
BUILDING BUSINESS BEYOND PROFITS
KUALA LUMPUR
APRIL 21-22, 2012
ASEAN 2015—GREAT EXPECTATIONS: ONE
VISION, ONE IDENTITY, ONE COMMUNITY
AIR SERVICES LIBERALIZATION ON
TOURISM GROWTH: CASE OF MALAYSIA
DATUK DR. VICTOR WEE
CHAIRMAN OF TOURISM MALAYSIA
22 APRIL 2012
1
GREAT EXPECTATIONS
ASEAN ECONOMIC COMMUNITY (AEC)
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2
ASEAN Economic Community (AEC)
•1997 Decide on ASEAN Vision 2020
•2003 Declared ASEAN Economic Community
(AEC) by 2020
• 2007 Agreed on establishment of ASEAN
Community by 2015, a region with free
movement of goods, services, investment,
skilled labour, and freer flow of capital
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Vision of ASEAN Economic Community
“Transform ASEAN into a stable, prosperous, and
highly competitive region with equitable
economicdvelopment, and reduced poverty and
socio-economic disparities”
-ASEAN Vision 2020
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Characteristics of AEC
• Establish ASEAN as a single market and
production base making ASEAN more dynamic
and competitive
• Accelerate regional integration in priority
sectors
• Facilitating movement of business persons,
skilled labour and talents
• Strengthening the institutional mechanisms of
ASEAN
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Four Main Thrusts
A. Single Market and Production
Base
B. Competitive Economic Region
C. Equitable Economic Development
D. Integration into the Global
Economy
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Single Market and Production Base
• The ASEAN single market and production base
will comprise five core elements:
•Free flow of goods
• Free flow of services
• Free flow of investment
• Free flow of capital
• Free flow of skilled labour
• In addition, the single market and production base will
include integration of 12 priority sectors (including
tourism) and enhance the competitiveness of food,
agriculture and forestry
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Competitive Economic Region
• Increase competitiveness of the region by
adopting Competition policy, Consumer
protection, and Intellectual property rights
• Establish an efficient, secure and integrated
transport network to realize potential and
enhance attractiveness of the region.
•One of the measures is to implement the
ASEAN Single Aviation Market through
liberalisation of the air sector
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Equitable Economic Development
• Accelerate the pace, competitiveness
and dynamism of ASEAN SMEs and
deepen the technical and development
cooperation among member countries
for closer economic integration and
narrowing the development gap
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Integration into the Global Economy
• For ASEAN businesses to compete
internationally, there’s need for
• Integration into the global economy by
adopting a coherent approach towards
external economic relations and
• Enhancing participation in global supply
networks
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ASEAN TOURISM STRATEGIC PLAN
2011-2015
t
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11
Vision of ASEAN Tourism
“By 2015, ASEAN will provide an increasing number of
visitors to the region with authentic and diverse
products, enhanced connectivity, a safe and secure
environment, increased quality of services, while at the
same time ensuring an increased quality of life and
opportunities for residents through responsible and
sustainable tourism development by working
effectively with a wide range of stakeholders.”
Source: ASEAN Tourism Strategic Plan 2011-2015
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Three Strategic Directions
1. Development of innovative regional products
and creative marketing and investment strategies
2. Increasing quality of human resources, services
and facilities within the region
3. Enhancing and accelerating travel facilitation
and ASEAN connectivity
¾Liberalize market access for air services by 2008
