Southeast Asia’s low-cost airline fleet to grow 20%
The number of planes operated by Southeast Asia’s budget airlines is projected to increase by nearly 20 per cent in 2014 despite a recent spate of delivery deferrals and suspensions of expansion.
The region’s low-cost carrier fleet also grew by about 20 per cent in 2013, creating overcapacity in several Southeast Asian markets and leading to the current pressure on yields and load factors.
The AirAsia Group has made the right move in slowing down expansion by deferring deliveries and selling aircraft. Tigerair Mandala and Jetstar Asia also have decided to take at least a one-year hiatus from expanding their fleets. More Southeast Asian budget carriers, including potentially the Lion Air Group, need to make similar adjustments for market conditions to improve.
Southeast Asia is still a market with huge opportunities for further budget airlines growth. But the capacity expansion has started to outstrip supply, perhaps necessitating a pause for breathing space, the Center for Aviation suggests.
There are currently 23 LCCs operating in Southeast Asia. Another four LCCs are expected to launch in 2014 including three in Thailand – Thai AirAsia X, Thai VietJet Air and NokScoot – and Indonesia AirAsia X.
The start-up activity is not too concerning as three of the new carriers are widebody operators. The medium/long-haul segment of the market is not nearly as crowded, with just four of the 23 existing Southeast Asian budget carriers operating widebody aircraft. While some medium-haul markets are also now seeing overcapacity, particularly Southeast Asia-Australia, for the most part this sector of the market remains relatively underpenetrated.
It is Southeast Asia’s short-haul sector that is now seeing irrational competition on dozens of city pairs. Low-cost airlines now account for nearly 60 per cent of capacity within Southeast Asia. The short-haul sector (both international and where relevant domestic) have become competitive in all five of the leading aviation markets of Southeast Asia – Indonesia, Malaysia, the Philippines, Singapore and Thailand.
The number of planes operated by Southeast Asia's budget airlines is projected to increase by nearly 20 per cent in 2014 despite a recent spate of delivery deferrals and suspensions of expansion. The region’s low-cost carrier fleet also grew by about 20 per cent in 2013, creating overcapacity in several Southeast Asian markets and leading to the current pressure on yields and load factors. The AirAsia Group has made the right move in slowing down expansion by deferring deliveries and selling aircraft. Tigerair Mandala and Jetstar Asia also have decided to take at least a one-year hiatus from expanding their...
The number of planes operated by Southeast Asia’s budget airlines is projected to increase by nearly 20 per cent in 2014 despite a recent spate of delivery deferrals and suspensions of expansion.
The region’s low-cost carrier fleet also grew by about 20 per cent in 2013, creating overcapacity in several Southeast Asian markets and leading to the current pressure on yields and load factors.
The AirAsia Group has made the right move in slowing down expansion by deferring deliveries and selling aircraft. Tigerair Mandala and Jetstar Asia also have decided to take at least a one-year hiatus from expanding their fleets. More Southeast Asian budget carriers, including potentially the Lion Air Group, need to make similar adjustments for market conditions to improve.
Southeast Asia is still a market with huge opportunities for further budget airlines growth. But the capacity expansion has started to outstrip supply, perhaps necessitating a pause for breathing space, the Center for Aviation suggests.
There are currently 23 LCCs operating in Southeast Asia. Another four LCCs are expected to launch in 2014 including three in Thailand – Thai AirAsia X, Thai VietJet Air and NokScoot – and Indonesia AirAsia X.
The start-up activity is not too concerning as three of the new carriers are widebody operators. The medium/long-haul segment of the market is not nearly as crowded, with just four of the 23 existing Southeast Asian budget carriers operating widebody aircraft. While some medium-haul markets are also now seeing overcapacity, particularly Southeast Asia-Australia, for the most part this sector of the market remains relatively underpenetrated.
It is Southeast Asia’s short-haul sector that is now seeing irrational competition on dozens of city pairs. Low-cost airlines now account for nearly 60 per cent of capacity within Southeast Asia. The short-haul sector (both international and where relevant domestic) have become competitive in all five of the leading aviation markets of Southeast Asia – Indonesia, Malaysia, the Philippines, Singapore and Thailand.
