Air Transport World

Revolution deferred but not denied: after years of defying trends in the US and Europe, the Asia/Pacific region has climbed aboard the budget airline revolution train.(Low-Cost Carriers)(Industry Overview)

People may not be out in the streets demonstrating for change, but they are at their home PCs and Internet cafes making bookings for scats on a revolution sweeping across Asia. The era of the low-cost carrier has arrived and perhaps sooner than most would have expected in a region still making the transition from tightly drawn bilateral agreements to freewheeling open skies arrangements.

Interestingly, the momentum in Asia is driven not by liberalization per se but by the support of government investment agencies and major airports that regard LCCs as weapons in the ongoing battle for hub domination and the economic benefits of tourism. This means that LCCs can thrive despite the absence of open skies. Peter Harbison, founder and MD of the Centre for Asia Pacific Aviation, asserts that LCCs are "provoking very different government attitudes to airline access, domestically and internationally. AS popular demand for new, low-priced air travel spreads--like wildfire--governments are quickly acting to remove restrictions on new airline entry. So this movement is not just about low-cost airlines; it is about the smashing of barriers to competition, domestically and internationally."

Leading the charge is the Singapore government investment arm Temasek Holdings, which owns Changi Airport and a controlling stake in Singapore Airlines. It also has a significant stake in that carrier's LCC venture due to start later this year, Tiger Airways, and perhaps to hedge its bets a 19% share of Qantas's Jetstar Asia, also to be based at Changi.

To the Singapore government and Temasek, LCCs are a critical part of a "numbers game"--hub domination. Altogether Changi and the aviation industry contribute S$13.3 billion--9.2%--of Singapore's GDP, Temasek has made it clear to SIA unions that between preserving its assets in SIA and protecting Changi's hub status, the latter has priority.

And it is not just competition among hubs in Singapore, Malaysia, Thailand and Hong Kong. The battle also stretches to Dubai, where the government is focused on boosting tourism as a way to offset dwindling oil revenues. …

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