Is there a good time for LCCS?

The challenge ahead for Asia's premium airlines, which consistently get top ratings from travellers, is how long they can maintain high-quality service. • Until recently, these airlines were relatively immune to competition from low-cost carriers. But budget airlines now account for 24.9 per cent of Asia's total passenger traffic, up from 19.1 per cent in 2011 and 9 per cent in 2006, according to consulting firm UBM Aviation. At least five low-cost carriers are being set up by full-service Asian airlines, including Scoot from Singapore Airlines Ltd., Jetstar Japan from Japan Airlines Corp., Peach Aviation by ANA and Thai Smile from Thai Airways International PCL. The rise of LCCs could now be opportune. Asia's big carriers are challenged by slowdowns in premium and business travel, their most profitable businesses. High operating costs and persistent weakness in the lucrative airfreight business are also reasons why LCCs could offer a stable, alternative revenue stream. At the same time, there are tremendous growth opportunities in Asia. Findings from the World Travel and Tourism Council (WTTC) predict positive growth for the Asian travel sector. In addition, countries such as China and India are expected to perform strongly. In support of this, the Air Transport Action Group’s regional and group analysis of Asia Pacific states the key drivers of the robust expansion of the region’s air transport market to be steadily rising incomes and rapid urbanization of the very large populations in China and India, as well as other dynamic Asian economies. This is further augmented by discussions at TravelRave’s 2011

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• Asia Travel Leaders Summit where it was noted that the Middle Affluent Consumer (MAC) segment in Asia is on the rise. This segment is estimated to grow by 20 per cent and will account for approximately US$ 430 billion in tourism spending by 2020, making it the highest contributor of tourism spending. The number of MAC households in Asia is also estimated to grow by 18 per cent annually from 160 million in 2010 to 369 million by 2015. These figures, together with the rising intra-regional travel among Asians1, show the timeliness of investing in Asia. In addition, as a part of the travel business chain, LCCs create a domino effect on other travel partners. Keenly aware of this growing trend, industry leaders are convening at TravelRave to engage in meaningful discussions about optimising their business opportunities at events such as Aviation Outlook Asia and ITB Asia. Mr. Si Thu, Managing Director, CEO, Myanmar Airways International, will be one of the many in the business attending TravelRave’s Aviation Outlook Asia this year to discuss the pertinent issues faced by the Airline industry. He shared, “Myanmar has emerged from its isolation and seen exponential growth in the high season of 2011-2012. This is just the beginning of the growth of Myanmar’s aviation industry and we will see continued growth as Myanmar Airways International, readies itself to capture the region’s burgeoning market. I am looking forward to meet and learn from other key players in Asian aviation at Aviation Outlook Asia 2012!”