FlyBoeing
Topic Author
Posts: 835
Joined: Fri May 05, 2000 2:08 am

Why No Low-cost Asian Carrier?

Wed Oct 04, 2000 2:12 am

I was wondering why there's no low-cost Asian carrier like Southwest in the USA and Easyjet/Go!/Virgin Blue/you name it in Europe. It seems like a no-brainer to try this given that there are a lot of people there and they ought not to pay the airfares in Asia. It costs $978 US to fly from Hong Kong to Singapore. It doesn't cost that to take a typical medium-haul flight within the USA. It costs $350 US to fly from Hong Kong to Manila. No wonder Asian carriers make such obscene profits and have brand-new aircraft with personal televisions. I reject this course of expensive flights, though. I think there's a large fraction of the population that's a flight ascetic: just gimme a seat, a soda, and a blanket and a low fare and I'll be happy, they say.

I figure you could have success if you had a regional carrier using 757-300s out of HKG that code-shared like a sonofabitch with the American carriers that have low levels of service anyway. Americans and Asian-Americans would jump for it.

Do you guys see any obstacles to this? Regulations, landing costs, fuel fees?

Thanks for all your help
 
ContinentalEWR
Posts: 3619
Joined: Wed May 24, 2000 2:50 am

RE: Why No Low-cost Asian Carrier?

Wed Oct 04, 2000 2:27 am

Sure, Asia has its own low cost airline. It's called Korean Air. Low cost on everything, including pilot training and maintenance.

Runner up....China Airlines.

 
shankly
Posts: 1199
Joined: Tue Jan 11, 2000 10:42 pm

RE: Why No Low-cost Asian Carrier?

Wed Oct 04, 2000 2:33 am

I though they did. My recent return airfares:

London - Bangkok, via Dubai with Emirates £390

London - Kuala Lumpur, via Singapore with SIA £400.

Kuala Lumpur - Langkawi, with three nights thrown in at the Pelangi Beach £70!

L1011 - P F M
 
Guest

RE: Why No Low-cost Asian Carrier?

Wed Oct 04, 2000 3:18 am

Hi Matt,

Good idea, interesting thinking. You make a good point that indeed, Asia is without an Easyjet, Southwest type of operation and question that fact. One would think that since the since low-fare air fare is so prolific now, someone would have already started it in Asia. Perhaps there is a good reason there is no such operation.

I would begin at costs, citing the high cost of productuon in Japan and Hong Kong as an answer. Almost like the NE US in that respect. However Europe too is very expensive to do business.

Lack of secondary airports? Since Asia has seen so much infastructre development in the last 50 years or so, much of it was put into large megaprojects. Old airfields as in Europe and America do not abound. So low-cost providers will still have to pay the same landing costs, rent etc.. as the big players at large airports, HKG, KUL, SEL, etc...

Competition. There is already an extravagent number of regional airlines plying the skys in east asia. From Korean, JAL, ANA, PAL in the north to Garuda, SIA, Thai, MAS, Cathay, Silk, Dragon in the south Asia seems to have a proliferation of state-owned "flag carriers" so to speak who in their cut throat competition seem to sometimes offer discount fares becuase of excess capacity.

Asia is not completely devoid however of Low-fare, albeit not on the scale you speak of. Most are small and fly domestic routes such as Skymark in Japan or the new JAL subsidiary JEX. Philipine Airlines serves a cheap niche in that archipeligo. SilkAir I beleive keeps the fares low so as to entice pax to transit to long distance high fare SIA routes.

Its a good question however, and who knows in the next few years there could be an "AsiaJet" or something of that nature. It may even be a questioning aviation enthusiast Dartmouth grad.
 
Triple Seven
Posts: 518
Joined: Fri Apr 07, 2000 10:04 pm

Transmile Air

Wed Oct 04, 2000 11:45 pm

There is a low cost carrier in Malaysia and that is Transmile Air. Although flying mostly cargo flights Transmile Air, I believe, has about 3 737 configured in high density layout plying routes such as KUL-Kota Kinabalu or KUL-Kuching. They have in recent years re-invented themselves as a low cost carrier. Transmile is flying about 2 727-200s (1 more planned), 7 737-200s, and 2 Cessna 208Bs. Plans are also on foot to acquire a widebody. Before the asian economic crisis Transmile Air were on the verge of acquiring DC-10s.

- Triple Seven
 
thai747
Posts: 784
Joined: Sun Jun 06, 1999 1:23 pm

RE: Why No Low-cost Asian Carrier?

Wed Oct 04, 2000 11:55 pm

Hi,
Flying Domestic in Thailand, is already cheap although you're flying with the national carriers. E.g. BKK - HKT ( Phuket costs US$100 return, with meals ) so I don't think a low cost carrier will be making any profit here , I'd expect the same thing with Malaysia..


