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Low-cost Carriers in Asia - August 2011

  • There are numerous regional airlines in Asia, some of which are classified as budget, but do not really operate with an low cost carrier business model.
  • The most developed budget airlines markets in Asia are India, Indonesia, Malaysia, the Philippines, Singapore and Thailand. These countries offers largely deregulated airspace, low costs, and in some cases, dedicated low cost carrier terminals that make the operation of budget airlines viable.
  • The Indian domestic air-transport market, which is growing at an almost 20% annual rate currently in terms of passenger numbers, has been largely taken over by the low cost airline business format, which accounts for over 70% of current capacity. The flights are operated both by dedicated budget carriers or by the low-cost affiliates of the network carriers such as Air India, Jet Airways (Jetlite) and Kingfisher.
  • Budget airlines have yet to develop to any great extent in China, Japan, Indochina (Cambodia, Laos and Vietnam) or South Korea, due to high costs (Japan in particular), lack of deregulated air space, as in China, or high-speed rail competition (a particular factor in Japan and Korea but also increasingly in China).
  • Asia’s major low cost carriers, including IndiGo (India), AirAsia (Indonesia, Malaysia, the Philippines and Thailand) and Lion Air (Indonesia), as well as India’s third-ranked LCC GoAir, have contracted massive orders for hundreds of new planes. The most favoured type of aircraft is the Airbus 320.
  • AirAsia’s affiliate, AirAsia X, which offers flights to Europe and Oceania, has demonstrated that long-haul budget airlines routes can be viable and profitable.
  • Singapore Airlines (SIA) is planning to set up an LCC to secure its competitive position in the burgeoning long-haul, no-frills air-travel market in Asia; specifically, it intends to challenge the rise of Qantas’ Singapore-based Jetstar Asia affiliate.

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Table of contents

  1. Introduction

      • Key findings
      • Data Sources

        • Overview

          • Outlook for spending on travel and tourism
            • Figure 1: Forecasted and projected expenditure on travel and tourism in Asia, by sub-region, 2011-21
          • Supply and demand trends
            • Figure 2: Year-on-year percentage change in air-transport supply and demand, April 2010-11
          • Airline capacity ranking by country
            • Figure 3: Capacity to Asia – seats per week by destination country, May 2011 versus May 2010
        • Asian Low-cost Carriers by Country

