Low-cost carriers might double Asia market share

By Amy Su  /  Staff reporter

Wed, Jul 04, 2012 - Page 13

The market share of low-cost carriers (LCCs) in Asia might double over the next five years, from the current 25 percent, on the back of rising demand in regional traffic, an official at a regional budget airline said yesterday.

However, the number of budget airlines in Asia might drop in the near future through mergers and acquisitions or other factors following a development trend, the official added.

“Low-cost carriers’ developing trend in Asia will be similar to that in Europe,” Azran Osman-Rani, corporate executive of AirAsia X, a subsidiary of the Malaysia-based budget airline group AirAsia, told reporters in Taipei.

Both sales and business-scale-of-budget airlines have been growing in Europe in recent years, Azran said, adding that the market share held by LCCs in Europe has been calculated at 45 percent.

Since Asia’s population totals as much as three times that of Europe, Azran expects that demand from the Asian market holds a lot of potential for budget air carriers.

“Budget airlines’ market share in Asia might double over the next five years to between 50 percent and 55 percent,” Azran said.

Passengers from more Asian countries — such as Japan and Taiwan — have gradually been accepting low-cost airlines, providing more evidence that demand from Asia would grow further in the near future, Azran said.

Azran also forecast that a new brand of budget airline would be launched in Taiwan in the next 12 months.

Nevertheless, Azran said the number of LCCs in Asia might consolidate into five over the next five years, from the current 15 carriers. This is because more budget airlines entering the market would increase competition, putting pressure on players without a niche market and driving some carriers to merge, Azran said.

That would in turn increase the business scale of surviving carriers and make them more competitive, he added.

Azran said the AirAsia group has an expansion plan for the Taiwanese market, through launching a relatively short route between Taipei and Manila or Tokyo.

However, Azran said he was not sure yet about the details of the route and the proposed schedule, as some issues about the aviation rights would still need to be approved by the governments involved.

AirAsia X — which focuses on relatively long-haul routes of more than four flying hours — runs its route between Taipei and Kuala Lumpur on 11 flights a week, for the present.