However, in Japan , there's Air Do and Skymark , I have experienced Air Do, and yes... you get what you paid for..

Regards,
Jak
 
Triple Seven
Posts: 518
Joined: Fri Apr 07, 2000 10:04 pm

RE: Thai747

Thu Oct 05, 2000 12:08 am

As a matter of fact Transmile Air is doing well in Malaysia. When KUL at Sepang opened the old Subang airport became the hub for Transmile Air and they have carved a market there to them and competing second national carrier AirAsia.
Without strong MAS competition both Transmile and AirAsia are making profits. MAS was forced to return partially back to Subang....flying 17 flights out of there a week just to stay competitive. This double hub operation is hurting MAS badly but is doing a jolly good thing to Transmile and AirAsia. How long will this last I don't know but I foresee that the government would one day shut Subang down and both Transmile and AirAsia will be forced to operate out of Sepang. By then they should be a much stronger carrier.

- Triple Seven
 
Guest

RE: Why No Low-cost Asian Carrier?

Thu Oct 05, 2000 2:35 am

Thats right, the new 717 carrier Bangkok Airways is a sort of off-cost operation, but again like Skymark and the rest of them, its only domestic routes.
 
MAS777
Posts: 2757
Joined: Sun Jul 11, 1999 7:40 am

RE: Why No Low-cost Asian Carrier?

Thu Oct 05, 2000 8:47 am

Malaysia is quite a difficult market to operate a low-cost carrier in...by the nature of the fact that the government regulates its airfares at ridiculously low-prices. Transmile and Air Asia only really compete with MAS on the Trans-Malaysian routes across the South China Sea to Borneo which are really the only routes possible to undercut in the way of fares. Routes within the mainland however are so underpriced that MAS has consistently flown at a loss since its inception - how could a lo-cost carrier within Malaysia REALLY be justified unless the regulations change in their favour?

The problem with regional flights is the fact that Intra-Asian routes use archaic agreements which still favours national carriers as each national carrier still HAS national identities - unlike Western airlines which have mostly lost their nationalism and operate more as competing businesses. With such nationalism behind the industry in Asia - lo-cost carriers have little government backing so in all there is little incentive to start one as it WILL struggle under the current legislations in place.
 
Guest

RE: Why No Low-cost Asian Carrier?

Thu Oct 05, 2000 9:49 am

Good point MAS!!

I was going to add that, that Asian airline nationalism (is that a phrase?) and state support for airlines are prolific. One only has to look at the recent Taiwain / Phillipines squabble to appreciate the fact.
 
Megatop747-412
Posts: 257
Joined: Tue Sep 19, 2000 1:59 am

RE: Why No Low-cost Asian Carrier?

Thu Oct 05, 2000 10:40 am

I must say I agree with MAS777 and TWAneedsNOhelp...

May I add that the air traffic pax volume for Asian carrier really only started to get large sometime later in the 90s, but it was somewhat hampered by the Asian economic downturn... The markets are now just slowly creeping back and hence you''re beginning to see small airlines coming up, albeit mostly domestically. The Malaysian Govt has long kept domestic fares in check and it's no doubt MAS has lost heaps from them (domestic flights) - that perhaps is one of the main factors why MAS does not seem to be a profitable airline. SIA, on the other hand, don't have this problem, as Singapore DOES NOT have any domectic flight (hee.. heee...) - too small an island!!! They were smart in setting up Silkair years ago and off-loading some so-called "unprofitabl routes" to them 0 mostly touring routes. But then, once those routes prove to be maknig $$, SIA takes them back again!! Look at SIN-KHH (Kaohsiung in Taiwan) - SIA used to fly SIN-KHH in the very beginning, but it proved not profitable, so they allowed SilkAir (MI) to fly them. MI made it so popular with their daily flights, then SIA took it back a few years ago...

Another thing I'd like to point out, as FlyBoeing mentioned that it cost US$978 to fly HKG-SIN, well, I must say that you CAN get real cheap air fares on the sector. however, these real cheap fares are only to travel agents operating in Singapore - e.g. you can get a SIN-HKG-SIN return on SIA in S'pore for S$350 (abt US$280-300 I guess)... But they are only available to agents operating in Singapore - unfortunately you can't get such fares overseas and definitely not directly from the airlines. It's just how things are at the moment - using the internet, etc to book your travel arrangements has not been a big hit (yet) like in Europe and Asia as with EasyJet/Virgin. Another thing, I think most Asians are still not used to making bookings thru phone/internet - they prefer a more "personal" face-to-face communicatoin when making travel arrangements etc. Hence, even if a low-cost airline were to be established, they still need to have a certain number of sales/retail outlets to make it work, and that means cost could go up with high staffing costs... An airline like Virgin whereby their only sales channel is via phone/internet may not survive in Asia...