          • China
            • Figure 4: Chinese low-cost carriers, 2011
          • Chengdu Airlines
            • China West Air
              • Lucky Air
                • Spring Airlines
                  • Spring now flies to Japan
                    • Viva Macau
                      • India
                        • Figure 5: Total passenger movements in India, 2004-13
                      • Domestic air travel growing even faster
                        • Deregulation and a rising middle class
                          • Market overview
                            • Figure 6: Indian domestic market shares (% of passenger traffic), November 2009 & 2010/April 2011
                          • Network carriers have switched to low-cost format
                            • High load factors
                              • IndiGo
                                • An order for 300 aircraft engines
                                  • Boosting staff numbers by over a third
                                    • A possible IPO?
                                      • An attractive alliance partner
                                        • Launch of foreign routes
                                          • Emergence of packages
                                            • Hotel partners
                                              • SpiceJet
                                                • Profits up sharply
                                                  • A single class of aircraft
                                                    • Delhi and Mumbai are two biggest bases
                                                      • Figure 7: SpiceJet’s top 12 airports, September 2010
                                                    • Customer service features
                                                      • Indochina
                                                        • Cambodia and Laos
                                                          • Vietnam
                                                            • Jetstar Pacific
                                                              • Indonesia
                                                                • Deregulation has sparked explosive growth
                                                                  • Infrastructure under strain
                                                                    • Domestic traffic dwarfs international
                                                                      • Figure 8: Domestic air traffic in Indonesia, 2004-09
                                                                      • Figure 9: International air traffic in Indonesia, 2004-09
                                                                      • Figure 10: Domestic Indonesian air-transport capacity, March 2010
                                                                    • Lion Air
                                                                      • Figure 11: Lion Air’s existing and planned fleet, 2011
                                                                      • Figure 12: Lion Air’s delivery schedule, 2011
                                                                      • Figure 13: Fleet plans of select South East Asian airlines, February 2010
                                                                    • Wings Air – a subsidiary
                                                                      • Figure 14: Wings Air fleet, March 2011
                                                                    • Indonesia AirAsia
                                                                      • Japan
                                                                          • Figure 15: Japanese LCCs, 2011
                                                                        • Malaysia
                                                                          • Figure 16: Malaysian air passenger movements, 2004-13
                                                                        • A dedicated low-cost terminal
                                                                          • Figure 17: Breakdown of LCCT-KLIA, by specific area, 2011
                                                                          • Figure 18: LCCT-KLIA’s configuration, 2011
                                                                        • New terminal to be ready by March 2012
                                                                          • Capacity for 30 million passengers
                                                                            • AirAsia
                                                                              • Airbus 320 has been adopted
                                                                                • Figure 19: AirAsia’s air fleet, by hub, country and subsidiary, May 2011
                                                                              • Expanded distribution possibilities
                                                                                • Good coverage of ASEAN
                                                                                  • A new Philippines affiliate
                                                                                    • Clark has a catchment area of 23 million
                                                                                      • 200 million passengers by 2013
                                                                                        • Figure 20: Consolidated operating statistics for AirAsia, 2007-10
                                                                                      • AirAsia to stick to the region
                                                                                        • A Vietnamese subsidiary?
                                                                                          • AirAsia X – a successful long-haul budget carrier
                                                                                            • The Philippines
                                                                                              • Figure 21: Philippine air traffic, 2006-08*
                                                                                              • Figure 22: Air-seat capacity shares in the Philippine commercial aviation market, August 2010
                                                                                            • Cebu Pacific
                                                                                              • An expanding route network
                                                                                                • Largest IPO in the Philippines and largest global LCC IPO ever
                                                                                                  • An expanding fleet
                                                                                                    • Figure 23: Cebu Pacific aircraft fleet development, 2010-14
                                                                                                  • Lower-income passengers targeted
                                                                                                    • Singapore
                                                                                                      • Figure 24: Airline passenger movements in Singapore, 2004-13
                                                                                                    • 48 million passengers by 2013
                                                                                                      • Budget terminal
                                                                                                        • Tiger Airways
                                                                                                            • Figure 25: Shareholders in Tiger Airways as at 25 August 2010
                                                                                                          • Profit before tax to almost triple in FY 2011
                                                                                                            • Capacity to grow in Singapore but not Australia
                                                                                                              • Expansion planned with foreign partners
                                                                                                                • 68 aircraft by the end of 2015
                                                                                                                  • Jetstar Asia
                                                                                                                    • Figure 26: Jetstar Asia’s route network, 2011
                                                                                                                  • Fleet
                                                                                                                    • Modular fares
                                                                                                                      • Long-haul amenities
                                                                                                                        • Interline and code-share partnerships
                                                                                                                          • Performance
                                                                                                                            • South Korea
                                                                                                                              • Six leading domestic carriers
                                                                                                                                • Figure 27: Airline shares on domestic routes, March 2010
                                                                                                                                • Figure 28: South Korean LCCs, 2011
                                                                                                                              • Air Busan
                                                                                                                                • Eastar Jet
                                                                                                                                  • Jeju Air
                                                                                                                                    • Jin Air
                                                                                                                                      • Thailand
                                                                                                                                        • Traffic grew by more than 80% over decade
                                                                                                                                          • Thai AirAsia gaining on Thai Airways in domestic market
                                                                                                                                            • Figure 29: Airline market shares in Thailand, 1 February 2010
                                                                                                                                          • Thai AirAsia
                                                                                                                                            • Chiang Mai added
                                                                                                                                              • A focus on south Asia
                                                                                                                                                • Nok Air
                                                                                                                                                • What Next?

                                                                                                                                                  • Capacity surge in India
                                                                                                                                                    • GoAir wants to catch up
                                                                                                                                                      • Major IndiGo and SpiceJet orders
                                                                                                                                                        • Better infrastructure supports growth
                                                                                                                                                          • LCC development in China, Japan and South Korea?
                                                                                                                                                            • China still discourages LCCs
                                                                                                                                                              • Singapore Airlines to set up LCC
                                                                                                                                                                • Threat to SIA’s price-elastic economy business
                                                                                                                                                                  • A significant investment
                                                                                                                                                                    • Aircraft for new LCC
                                                                                                                                                                      • Qantas competitive threat
                                                                                                                                                                        • Cathay Pacific will not follow in SIA’s footsteps

                                                                                                                                                                        Companies Covered

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                                                                                                                                                                        Low-cost Carriers in Asia - August 2011

                                                                                                                                                                        £295.00 (Excl.Tax)