Low-Cost Carriers Lead Airline Market Growth in Asia Pacific

Asia Pacific's aviation industry is on a growth tear, and low-cost carriers are leading the way. A forthcoming report from travel industry research authority PhoCusWright, PhoCusWright's Asia Pacific Online Travel Overview Fifth Edition Airlines: A Turbulent Ascent, reveals that the region's airline market is the fastest growing in the world – and low-cost carriers (LCCs) will grow nearly three times faster than traditional airlines across APAC in 2012.

Despite political and economic instability, natural calamities, rising oil prices and foreign exchange volatility, airline gross bookings marked double-digit gains across all APAC markets except Japan in 2011. But the standout performance came from the region's LCCs, whose passenger revenues jumped 42% in 2010 and another 27% in 2011. In 2012, PhoCusWright projects LCCs will grow 23% versus just 8% for traditional airlines.

"While traditional airlines still account for the vast majority of passenger revenue in the region, LCC outperformance over the past several years underscores the impact newer, more nimble carriers are having in the region, especially in the faster growing markets of India and Southeast Asia," said Douglas Quinby, senior director, research. "LCCs are weathering industry challenges better than their full-service counterparts, and their continued growth and expansion – abetted by the faster growing APAC economies – are yielding profit margins ahead of network carriers on average."

LCCs are instrumental in driving the online air market across the region. By 2013, LCC online gross bookings will reach US$13.3 billion, up 55% over 2011. While AirAsia, Lion Air in Indonesia, Spring Airlines in China, and several in India have led the low-cost charge, some network carriers – including Singapore Airlines, Japan Airlines, All Nippon Airways, China Eastern, and Qantas Airways – have made big bets to capitalize on the enormous market changes underway.