Air Transport World

Asia's rising low-cost tide: eight years after AirAsia launched the low fare revolution there, LCCs are popping up everywhere.(Competition)(Industry overview)

THE TIDE IS IRREVERSIBLE AND IT IS COMING TO MORE AND MORE destinations in the Asia/Pacific region every week. Low-cost carriers, which accounted for just 1.1% of Asia/Pacific air travel in 2001, captured 15.7% of the market last year, carrying one of every six travelers. Airbus predicts LCCs will hold 20% of the market by 2012.

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In early August, one of the final barriers to their spread across Asia was swept away when Thai International Airways and Singapore-based Tiger Airways teamed up to create Thai Tiger Airways. That development was followed quickly by Malaysia Airlines announcing plans to equip its Penang-based low-cost subsidiary Firefly with 737-400s to take on AirAsia. In the past, the Thai and Malaysian governments were reluctant to embrace the LCC phenomenon but the latest moves signaled an end to protectionist policies, suggests Peter Harbison, chairman of the Centre for Asia Pacific Aviation.

"This new JV could have a major impact on the pace of airline liberalization in the region," Harbison notes. "Until now, the Thai government has been highly protective of its national flag carrier and has been an impediment to the region's multilateral timetable for moving toward open skies for Southeast Asian airlines. This position should now soften, as high-cost Thai Airways will have the opportunity to meet competition on a more equal footing."

Thai President Piyasvasti Amranand said as much at the announcement, telling media that the JV will "allow Thai to be more competitive in the region with the anticipated growth in the low-cost market as a result of continued ASEAN air liberalization policies by 2015. …

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