Flying for Less in Asia

Low-cost carriers continue to grow in popularity

By: Gary Bowerman

Low-cost. Budget. No-frills. Boutique. Whichever name you prefer, the growth of short-haul airlines offering lower fares, new routes and easy Internet booking is revolutionizing leisure and business travel across Asia.

Boosted by relaxed regulatory barriers, an increased demand for travel both to and within Asia and a surfeit of under-serviced short-haul routes, new airlines (many financed by flagship carriers) are springing up from Malaysia to India, Singapore to Thailand and Indonesia to China. And there is plenty of room for expansion: Figures from IATA reveal that low-cost carriers (LCCs) have a 6 percent penetration in Asia, compared to 35 percent in Europe and 45 percent in the United States.

Leading the way is Air Asia, which has been transformed from Malaysia’s second national airline into Asia’s leading LCC by offering access to new destinations at low prices via the Internet. In March, Air Asia relocated operations to Asia’s first dedicated LCC terminal at Kuala Lumpur International Airport, and its route network includes Singapore, Thailand, Malaysia and Macau. It is also seeking to add to its current single China destination, the southern port city of Xiamen. Singapore-based Tiger Airways (which flies from a new, dedicated Budget Terminal at Singapore’s Changi Airport) is also targeting China and currently offers flights to two key business cities, Guangzhou and Shenzhen, as well as Macau.

Annual low-cost carrier growth in India where, until recently, an often-quoted statistic was that 16 million people caught a flight every year, the same number that took a train each day is expected to hit 15-25 percent between now and 2011.

Last year, five new low-frills operators launched in a market that now includes Air India Express, Spice Jet and Kingfisher, which has also introduced a “first-class service,” due to strong demand. Though much of India’s LCCs offer domestic routes, Jetstar Asia which serves key Asian cities such as Hong Kong, Bangkok and Singapore now flies to the Indian city of Bangalore.

Thailand has also embraced low-cost carriers. The opening of Bangkok’s impressive new Suvarnabhumi Airport scheduled for later this year will see its predecessor, Don Muang Airport, converted into a short-haul hub to cater for the nation’s growing number of LCCs, which include Nok Air and Thai Orient. Flag carrier Thai Airlines is even considering launching a new “mid-range” airline to meet the nation’s rising demand for air travel.

Though Bangkok Airlines calls itself a “boutique airline” its rapidly expanding network and good-value fares offer getaways to new locations across Thailand and Asia, including Hangzhou and Xian in China, Luang Prabang in Laos and Siem Reap in Cambodia. It plans to open more routes later this year and has signed a code-share agreement with Thai Airways.

China is, for now, a different story: It retains tight control over its airspace, and LCCs have had a limited impact. Its national route network is relatively well serviced and landing, airport and fuel costs are state controlled to protect the growth of its major carriers and airport capacity is limited. However, stay tuned: Air industry reforms are under way, and a handful of private airlines have been permitted to operate, and some of Asia’s leading LCCs now offer limited routes into China. Crucially, China is currently constructing around 50 new airports before 2010, which should open more landing slots and opportunities for LCCs.

Asia’s LCC industry is developing fast and industry watchers expect some consolidation in the coming years.

So enjoy it while it lasts even some cursory online research will enable you to offer clients great value deals and access to established and up-and-coming Asian destinations.


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