Asia to drive long-haul low-cost air travel

AirAsia X has the original Asian long-haul LCC
AirAsia X has the original Asian long-haul LCC

Asia is setting new trends in long-haul low-cost air travel, and China is likely to become a key regional player in the coming years, according to a new report by aviation analysts OAG.

Titled ‘Generation X – Long-Haul Low-Cost Comes Of Age’, the analysis shows that following the launch of Asia’s first long-haul LCC, Malaysia’s AirAsia X, more budget airlines are seeking to expand their route networks to take advantage of growing traffic between Southeast Asia, Northeast Asia, and increasingly South Asia, Australia and New Zealand.

“The LCC sector in Asia is experiencing strong growth with massive potential demand supported by fast-growing economies and rising demand for intra-regional travel.” the OAG report stated.

“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. This enables cost-conscious Asian travellers to fly to new destinations for which flights were either previously unavailable or were priced too high.”

AirAsia X has since been joined in the market by Jetstar, Scoot and Thai AirAsia X, a new Bangkok-based subsidiary. Broadly speaking, these carriers are connecting regional destinations in Northeast Asia and Australia from their Southeast Asian homes. Cebu Pacific and PAL Express are also serving the Philippines-Middle East sectors.

In the near future, Cebu Pacific will launch services to Australia, while Scoot is preparing to launch a Bangkok-based joint venture with Nok Air. OAG also predicts the launch of AirAsia X in Indonesia.

But looking at the future potential of this market, the report found that China could hold the key. Analysing the region’s top 20 country pairs in terms of seat capacity growth between June 2010 and June 2014, China was found to feature in eight of the fastest growing markets. There was double-digit growth on routes connecting China with both Australia (+11%) and Thailand (+20%). Here, existing LCCs like Spring Airlines could thrive, alongside a multitude of new market entrants.

Jetstar's Dreamliner at Bali airport, following a flight from Australia
Jetstar’s Dreamliner at Bali airport, following a flight from Australia

China’s aviation authorities recently abolished the minimum pricing requirement for airlines, and introduced new measures designed to encourage the development of Chines LCCs. This has led to the formation of many new carriers, including Guangzhou-based 9 Air and Hangzhou’s Zhejiang Loong Airlines.

“Given the potential impact of the recent changes made by the Civil Aviation Administration of China to the rules governing the establishment and operation of LCCs, the opportunities are now available for a major Chinese low-cost carrier to emerge or for a major Chinese carrier to make a play for regional markets,” said Mark Clarkson, OAG’s business development director for Asia Pacific.

And there is room for further growth, with only three routes from China – Shanghai-Singapore (ranked fifth), Bangkok-Shanghai (19th), and Beijing-Singapore (23rd) – listed in OAG’s top 25 low-cost, long-haul routes in Asia Pacific.

The top international routes are Bangkok-Seoul, Singapore-Sydney, Singapore-Taipei, Hong Kong-Tokyo, Seoul-Singapore, Melbourne-Singapore and Bangkok-Tokyo.

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