Low Cost Airlines Opportunity Not Threat to National Carriers

The new generation of low cost airlines in Asia represent a “remarkable opportunity” for national carriers, according to the Centre for Asia Pacific Aviation head Peter Harbison.

At the conclusion of the Centre’s Asia Pacific Low Cost Airline Symposium in Singapore, Mr Harbison says that the incumbent operators are wrong in treating the low cost emergents as a serious threat.

“It is in fact a remarkable opportunity – once they are able to emerge from the state of denial which many of them have retreated to,” he says.

“The new low cost, point to point thinking is already helping make complacent airlines much more efficient – which, by reducing their costs and prices and improving the airlines’ customer targeting, will help them stimulate traffic growth well above forecast levels.”

The two-day symposium, which attracted 260 delegates from Australia, Asia, Europe and the US, discussed the rapid development of low cost airlines (LCAs) across the region. 

Representatives of government, airlines, airports, tourism groups and investors attended the landmark summit at the Raffles City Convention Centre. It was the first of three Asia Pacific Low Cost Airline symposiums being organised by the Centre. The second will be in Macau on April 26 and 27, and third in New Delhi on a date yet to be fixed.

Mr Harbison says that the initial symposium was a “resounding success”, focusing interest on probably the most significant development in Asian aviation for a considerable time.

“Low cost carriers clearly are a catalytic force in the push for regional liberalisation. They are sure to become increasingly influential in terms of both airline restructuring and the formation and pursuit of an effective government aviation policy,” he says.

Mr Harbison says that the major airlines are still in the “box seat”.

Also, in the special nature of the Asia Pacific market, still dominated by government regulation on international routes, the majors have the box seat in establishing their own low cost subsidiaries. 

In this, they have perhaps a year’s head start over the independents – the flag carriers will have first bite at the international routes available under bilaterals, they have no difficulty in raising adequate funding, they can often rely on the parent airline’s infrastructure (including aircraft and services) and do not have to face the usual public doubts affecting independent start-ups.

“And they should take every effort to make the best of that opportunity.”