Budget airlines to have staying power in Asia

Budget airlines to have staying power in Asia

Associated Press
Jakarta

Budget airlines will survive in Asia as long as they have
adequate capital and are treated fairly by regional governments
and airports, U.S. Transportation Secretary Norman Mineta said on
Thursday.

No-frills air travel - where carriers cut perks for travelers,
slice costs, trim turnaround times, and sell more tickets through
low-cost channels - arrived in Asia three years ago and analysts
have predicted the sector is set for explosive growth.

The surge has been led by companies such as Malaysia's
AirAsia, Australia's Virgin Blue, and recent Singapore entrant
Valuair. Tiger Airways, backed by full-service flag-carrier
Singapore Airlines, entered the market last week.

Some analysts have raised questions about the viability of the
airlines, especially with at least three low-cost airlines going
belly-up in Europe.

But Mineta expressed confidence in the sector.

"I would think that low-cost carriers will be able to
survive," Mineta told the Associated Press in telephone interview
from Bali, where he is attending a meeting of transportation
ministers from the Asia-Pacific Economic Cooperation countries.

"It takes some time to get a secure footing in the
marketplace," he said. "It also depends on how fairly they are
treated by airports in terms of access." Many Asian airports
restrict landing slots and give preferential treatment to
national carriers.

Mineta said the low-cost carriers in Asia have been a boon to
the traveling public and "put pressure on the other airlines to
improve their service, their fares and all that accrues to the
benefit of the traveling public."

Budget airlines are already having a significant impact on the
industry, especially in Singapore.

Singapore Airlines announced on Wednesday that it will
drastically cut costs in anticipation of intense competition from
regional low-cost carriers. Officials didn't give many specifics
or a timetable, but said the airline's board will consider
reducing staff costs, cutting fuel consumption, and promoting
cheaper Internet ticket sales.

Last week, Singapore authorities unveiled plans to build a
dedicated low-cost airport terminal to try and fend off
competition from regional airports hoping to attract business
from fast-growing budget airlines.