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Sun, Dec 21, 2003 - Page 12 News List

Low-cost airlines swooping into Asia to try their luck in aviation gold rush


The theory is simple enough, sell the tickets cheap and more people will fly -- even if they get herded aboard like cattle with nothing more than peanuts and soft drinks for dinner.

Low-cost airlines have been a success in the US and Europe, and a new batch is now swooping into Asia to see if the formula works here.

They are popping up so fast -- some independent, some owned by bigger airlines -- that it almost looks like an aviation gold rush, promising travelers more choices and cheaper fares.

Singapore Airlines is the latest big player to join the fray, with plans to start a low-cost carrier, Tiger Airways, next year in partnership with the founder of the budget European carrier Ryanair. Their prices haven't been announced.

But Indonesia's Lion Air, which also plans to begin operations next year, says a one-way ticket from Singapore to Jakarta would cost US$49, compared with about US$313 on a full- service carrier.

Thai Airways plans its own version next year, and British airline tycoon Richard Branson is moving into the New Zealand market with Pacific Blue Airlines, after starting up Virgin Blue in Australia.

Virgin Blue has knocked prices lower in Australia: Travel agents charge about US$855 for a ticket from Melbourne to Perth. The nation's only other big carrier, Qantas, charges about US$1,340, but plans to respond with its own cut-rate airline, Jetstar, next year.

Aviation experts expect more startups, though some caution quite a few probably won't last long.

"We ain't seen nothing yet," said Peter Harbison, managing director at the Center for Asia Pacific Aviation, a consultancy in Sydney, Australia. "This is going to be a big, big movement."

Consumers can benefit as cheap carriers slash prices to compete for market share, though often the rock-bottom prices that get advertised only apply to a few tickets for flights at odd hours.

Prices on Australian tickets now being offered by Virgin Blue and Qantas often end up within a few dollars of each other, but Harbison said that since Virgin Blue came along in 2000 the new competition forced them down sharply in many cases.

The low-cost concept became a money-maker in the US, where it was pioneered in the 1970s by Southwest Airlines -- the model for budget carriers elsewhere like Ryanair and easyjet that took hold in Europe.

"Asia is playing catch-up," said Joyce Lai, a spokeswoman for the low-cost Malaysian carrier AirAsia, which has been successful on domestic routes and moved international this month with flights to the Thai resort island of Phuket. More international services are coming soon.

AirAsia claims its operating costs are less than half that of other successful Asian carriers, and it's made air travel an affordable option for more Malaysians.

The concourses of Kuala Lumpur's international airport still teem with business executives in suits and well-heeled tourists, but they're now joined by many less-flush travelers flying back home to visit relatives in the provinces.

"Most of the time you can get really good rates -- in fact, sometimes it's cheaper than bus tickets from Penang to Kuala Lumpur," said George Ong, who runs a travel agency on Penang island specializing in local tour packages.

But some naysayers note that Asia is quite different from the US and Europe -- which have huge, open aviation markets -- and that could stop the low-cost carriers from enjoying the same success. Asian regulators typically have been reluctant to open up routes to more competition, though that's easing.

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