Page 11 - AAA APRIL - MAY 2017 Online Magazine

FEATURE LOW COST CARRIERS

During the 2015 Dubai Airshow,
Vietjet President and CEO, Nguyen
Thi Phuong Thao, and John Leahy,
Airbus Chief Operating Officer,
Customers signed an agreement
for the purchase of 30 A321 aircraft

Growth Engine The U-FLY Alliance brought together HK
One place that LCCs have really taken off is Express, Lucky Air, Urumqi Air, and West Air
China where they now account for 14 per cent which are all affiliated with the HNA Group
of traffic and are growing at 15 per cent a year. but the alliance is open to more members
An excellent example of that growth is China’s and Eastar Jet, the South Korean LCC signed
first LCC Spring which was formed in 2004 up in July last year. The alliance is essentially
and according to CAPA founder and chairman a way around some of China’s restrictions
Peter Harbison “was able to overcome local relating to mergers across provinces and
challenges and regulatory constraints to enables smaller airlines to get the economy
emerge as North Asia’s largest LCC.” And of scale without a merger. Launched in May,
just as AirAsia’s success has led to a more 2016 the Value Alliance brings together Cebu
LCC accommodating policy in Malaysia and Pacific (including subsidiary Cebgo), Jeju Air,
other ASEAN countries, Spring has broken Nok Air, NokScoot, Scoot, Tigerair Singapore,
down the barriers in China. “Spring became Tigerair Australia and Vanilla Air and these
China’s first LCC in 2005 and has since grown airlines serve more than 160 destinations with
steadily, despite a challenging regulatory a fleet of 176 aircraft. Customers are able to
and political environment”, Harbison said. book flights from any of the airlines in a single
“What Spring has been able to accomplish transaction which means more destinations,
as a private company in China is remarkable more routing options and greater convenience
and its success has led to a more supportive for customers of each airline.
LCC policy from the once reluctant Chinese
government.” Spring operates over 60 aircraft Alliances are Key
in China across a network of more than 80 But away from the giants and the two
destinations, including 22 international alliances there are still a host of smaller LCCs
destinations. As the barriers come down so who are either niche players or wannabe
the opportunities exist for new LCCs and tomorrow’s heavyweights. However, CAPA
possibly ULCCs throughout the region. But to says these airlines need partnerships to
combat government restrictions and / or the unlock the growth potential. “Partnerships
giants in the LCC space of AirAsia group, the are critical for unlocking a new phase
Jetstar group and Lion Air the U-FLY Alliance of growth in the relatively crowded and
was created in China in January 2016 followed increasingly competitive Asian market. This
by the largely ASEAN Value Alliance in May. is particularly important for independent
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