Dozens of low-cost airlines set for takeoff in Asia

Dozens of low-cost airlines set for takeoff in Asia

Associated Press Singapore

Asia is set for explosive growth in the low-cost airline business with dozens of new entrants taking to the skies and governments racing to liberalize their airspace, a leading aviation analyst said on Thursday.

The growth will push down fares, raise demand for air travel, and prompt most full-service carriers to fight back with their own low-cost arms, said Peter Harbinson, Managing Director at Sydney's Center for Asia Pacific Aviation.

"The growth potential is actually quite enormous. What percentage of that will low-cost airlines take? God knows. But they are going to be very important in stimulating overall market growth," Harbinson told The Associated Press.

There will be "dozens, dozens in the next five years," he added.

No-frills air travel - where companies cut perks for travelers, slice costs, trim turnaround times, and sell more tickets through low-cost channels - emerged in the United States in the 1970s and spread to Europe in the 1990s.

The business model has made inroads in Asia in the past three years, led by companies such as Malaysia's AirAsia, Australia's Virgin Blue, and recent Singapore entrant Valuair.

At least two more discount operators are set for launch in Singapore later this year: Tiger Airways, backed by full-service flag-carrier Singapore Airlines, and a rival supported by Australia's Qantas Airways.

India - home to more than a billion people - has great potential, provided that authorities loosen rules governing which airlines may fly which routes, both domestically and abroad, he said.

"We are working on a couple of low-cost airlines ourselves there. We know of at least a half a dozen others in the Indian domestic market, that is the scale of this. And they are popping up all over the place," Harbinson said.

Air Deccan, based in the southern Indian city of Bangalore, is already offering cheap travel, and Air India Express, subsidiary of flag carrier Air India, is due to start flying by year-end.

Harbinson said there is growing commercial pressure on governments to ease restrictions on access to international air routes.

"The pace (of growth) will really depend on how fast the market liberalizes, how quickly you can get access to new routes," he said.

The latest sign of improved air access came on Thursday, when the governments of Singapore and Malaysia agreed to try to boost the number of flights between the neighboring countries, Bernama, Malaysia's official news agency, reported.

"The more we can strengthen air links between Singapore and Malaysia, the more we can facilitate tourism and investment flows," the report cited Singapore Transport Minister Yeo Cheow Tong as saying after talks with his counterpart in Kuala Lumpur.

In Singapore, the entrance of low-cost players on routes to Bangkok and Hong Kong has prompted price cuts by established carriers, blurring the distinction between the industry segments.

"We aim to offer bargains whenever there are capacity opportunities," said Wong Hong, area vice president for Singapore at Singapore Airlines.

The state-backed company now offers partially restricted round-trip flights to Indonesia and Thailand for as little as S$150 (US$87), up to 25 percent cheaper than earlier regular fares.