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Budget Airline Services Expand in Asia

The number of budget airlines operating within Asia is expanding at an alarming rate, particularly the number of long-haul flights across the continent.  Budget carriers running long-haul flights have traditionally not made money, but they are hoping that the dynamic demands in Asia will change this trend for the better.  Cebu Air Inc. is one of the budget carriers trying to make it work in Asia.  Based in the Philippines, they have made arrangements to lease four new Airbus A330 aircraft for the use in long-haul flights.  Singapore Airlines has also announced its plans to create a budget unit called Scoot that will have flights from Singapore to Australia and other locations.

There are a number of other regional carriers with plans to launch budget units with flights of six hours or longer, including JetStar from Australia’s Qantas Airlines, AirAsia X from Malaysia, Tiger Holdings Ltd. from Singapore.  However, despite the optimism of the airlines industry executives and investors state that it is tough to make a profit in the low-budget, long-distance business.  This is because budget airlines typically operate with small aircraft that are less expensive to operate.  This works well on flights of two to three hours, says Mark Webb, regional head of conglomerate and transport research at HSBC in Hong Kong, but above that length of time the low-budget airline becomes much like any other long-haul airline.

AirAsia X is a good example of the struggles faced by budget airlines in the long-haul category.  Just last month they announced they would be cutting flights to Europe and parts of India due to the high price of fuel.  Instead, they intend to focus on the Asian market, in which they believe it is easier to turn a profit.  AirAsia Chief Executive Tony Fernandes said that they have determined that it works better to stay close to home and that flights of between four and eight hours will is the sweet spot.
See the original Google News article for more details.




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