Budget airlines have enjoyed a stellar rise since their emergence in South-east Asian skies a decade ago. Will these carriers go the distance over the long haul?
Change appears to be the only constant in ASEAN’s budget aviation landscape in 2013 as LCCs pursue ambitious expansion plans, carving out a bigger share of the passenger throughput at the region’s main hub airports.
With the launch of Golden Myanmar Airlines in early 2013, LCCs are now based in seven out of the 10 ASEAN member states. Only Brunei, Cambodia and Laos are without their own homegrown LCCs.
A constant state of brand evolution
As 2013 rolled out, several LCCs in ASEAN began to tweak their brand names and this is none more apparent in the Philippines than elsewhere in the region. AirPhil Express, a subsidiary of Philippine Airlines, was rebranded as PAL Express while Zest Air merged with Philippines AirAsia to operate as AirAsia Zest.
SEAir became known as Tigerair Philippines, a name that might change again as Tigerair has sold its 40 per cent stake in Tigerair Philippines to Cebu Pacific Air – the latter will initially just add its own title to the airplanes of the former’s small fleet. Tigerair and Cebu Pacific Air will also cooperate on their services between the Philippines and Singapore.
In Singapore, Tiger Airways rebranded itself as Tigerair in July 2013, adopting a new logo that resembles a tiger’s tail.
Soaring expectations
A clear sign of strong optimism in their growth performance ahead, eight of the LCCs (see table) covered in this report have more airplanes on order than they have in their current fleet.
AirAsia continues to be the cherry on the cake for Airbus with more than 240 delivery positions – although it should be noted that some of these are slated for its operations in Indonesia, Thailand and the Philippines (and possibly in India). AirAsia X is re-committed to returning to Europe with a reportedly more efficient Airbus A330 and is on the brink of replicating its blueprint in Thailand with Thai AirAsia X.
Indonesia’s Lion Air is the next most aggressive LCC, taking a leaf out of AirAsia’s book to roll out Malindo Air in Malaysia and Thai Lion Air in Thailand. In an about-turn of its long-term strategy however, the airline has also cancelled its outstanding order for five Boeing 787-8 Dreamliners – initially destined for its premium subsidiary Batik Air.
Not to be outdone, Singapore’s Tigerair has entered into a minority partnership with Taiwan’s China Airlines to establish a new Taipei-based LCC that is likely to carry the Tigerair branding.
Thailand’s Nok Air has also entered into a joint venture with Singapore’s Scoot to establish NokScoot to operate medium and longhaul services out of Bangkok’s Don Mueang Airport – a clear response to the ‘invasion’ of Thai AirAsia X and, to a lesser extent, Thai Lion Air. According to an industry source, NokScoot will start up in early June 2014 with a couple of Boeing 777s likely to be sourced from Singapore Airlines with destinations in China, Japan and South Korea on its radar. To leverage on the partnership synergy, Scoot’s Singapore-Bangkok service is expected to fly into Don Mueang Airport instead of Suvarnabhumi Airport from May 2014.
A push for wider horizons
As Cebu Pacific Air started operating A330-300s and extended its network to Dubai, PAL Express too received an A330-300 from its parent company – Philippine Airlines – and launched its own five-times-weekly services to Dubai.
Thai AirAsia X will begin operations with A330-300s in 1H2014, while Scoot too will be in a position to launch new longhaul routes when it receives its first B787-9 Dreamliners in 2H2014. Jetstar Asia will also take delivery of its first B787-8s later this year but there is yet any indication which routes these will be deployed.
Lion Air will turn Batam – located just south of Singapore – into its second hub to initially serve as a nexus for east-west domestic travel. Over time, Lion Air hopes to increase Batam’s domestic destinations from its current 15 to 20, and add international links to Guangzhou, Hong Kong, Bangkok, Jeddah, New Delhi and Mumbai.
Reaching out globally through GDSs
More LCCs have turned to global distribution systems (GDSs), making it easier for travel consultants to access their content and drive sales. By end-2013, the services of 26 LCCs worldwide are bookable via Abacus, which expects to grow this by 10 per cent in early 2014.
Amadeus Asia Pacific’s executive vice president, airline commercial, Hazem Hussein, said: “The competition among LCCs in South-east Asia is tough, and airlines need to evolve to get ahead. LCCs that tap our extensive travel agency network can reach new customers and improve their yield.”
Sabre Travel Network’s vice president and general manager Asia Pacific, Hans Belle, said: “LCCs in Asia are evolving their merchandising strategies to differentiate, compete and extend their reach into new customer segments. Our global travel marketplace allows airlines to promote, personalise and sell their seats to 400,000 travel (consultants) around the world, and tap into data-rich solutions that give insights on customer shopping and booking trends, resulting in better yields and more personalised customer service.”
This article was first published in TTG Asia, February 21, 2014 on page 18 and 20. To read more, please view our digital edition or click here to subscribe.
