Low-cost carriers expected to fly higher under AEC

Thai low-cost airlines will see a chance to grow because of a number of supporting factors including the economic growth of region and increasingly liberalised skies across Asean, according to Kasikorn Research Center.

Despite fierce competition in their home market, Thai budget airlines have been able to adjust their marketing strategies to adapt and expand both domestic and international routes to maintain business growth, even in the face of the slowdown in the global economy, said K-Research.

Given their steady growth, these airlines are well positioned to benefit from the emergence of an Asean Single Aviation Market under the Asean Economic Community (AEC).

In the 12 months to Sept 30, 2012, Thai low-cost airlines carried 20.3 million passengers, an increase of 15.3% from the previous 12 months, according to K-Research data. Low-cost domestic and international routes increased by 15.1% in the same period.

The centre attributed the growth to various factors including stronger tourism, increasing urbanisation in various regions of the country, a shift of consumers’ preferences toward low-cost air travel, and the economic development of Asean.

The sector will also be stimulated by the creation of the Asean Single Aviation Market, which will further liberalise air travel among Southeast Asian countries. To prepare for the single market, Asean members are hastening to develop their infrastructure to support air travel.

Thailand took a major step in this direction when it reopened Don Mueang airport on Oct 1, 2012, moving low-cost carriers there from overcrowded Suvarnabhumi to allow them to service more passengers.

K-Research expects Thai low-cost carriers to see growth of 15-18% to 23-24 million passengers in 2013. By 2015, people travelling on budget airlines may account for about 35% of all airline passengers.

In addition, the growth of low-cost carriers may help increase air cargo volumes, which expanded just 2.3% in the 12 months to Sept 30 due to the slowdown of the global economy and the Thai export sector.

To ensure good momentum for the aviation industry and low-cost carriers, K-Research says the Thai government needs to develop better infrastructure, especially a transport system linking Don Mueang and Suvarnabhumi airports.

The reopening of Don Mueang was a necessary move for the government, said the centre. Passengers at the airport are expected to rise to 15-16 million in 2013, but Don Mueang will be able to handle 36.5 million passengers a year if both of its terminals are opened, which should be enough when the AEC comes into effect in 2015.

Sourced: bangkokpost