Asia has emerged as a solid market for no-frills carriers, partly because most of the demographic requisites were already in place, a regional travel industry leader says. Growing regional travel demand, rising disposable income, a high population base and open skies policies are driving low-cost carriers (LCC), which have been spurring additional air travel, said Peter de Jong, chief executive of the Bangkok-based Pacific Asia Travel Association (Pata).

In his analysis entitled ”A Future Vision for Air Transportation”, Mr de Jong listed the following elements that are propelling a business model that was almost unheard of in the region four years ago:

• More than 200 Asia Pacific cities have populations exceeding 500,000 and over 130 of them have more than one million inhabitants.
• More than 300 airports in the region can accommodate jet aircraft, such as the Boeing 737 or the Airbus A320 _ the aircraft that most LCCs use.
• The region’s mature economies where people have high purchasing power, such as Japan, Hong Kong, Singapore, South Korea and Taiwan, are generating significant flows of outgoing travellers.
• Rising GDP in developing nations is being rapidly followed by rising living standards and greater discretionary income in countries such as China, India, Indonesia, Malaysia and Thailand.
• The mix of both markets gives Asia a unique position to stimulate leisure, VFR (visiting friends and relatives) and business traffic.
• Countries in the region are increasingly deregulating their air transport policies, signing more liberal bilateral accords or agreeing to open their skies.
• The Association of Southeast Asian Nations is expected to implement a total open-skies policy, based on the European Union model, by 2010, and India has already opened its skies to foreign carriers and has implemented a domestic open-skies policy.
• Asia has a multitude of islands, long distances and often limited infrastructure. This means that aviation is often the most efficient and easiest way to reach a destination.

Mr de Jong noted that between 2003 and 2006, LCCs, with rising competition from full-service carriers that had also joined the low-fare competition, provided large airports in Southeast Asia with strong increases in the numbers of passengers.

Jakarta’s Soekarno Hatta airport saw a 57% increase in numbers; Kuala Lumpur realised 41% growth; Bangkok 27% and Singapore 21%.

”This was a remarkable achievement, as aviation and tourism during that period were affected by a number of crises including Sars in 2003, the tsunami in 2004 and various recurrent acts of terrorism,” he noted.

LCCs have also increased airport traffic in the region’s secondary cities, which have become a primary focus for many budget carriers.

Thanks to the new routes being pioneered by these LCCs, it is now possible, for example, to fly from Bandung to Kuala Lumpur or from Bangkok to Kota Kinabalu.

As a result, between 2003 and 2006, many secondary airports experienced dramatic increases in their passenger volumes.

Udon Thani, in northeastern Thailand, saw passenger volumes increase by more than 80%; Padang in Indonesia and Hat Yai in Thailand saw growth in excess of 70%; and Bandung in Indonesia and Johor Bahru in Malaysia both reported increases of more than 50%.

Increased traffic at secondary airports has also seen stimulated tourism at nearby cities.

Following the expanded service between Chiang Mai and Kuala Lumpur, for example, the northern Thailand city saw a 160% rise in arrivals from Malaysia, the Pata chief pointed out.

The spin-off effect of these new origin-destination city pairs increases the need for infrastructure improvement, which benefits local residents.

As a result, many new destinations have seized the opportunity to brand themselves as holiday destinations.

Source: Bangkok Post