SINGAPORE (Feb 12): For one of the most unpredictable industries in the world, airlines have had a spell of good weather. The year 2017 was the third consecutive one in which the air transport industry generated a rate of return that exceeded its cost of capital, and the International Air Transport Association expects 2018 to mark the fourth.

In Asia-Pacific, the growth story continues on an upward trajectory. Asia-Pacific airlines are expected to generate a net profit of US$9 billion ($12 billion) in 2018, up from US$8.3 billion in 2017. Home to three of the top five fastest-growing passenger markets in the world — China, India and Indonesia — this is truly the region to be. But the good times are not without some dark clouds. Infrastructure constraints could hinder growth if not addressed by all stakeholders, competition continues to put downward pressure on profit and rising fuel prices will be watched closely.

On the flip side, I see a deep hunger for innovation in this region. In my conversations with airlines here, digital transformation, merchandising and disruption management have been top of the agenda. Many are embarking on turnaround transformation initiatives, driven by a real will to address competition but above all to improve the customer experience. Indeed, I would argue that the impetus to achieve that is greater here, as the Asian market expects and demands the high-service levels that Asian airlines have come to be known for.

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