Soaring Air Macau chases pilots

PUBLISHED : Monday, 03 July, 2006, 12:00am
UPDATED : Monday, 03 July, 2006, 12:00am

Air Macau hopes last month?s bankruptcy of Brazilian carrier Varig will let it hire the pilots needed to spearhead an expansion of regional services, according to chief executive David Fei Hong-jun.

Mr Fei said senior Air Macau officials would go to Brazil this month to hire between 10 and 15 new pilots as it prepares to launch flights to Japan and lessen its commercial dependence on travel between the mainland and Taiwan.

?Pilots are really a big problem for us right now,? Mr Fei said. ?Based on our business plan for the next two years, we?ll need to recruit over 30 pilots each year.?

He said Air Macau would launch flights to Osaka by the end of the year and India was on the cards for next year. Transit traffic from Taiwan, boosted by a ban on direct flights between the island and the mainland, accounted for 60 per cent of Air Macau?s revenue and 70 per cent of earnings. With cross-Straits travel restrictions easing, the carrier?s revenue model is increasingly vulnerable.

?We have changed our philosophy to start bringing more passengers into Macau,? Mr Fei said. ?We need to quietly diversify our product beyond our traditional heavy reliance on the Taiwan market by developing new destinations.?

Last month a shortage of cockpit crew forced Air Macau to delay until September a planned short-haul service to Guangzhou. The competition for pilots has intensified in South China with two new airlines on the verge of taking to the air and a Macau-based low cost carrier soon to join them.

Demand has driven salaries up ? a chief pilot qualified to fly regional aircraft can now ask for US$120,000 (HK$936,000) a year, up 25 per cent against 2004 ? making it harder for smaller airlines and start-ups to turn a profit.

Oasis Hong Kong Airlines has set a late September date for its inaugural service to London. Viva Macau, another budget carrier based in the former Portuguese colony, has a similar timetable for flights to Jakarta and Male, in the Maldives. Macau Asia Express, Air Macau?s low-cost off-shoot, drew closer to its first flight last month when it hired veteran British aviation executive Ed Winter, the former chief operating officer for EasyJet, after failing to reach agreements with executives from ValuJet and AirAsia, industry sources said.

The budget travel phenomenon in general has put Air Macau under pressure.

?Our yields have been driven down by the [low cost carriers] quite a lot to Bangkok and Manila, about 20 per cent in the past year,? Mr Fei said. ?But the [ticket price] gap between LCCs and traditional carriers is narrowing, so the impact will be less and less.?

While it has largely weathered the storm ? sales were up 20.4 per cent to 1.1 billion patacas (HK$1.09 billion) in the first five months ? the inexorable rise in the cost of aviation fuel drove down earnings to 14 million patacas for the period. Direct control of the airline will be taken over by Air China at the end of the summer under the terms agreed for the privatisation the China National Aviation Corp, its present parent.

Mr Fei said the shift will be a positive.

?They realise Air Macau is in a very unique position in Southern China and fully support us in building up our own niche market,? he said. ?They would like to provide us with some resources such as aircraft and training.?

One such deal on the table involves the lease or sale of three B747-400 ?combis?, modified long-haul aircraft owned by Air China and able to carry about 200 passengers and 50 tonnes of cargo per flight.

Air Macau would like to use them to fly via Bangkok to European cities such as Paris, Frankfurt and London. It has the bilateral rights to do so but Europe services are about two years away.

?The priority is Asian countries and India,? Mr Fei said. ?If we can stand firm in Asia, we will have the confidence to fly to Europe.?