¾Full liberalization of Passenger Air Services by 2010
• Preparation of ASEAN Tourism Marketing Strategy
2012-2015 to chart out marketing and promotional
efforts
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MALAYSIA’S TOURISM IN BRIEF
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Contribution of Tourism to Malaysia’s
Economy
o Globally, Malaysia ranks top 10 in tourist
arrivals and top 15 in global receipts
o It is the 9th most visited country in the world
and receives USD1 billion tourist receipts per 3
weeks from foreign visitors
o Tourism is the fifth largest industry after Oil,
Gas & Energy, Financial Services, Wholesale &
Retail and Palm Oil
Tourism with strong starting position; Future ambition to grow sector 3x by 2020
Key strategic focus on enhancing yield per visitor
GNI per capita (US$)
2,171 6,732
3x
Total
Tourist
receipts
(Bn)
Others
Agriculture
Telco
Automotive
Education
Electronics
Tourism
583
Oil &
gas
Finance
services
Wholesale
retail
Palm
oil
1,116 598
272 224 206
374 276
537 375
YIELD
+12%
29.7
32.0
36.3
46.1
49.6
2005
2006
2007
2008
Spend/
arrival
(RM)
53.3
0
2004
2020
RM3bn/week
24
2009
Receipts (RM Bn)
50
2009
1.5x
Large and fast growing sector in
Malaysia
Inbound tourism receipts (2004-09)
100
53
RM1bn/week
# arrivals
(Mn)
2009
36
2020
2x
4,675
2,260
2009
Global
ranking
168
2020
2009
2020
#13 in receipts
Top 10
in receipts
Tourism with Gross National Income of RM34billion in
2009
16
TOURIST ARRIVALS TO MALAYSIA
YEAR
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
58.3
56.5B
RECEIPTS
(RM BILLION)
53.37B
49.5B
24.7M
46.0B
24.6M
36.2B
23.65M
31.9B
29.6B
25.7B
24.2B
12.3B
17.3B
20.9M
17.5M
22.05M
16.4M
21.2B
15.7M
12.8M
13.3M
10.6M
7.93M
10.2M
ARRIVALS
9/11
04/24/2012
(MILLION)
BOMBING
BALI
BOMBING
SARS/IR
AQ WAR
TSUNAMI
VMY
VMY & GLOBAL
ECONOMIC
CRISIS
GLOBAL
ECONOMI
C CRISIS &
H1N1
JAPAN
EARTHQUAKE
4
INTERNATIONAL TOURISM RECEIPTS
RM (Billion)
58.3
60.0
55.0
47.4
50.0
37.6
40.0
30.7
30.0
20.0
50.2
25.8
33.1
27.0
22.1
18.8
10.0
0.0
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
Year
2010: International tourism receipts increased from RM18.8 billion in
2000 to RM58.3 billion in 2010 with an annual growth of 12.0 per cent.
DEPARTMENT OF STATISTICS, MALAYSIA
18
SHARE OF TOURISM INDUSTRIES TO GDP 2000-2010
Percentage share
(%)
12.5
12
11.5
12.2
12
11.7
11.6
11.3
11.3
11
10.5
10.8
10.6
11.1
10.7
10.3
10
9.5
9
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Year
Percentage share of GVATI
to GDP
EMPLOYMENT IN THE RELATED TOURISM INDUSTRIES
14,000.0
NUMBER ('000)
12,000.0
10,000.0
8,000.0
6,000.0
4,000.0
2,000.0
0.0
2000
2001
2002
2003
9,269.2
9,357.0
9,542.6
9,869.7
9,979.5 10,045.4 10,275.4 10,538.1 10,659.6 10,897.3 11,129.4
EMPLOYMENT IN THE RELATED TOURISM
1,531.1
INDUSTRIES Number ('000)
1,323.4
1,402.1
1,472.8
1,503.2
TOTAL EMPLOYMENT Number ('000)
16.5
17.0
2004
2005
1,511.5
1,554.6
2007
1,568.8
2008
1,677.6
2009
2010
1,759.5 1,770.80
SHARE OF EMPLOYMENT IN THE RELATED TOURISM
INDUSTRIES TO TOTAL EMPLOYMENT (%)
16.5
16.1
16.0
15.7
15.0
14.7
14.9
15.1
15.0
15.1
15.9
14.9
14.1
14.0
13.0
1998
2006
2000
2002
2004
2006
2008
2010
2012
SHARE OF EMPLOYMENT IN THE RELATED TOURISM INDUSTRIES TO TOTAL EMPLOYMENT
Source: Tourism Satellite Account 2000-2010
20
CASES OF AIR LIBERALISATION IN
MALAYSIA
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CASE 1: Liberalization Between Malaysia-Thailand
• For many years, the Malaysia-Thailand market was
dominated by Malaysia Airlines and Thai Airways
• Both could serve any points in each other’s country
while maintaining capacity profitable for both flag
carriers
• In 2004, AirAsia entered the Malaysia-Thailand market
causing a surge in seat capacity
• Bilateral agreement between Malaysia and Thailand
permitted AirAsia to expand in the market by new
designations and frequency
• AirAisa’s low cost structure helped spur traffic while
generating increased competition from the incumbent
flag carriers
TOTAL MONTHLY ROUNDTRIP SEAT CAPACITY
MALAYSIA-THAILAND NONSTOP SCHEDULED SERVICES
TRENDS IN CAPACITY AND TRAFFIC
