Asia's larger low-cost carriers are continuing to expand beyond their home markets and around the region as they tap on the growing demand for cheap air travel around the region.
Southeast Asia remains the region's engine for low-cost travel, although Indonesia's Lion Air and the Philippines Cebu Pacific have largely restricted themselves to their domestic market. That has left Kuala Lumpur-headquartered AirAsia and Singapore-based Jetstar Asia and Tiger Airways to expand to other countries in the region.
AirAsia has affiliates in Indonesia and Thailand, both of which could have an IPO later this year, as well as long-haul associate AirAsia X. It has also announced plans to start up an affiliate in the Philippines.
"The company is in the best position, financially, that it has ever been in providing a strong foundation for further expansion and growth in 2011," AirAsia's Group chief executive Tony Fernandes said earlier this year. The Philippine subsidiary will be based at Manila's Clark Airport, and is scheduled to begin international flights in the fourth quarter of this year. The airline plans to operate between Clark and Singapore, Hong Kong, Taiwan, China, Thailand, South Korea and Japan.
"Our choice of Clark underlines the airline's commitment to developing transportation and tourism hubs outside Manila. This is part of our plan to contribute to the development of the country as a whole," says chief executive Marianne Hontiveros.
Clark will be the 13th regional hub of the AirAsia group, in addition to its bases in Malaysia, Thailand and Indonesia. Increasingly, however, AirAsia is finding that it has to share its turf with Singapore Airlines' associate Tiger, which has announced plans of its own for the Philippine and Thai market.
In February, Tiger said it would buy a 32.5% stake in Philippine low-cost carrier Seair, following a marketing partnership between the two airlines late last year. The initial partnership allowed Tiger to market Seair's flights on its website, while Seair operated A320 family aircraft leased from Tiger on its international flights.
Tiger's chief executive Tony Davis says that by taking a stake in Seair, his airline would be able to take a bigger share in "a major market opportunity for low cost airlines". The move would also allow Seair to compete more effectively against local market leader Cebu Pacific, which had a successful IPO last year and is rapidly expanding both its fleet and network.
It is in Thailand, however, that Tiger may be able to make the biggest dent in AirAsia's expansion plans. It has formed a joint venture with national carrier Thai Airways to start up a Bangkok-based low-cost airline. While the start of operations at ThaiTiger Airways, the name the new carrier has been given, has been delayed from the first quarter of 2011 to the third quarter of the year due to ongoing difficulties in getting government approval, there appears to be a significant amount of determination to make it a success.
"We will operate on the routes where there is a lot of demand for low-cost travel. Why should we leave the market to the competition? Thai will concentrate on the full service market, and this joint venture will add to our revenues at a low investment cost by riding on the growth in the South-East Asian air travel market," Thai president Piyasvasti Amranand.
Qantas subsidiary Jetstar, however, believes it is the Asia Pacific's leading low-cost carrier in terms of revenue and has long been operating low cost services in Australia and to regional destinations. While it also has a Vietnamese subsidiary, it is Singapore-based Jetstar Asia, in which Qantas has a 49% stake, which has become the focus of its expansion in the region.
Apart from plans to rapidly grow its short-haul network in the coming years, Jetstar Asia has also begun long-haul services to Melbourne and Auckland. It has secured rights for flights to Tokyo's Narita airport, and is also eyeing destinations such as Beijing and Shanghai in China and Rome and Athens in Europe.
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