Friday, August 1, 2014

Asia emerges as leader in low-cost, longhaul air travel: OAG

Asia is setting new trends in longhaul, low-cost air travel, with China poised to become a key regional player in the near future, according to OAG Aviation Worldwide’s new report, Generation X – Long Haul Low Cost Comes Of Age.

The report observes that although low-cost air travel originated in Europe and North America to connect destinations typically within four hours’ flying time, Asian LCCs are adapting the model for locations up to eight hours apart. 

LCCs are now seeking to expand their route networks to better connect the rapidly growing travel markets of South-east Asia, North-east Asia, South Asia, Australia and New Zealand.

Although LCC growth has been slow in China, it will be pivotal to the sector’s future development, given that China’s Civil Aviation Administration of China (CAAC) recently abolished the minimum pricing requirement for airlines, and introduced new measures and incentives designed to encourage the development of China-based LCCs.

“Given the potential impact of the recent changes made by CAAC, the opportunities are now available for a major Chinese LCC to emerge or for a major Chinese carrier to make a play for regional markets,” said Mark Clarkson, business development director Asia-Pacific, OAG.

An analysis of the region’s top 20 country pair markets for total seat capacity between June 2010 and June 2014 saw China in eight of the fastest-growing routes. The average annual growth in seat capacity between Australia and China was 11.4 per cent, while 20 per cent was recorded between China and Thailand.

Further room for expansion is evident, with only three routes from China – Shanghai-Singapore (ranked fifth), Bangkok-Shanghai (19th) and Beijing-Singapore (23rd) – listed in the report’s top 25 low-cost, longhaul routes in Asia-Pacific.

The other top routes are Bangkok-Seoul, Perth-Sydney, Singapore-Sydney, Singapore-Taipei, Hong Kong-Tokyo, Seoul-Singapore, Melbourne-Singapore, Bangkok-Tokyo (Narita), Kuala Lumpur-Melbourne, Manila-Tokyo, Perth-Singapore, Brisbane-Perth, Tokyo (Haneda)-Singapore, Jakarta-Hong Kong, Brisbane-Singapore, Tokyo (Narita)-Singapore, Denpasar-Hong Kong, Bangkok-Tokyo (Haneda), Kuala Lumpur-Sydney, Kuala Lumpur-Taipei, Hong Kong-Sydney and Chennai-Singapore.

Soon to join the low-cost, longhaul sector are Indonesia AirAsia X, Thai AirAsia X and NokScoot, while Spring Airlines and Cebu Pacific are expanding their networks for the sector. More airlines seem likely to follow in the coming years.

Meanwhile, new airport infrastructure is being developed to support the expansion of the pan-regional LCC sector, with Kuala Lumpur's recent opening of the world’s largest LCC airport terminal.

The large populations, multiple airports and ongoing air transport liberalisation in India and Indonesia mean these countries are also poised to drive growth in Asia’s longhaul LCC market.
-TTG Asia.

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