Can the Budget Airline Model Succeed in Asia?

(1) What opportunities exist in the Asia‐Pacific region for the entrance of new low‐fare

airlines? How might demand for low‐fare service differ in the Asia‐Pacific region and in

North America and Europe?

Differing views exist regarding the potential of low‐carrier airlines in Asia. Some analysts

regard the low levels of purchasing power, the availability of few satellite airports, and

scarce bilateral agreements allowing airlines to operate between countries, as sufficient

reasons to prove that no opportunities exist in Asia for the entrance of LFA. On the other

hand, other analysts consider that cheap travel would indeed be a great opportunity for Asia

Pacific, a region fully surrounded by sea and merely interconnected. Low‐far carriers would

have a great advantage as passengers would prefer quick and competitive travel compared

to travel by bus or car; especially since Asia‐Pacific is a region with no inter‐regional

highways and no high‐speed international rail.

There is no significant difference in demand in low‐fare service between Europe, North

America and Asia‐Pacific. Essentially, the substantial population in Asia‐Pacific could account

for a high demand in units and, hence, foster a bright future for the model in the region.

Moreover, Asia‐Pacific is a region with no inter‐regional highways and no high‐speed

international rail meaning that the alternative passengers may have in Europe or North

America are non‐existent in Asia‐Pacific, thus fostering the integration of a region divided by

water, politics and poor infrastructure.

(2) Do governments pose a significant obstacle to the expansion of low‐fare airlines in

Asia?

Airline regulation in certain Asian countries has restricted competition and, consequently,

opportunity for growth. As aforementioned, the Asian population has very limited air travel

choice in a region highly surrounded by sea, with neither highway nor high‐speed

international rail between countries. Although Air...