Asia-Pacific long-haul low-cost airlines getting ready for further expansion

Asia’s fragmented geography makes air travel an attractive option. Especially low-cost airlines have allowed many Asians to travel by plane for the first time, and there is major scope for LCC growth on medium and long-haul routes as the rapidly growing middle classes of Asia are increasingly traveling longer distances. Market liberalisation is the other growth engine, with the opening of new routes between secondary destinations, especially in China, India and Southeast Asia. 

Low-cost carriers already fly many 5-hour routes across Asia, such as Jin Air and Jeju Air from Seoul to Bangkok, and Tiger Airways from Singapore to destinations in Greater China. Indonesian low-cost carrier Lion Air also has plans to expand its regional network to China, Japan and South Korea. According to Airbus in 2009 Asian budget carriers flew an average 1,800 kilometres per flight. In comparison, the average flight length for Southwest Airlines (USA) was 1,019 km, and 978 km for Easyjet (Europe). The Asia-Pacific region is also home to 2 of the 3 long-haul low-cost airlines in the world, AirAsia X and Jetstar (airberlin is the third one).

Launched in November 2007, AirAsia X currently operates 6 A330s and 2 A340s and flies long-haul routes from Kuala Lumpur to destinations in Australia, China, and India as well as to London Stansted. In the second half of 2010 the carrier will add 4 A330s as part of its order of 25 A330s and 10 A350s. Tokyo Haneda, Seoul, Sydney and Jeddah are reported to be among the planned destinations. In the past AirAsia X also mentioned interest to start services to Fukuoka, Osaka, Saporo, Hawaii, LA, San Francisco/Oakland, New York/Newark and Paris Orly. AirAsia X just announced it is targetting an IPO in the second half of 2011 to raise funds for expansion. The airline booked a net profit of MYR87 million (USD26, EUR million) on revenues of MYR720 million (USD, EUR) million in 2009 and plans to triple revenue in five years. 

Jetstar is the low-cost subsidiary of Qantas and in 2006 began long-haul flights from Australia and currently operates 7 A330s. Over the last years, Qantas has transferred its less profitable long-haul routes on which it carried many leisure passengers to Jetstar. Jetstar’s network now includes flights from GoldCoast (near Brisbane) to Tokyo and Osaka, Sydney to Honolulu, Fiji, and Bali, and Melbourne to Phuket and Bali. It is likely to increase services to Japan and could also complement Qantas’ Shanghai and Mumbai services or serve secondary Chinese and Indian cities. 

Jetstar Asia, the Singapore-based Jetstar operation, just announced it will start its first long-haul flights to Melbourne and Auckland in December 2010, when it receives its first A330. Jetstar says it has increased its short-haul network from Singapore in recent months, which will feed into its planned long-haul operation. Says Jetstar’s CEO, Bruce Buchanan, “connecting our three largest operations in Australia, New Zealand and Singapore […] builds a solid foundation for future growth beyond Singapore to North Asia and Europe.” On the list of potential destinations are Tokyo Narita and destinations in China, Korea, Italy, Greece, France and Belgium (Charleroi/Brussels). 

AirAsia X’s CEO Azran Osman-Rani also emphasizes that for long-haul low-cost flights transfer passengers are essential. For example, only about 30 percent of AirAsia X passengers travel between London to Kuala Lumpur directly, as the majority self-connects from their origin to their final destination, buying separate tickets online and reregistering their luggage. AirAsia X says it is negotiating with airports to arrange special airport zones where it would be possible to pick up the luggage and then register for the next flight in a ‘sterile area’. 

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