Asian tourism winsr as no-frills carriers take off
Asian tourism winsr as no-frills carriers take off
Bernice Han, Agence France-Presse, Singapore
Regional tourism will emerge as the big winner as budget airlines take off in Asia, boosting the prospects of a sector which has been through rough times in recent years, analysts said.
Singapore Airlines (SIA) is the latest to jump aboard the no- frills bandwagon, joining forces with the founder of successful European budget airline Ryanair to set up Tiger Airways, scheduled to start flying in the second half of 2004.
"I think it's great for regional tourism," said Sim Kok Chwee, a director with the Bangkok-based Pacific Asia Travel Association (PATA).
"Intra-Asian tourism has always been strong and this will definitely be a catalyst for further growth," he told AFP.
It is difficult to estimate the financial impact of the budget carriers on industry revenues but analysts agreed they will unleash pent-up travel demand within Southeast Asia, which is home to some 500 million people.
There are already signs of recovery in an industry hurt by the terrorist scare since the attacks in the U.S. on Sept. 11, 2001 and the Severe Acute Respiratory Syndrome (SARS) epidemic in East Asia earlier this year.
"It is just absolutely mind-boggling when you think of the potential," said Peter Harbison, managing director of the Sydney- based Centre for Asia Pacific Aviation.
"To think that it could grow by ten-fold over the next two years is not impossible," he said.
"The ones which will benefit most are the regional centers which seek to attract tourists and already have a runway to accommodate the aircraft... they are going to be major beneficiaries of it," Harbison said.
Detractors argue that the novelty of cheap flights could wear off but others say the lure of lower air fares on short-haul flights that take less than five hours may be irresistible for bargain-conscious Asians.
"The low carrier model works best in point-to-point markets, particularly in short-haul point-to-point markets where price is extremely important and the deciding factor is price," Harbison said.
"We have been extremely bullish on low-cost airlines for the last couple of years... we think the potential is enormous," he said.
No-frills carriers are not new to the region. A few are already operating in Southeast Asia but they ply mainly domestic routes, like Cebu Pacific, set up in 1996 by Filipino tycoon John Gokongwei.
But SIA's Tiger Airways venture has generated expectations that the new carrier, backed by Ryanair founder Tony Ryan, will revolutionize the no-frills market with its deep financial pockets.
Tiger Airways will be up against AirAsia of Malaysia, currently the most successful no-frills carrier in Southeast Asia, and the competition will heat up when ValuAir, started by a former SIA managing director, takes to the skies by the second quarter of 2004.
AirAsia, under the helm of Malaysian entrepreneur Tony Fernandes, has successfully expanded its route network outside its home turf, plying its first regional route to Thailand this week.
Its joint venture with Thai telecommunications giant Shin Corp. is due to start operations in January.
Flamboyant British tycoon Richard Branson, whose budget Virgin Blue grabbed 30 percent of the market from Qantas in the Australian domestic market, has also expressed interest in the region, and has held talks with AirAsia.
Other players in the industry include Indonesia's Lion Air, which flies from Jakarta to Singapore, Orient Thai Airlines, and Malaysia's Athena Air Services.
Despite its late start, SIA chief executive Chew Choon Seng is confident Tiger Airways is capable of holding its own in the no- frills segment.
"The more the merrier, and that is good for the consumer," Chew said.
"And we are the fittest group," he said.