Asia Pacific aviation has changed irreversibly in the past ten years through the advent of new entrants on short haul routes, encouraged by rising economic growth and increasing market liberalisation. There have been…
Asia Pacific aviation has changed irreversibly in the past ten years through the advent of new entrants on short haul routes, encouraged by rising economic growth and increasing market liberalisation. There have been two distinct elements of the evolution: defensive and offensive new entry strategy, but both have increased competitive pressures in the market, stimulating new levels of demand, as we review briefly in this Perspective.
Defend and attack! What’s behind new entry?
Asia Pacific aviation has experienced waves of discount start-ups and full service responses over the past decade, intensifying in recent years. A key strategic response to new entry – the subsidiary carrier – actually celebrated its tenth anniversary in this region last November, with the launch of Air New Zealand`s Freedom Air in Nov-95.
Asian LCCs represent just 6% of the region’s total travel market at present, although penetration rates are much higher in countries like Australia (approximately 47%), the Philippines (41%), India (27%), Thailand (12-13%) and Singapore (11-12%) – markets that have either a deregulated domestic and/or liberal international market stance.
The US and European common aviation markets have much higher LCC penetration rates than Asia, which accounts for 26% of the world`s GDP and 62% of its population. However, genuine “international” (bilaterally regulated) LCC operations occupy a much larger proportion of Asia Pacific air travel than elsewhere.
Several factors in the Asia Pacific region will open the door for a new wave of aviation activity:
- Rapidly accelerating economic growth
- Increasing liberalisation (domestic, bilateral, then the eventual ASEAN multilateral)
- JV LCCs (with local partners) in offshore markets, with the related rise of region-wide LCC brands like Tiger Airways, Jetstar and AirAsia
These factors will enable LCCs to expand their presence across the region to the levels seen in Europe and eventually the US.
Vicky is the co-founder of TravelDailyNews Media Network where she is the Editor-in Chief. She is also responsible for the daily operation and the financial policy. She holds a Bachelor's degree in Tourism Business Administration from the Technical University of Athens and a Master in Business Administration (MBA) from the University of Wales. She has many years of both academic and industrial experience within the travel industry. She has written/edited numerous articles in various tourism magazines.
