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Budget Airlines Open Up Asia’s Skies
Adrian Addison | March 13, 2011

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Hong Kong. A decade ago, even some of Asia’s wealthier people could face a long bumpy ride on a bus to visit family or take a break on the beach — flying was simply too expensive.

Not any more. The proliferation of low-cost airlines across the region, particularly in Southeast Asia, has opened up air travel to the masses.

Malaysia-based AirAsia, which launched in 2001, was one of the first airlines to rip open Asia’s skies to the general public.

“Suddenly, people who had never been on planes — people who lived in villages and used to go on a 12-hour bus ride to see relatives — suddenly they were flying,” said Sean Lee, planemaker Airbus’s Asia communications director. “If the same thing happens in China, India and Indonesia, with their massive populations, imagine — the potential is huge.”

So huge, in fact, that Airbus predicts that a third of all new planes will be sold into the region by 2029 — 8,560 aircraft worth a cool $1.2 trillion.

The company has a backlog of over a thousand aircraft waiting to be delivered to the region. And of those, AirAsia has 175 firm orders for A320s, with a further 50 on option.

The airline continues to expand with the opening of three hubs in Kuching in the east Malaysian state of Sarawak, Chiang Mai in northern Thailand and Medan in Indonesia.

It is also launching operations in the Philippines later this year.

“For 2011, our plan is to further expand our route network and key routes,” said Tony Fernandes, AirAsia’s chief executive. “We also plan to be more aggressive in penetrating the Indian market and further expansion in China.”

Cebu Pacific, the already long-established low-cost carrier in the Philippines, plans to invest $1 billion in 21 new Airbus aircraft and hire 2,000 more staff over the next four years to boost its international operations.

Singapore’s low-cost carrier Tiger Airways, meanwhile, will take delivery of 26 aircraft by the end of this month, the company said.

India has eight budget airlines, which have gained nearly half of the market share in the country’s rapidly growing aviation sector.

IndiGo, launched in 2006, is the country’s youngest airline but has already become the third-largest, flying 8.4 million passengers last year, a 16.5 percent share in domestic traffic.

The airline announced a deal for 180 A320s, the largest number of Airbus planes ever bought in a single order, at the Paris air show this year.

IndiGo operates only domestic flights but has ambitious targets for 2011, planning to start flying internationally in August after recently getting government clearance.

Large-scale models of the Airbus suite of aircraft were on display at the Asian Aerospace Expo in Hong Kong, alongside rival Boeing and the Chinese upstart COMAC, which has its own aircraft on the drawing board if not yet in the sky.

All will be competing for a slice of this massive market which will soon overtake both Europe and North America.

Airbus predicts a need for 5,200 new airliners in the single-aisle 100- to 210-seat category, such as the A320 family. Of these, around a third will go to low-cost airlines.

The increase will be driven primarily by the growth of low-cost carriers, as well as the opening of new secondary short-haul routes, especially in China, India and Southeast Asia.

Airbus expects the number of passengers carried by Asia-Pacific airlines to rise by 5.8 percent per year, compared to global average increases of 4.8 per cent.

“If you look back to 2001 there were basically no Airbus aircraft flying with low-cost airlines in this region,” Airbus’s Lee said. “It’s expected to be 20 percent by the end of this decade — the growth has been really fast.”

Agence France-Presse