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New Indonesian safety measures will constrain airlines

Tuesday, January 13, 2015

Subject

The outlook for Indonesian and Asian airlines after AirAsia QZ8501's crash.

Significance

On January 13, the second flight recorder was recovered from AirAsia flight QZ8501, which went down between Surabaya and Singapore on December 28. These 'black boxes' should reveal why QZ8501 was lost. Even though the incident was probably caused by poor weather, it has raised renewed questions over Indonesian civil aviation's safety record. Indonesia's government has now introduced measures to improve this.

Impacts

  • Current retrenchment by Asian airlines reflects a temporary period of restructuring, but some weaker airlines may fail.
  • Demand for new large aircraft will fall as low-cost regional airlines restructure.
  • Asian airline safety will steadily improve as governments tighten regulation, and develop integrated regional air traffic systems.
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