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.