MALAYSIA-THAILAND NON STOP SERVICES 1996
TRENDS IN CAPACITY AND TRAFFIC
MALAYSIA-THAILAND NON STOP SERVICES 2006
Economic Impact
• In 2005, 1.3 million passengers travelled between
Malaysia and Thailand
• Of this total, over 370,000 can be attributed to
the combined liberalized regime and the entry of
a new low cost carrier, causing 37% market
expansion
• Malaysia and Thailand obtained more than 4,300
full-time employment and a stimulus of over
$114 million to their GDPs
Source: InterVistas Study
CASE 2: Liberalization of Kuala LumpurSingapore Route
• The Kuala Lumpur-Singapore route was dominated by the
national flag carriers, Malaysia Airlines and Singapore
Airlines
• Passengers travelling on AirAsia from Kuala Lumpur to
Singapore would have to fly to Senai in Johor and take a
bus into Singapore. Passengers from Singapore would
travel by road to Senai to fly into Kuala Lumpur
• In preparation for the Phase 1 of ASEAN for Open Sky by
Dec. 31, 2007, the route was finally opened up in Feb
2008 to AirAsia (Malaysia), and Tiger Air and Jetstar Asia
from Singapore
LIBERALIZATION OF KL-SINGAPORE ROUTE
2007
2008
2009
2010
AIRCRAFT MOVEMENTS
(K.LUMPUR – SINGAPORE)
192,304
209,681
225,251
244,179
(GROWTH)
5.3%
9.0%
7.4%
8.4%
TOURISM ARRIVALS FROM
SINGAPORE (‘000’)
10,493
11,003
12,733
13,042
(GROWTH)
8.6%
4.9%
15.7%
2.4%
Case 2: Impact of KL-Singapore
Liberalization
• The liberalization in 2008 resulted in 27%
increase in aircraft movements between the two
cities within 3 years, which also contributed to
tourist movements between the two countries
• In 2010, the number of tourists Malaysia received
from Singapore rose by 24.3% over 2007
• The opening is viewed as a significant
development in the history of ASEAN airline
industry and an important first step toward the
liberalization of air services in the ASEAN region.
MALAYSIA AVIATION POLICY IN SUPPORT
OF TOURISM GROWTH
1. Develop a network of modern airports systems
2. Promote a liberal/open skies aviation policies
with 18 countries
3. Multilateral Agreements among ASEAN countries
to accelerate open sky arrangements for both
Full-Service-Carrier and Low-Cost-Carrier
3. Develop KLIA as a hub for passenger and cargo
4. Develop Malaysia as low cost carriers hub, esp.
after the completion of KLIA2 as a low cost
carrier terminal
Role of LCCs in Developing Tourism
• AirAsia and AirAsia X played an important role to
develop tourism within ASEAN and the Asia
Pacific region by increasing capacity to existing
destinations served by other operators and well
as unserved routes
• AirAsia entered into JVs with airlines in Thailand
(Thai AirAsia), Indonesia (Indonesia AirAsia) and
the Philippines (Philippines AirAsia) to enhance
air connectivity from these countries
• AirAsia has also JV arrangements with Vietnam
and Japan airlines
Development of AirAsia
2001
2003
2004
2005
2006
2007
2008
Air Asia sold to Tony Fernandes for the purpose of establishing a low-cost
carrier based in Malaysia
Established a second hub at Senai Airport in Johor Baru, near Singapore;
Established Thai Air Asia as a joint venture with Shin Corporation;
Launched its first international flight to Bangkok
Acquired Awair, and Indonesian airline
Rebranded Awair as Indonesia Air Asia
As part of MAS route rationalization program, 96 non-trunk routes, in
addition to 19 domestic trunk routes, were transferred to Air Asia
Long-haul services from Kuala Lumpur to Australia and People’s Republic
of China using Airbus A330 offered by Air Asia X
Vina Air Asia, to operate out of Hanoi, Viet Nam
Developmental Routes in Asia Pacific
Operated by AirAsia
Operated by AirAsia X
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
Kuala Lumpur-Chiangmai
Kuala Lumpur-Bandung
Kuala Lumpur-Clark
Kuala Lumpur-Solo
Kuala Lumpur-Danang
Kuala Lumpur-Bandar Aceh
Kuala Lumpur-Ujung Pandang
Kuala Lumpur-Balikpapan
Kuala Lumpur-Jakarta
Kuala Lumpur-Christchurch
Kuala Lumpur-Gold Coast
Kuala Lumpur-Perth
Kuala Lumpur-Tianjin
Kuala Lumpur-Hangzhou
Kuala Lumpur-Sydney
THANK YOU
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