Transport Airlines

Low-cost carriers expected to capture the majority market share in Asia

Dec 21, 2012 7:39 am

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Traditional airlines are adjusting to the Asian travelers’ affinity for budget carriers by creating subsidiaries under the low cost model that may one day be their sole business.

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Jun Seita  / Flickr.com

Japanese LCC Peach from Kansai International Airport to Fukuoka Airport in Japan. Jun Seita / Flickr.com

Asian low-cost airlines will win more than 50 percent of the region’s market, surpassing the portion taken by U.S. and European discount peers in their own markets amid a wave of first-time air travelers, an executive at planemaker Airbus predicted.

Seat capacity offered by low-cost carriers in the Asia Pacific region currently comprise 19 percent of the whole market, rising to 32 percent in southeast Asia, according to the CAPA Center for Aviation. In Europe, the figure is about 30 percent.

Asia is catching up fast with the low-cost air travel markets established in more mature markets. The region is even more suited to budget carriers such as AirAsia Bhd., Airbus’s biggest customer in the region, because train and road travel is restricted by seas, said Kiran Rao, executive vice president for sales, marketing and strategy at Airbus.

“The Asian market lends itself more to the low-cost model in terms of mentality and the market, as they’re bringing in people who didn’t travel in the past,” he said. “These people in the past simply didn’t fly.”

India has more than 300 planes in operation, with already half of those belonging to low-cost carriers, the executive said. With the advent of carriers such as Air Deccan, the traditional two-class service offered by Air India has given way to single-class services on most routes, he said in an interview after a ceremony to market Airbus’s first delivery of an A320 with sharklet wingtips, to Air Asia Bhd.

Japan is another market where low-cost service has surged, he said.

’’We’re seeing a tremendous shift in traffic from the traditional ways of flying in Japan,’’ he said. AirAsia recently created a Japanese subsidiary, with plans to amass a fleet of at least 30 planes within five years, and All Nippon has taken a stake in low-cost Peach Aviation, started in 2011.

Editors: Andrew Noel and David Risser.

To contact the reporter on this story: Andrea Rothman in Toulouse at aerothman@bloomberg.net. To contact the editor responsible for this story: Benedikt Kammel at bkammel@bloomberg.net.

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