Page 7 - AAA JANUARY - FEBRUARY 2018 Online Magazine

Low Cost Carriers are
The Airbus report Driving Growth
highlighted that
“Domestic sources of ccording to Boeing’s
growth - particularly private Current Market Outlook
consumption - led by China’s 2017-36, in Asia “rapid
economic transition to Aexpansion of LCCs
services will play a larger has been a key driver of overall
role in coming years. “Asia- growth in the short-haul market
Pacific will continue to lead since the early 2000s. As a result, most number of seats in the global
world economic growth the LCC penetration rate in some LCC market.” Boeing also agrees
with forecasts suggesting Asian regions is now more than with Airbus that liberalization is
average real GDP growth of 50 percent of their home markets, responsible for significant expan-
+ 4.1 percent per year over and other regions have been pro- sion in the Asian aviation industry.
the next 20 years.” It also adds that easing of visa
gressively growing LCC capacity
at double-digit annual rates over policy has also allowed passen-
It adds that Asia-Pacific is a the past decade.” On the more gers to travel more broadly in and
diverse and dynamic region, and holistic growth prospects Boeing out of Asia. But Boeing notes that
highlights that its evolution is not concurs with Airbus’ upbeat change is in the wind with the
just one simple characteristic but assessment for the region. “Asia LCC business model of operat-
a matrix of very differing dynam- has become one of the biggest ing at secondary airports, flying
ics. In South East Asia, you have aviation markets in the world. single-aisle airplanes with a sin-
the important global hubs and the China, India, and other emerging gle-class product, achieving high
significant influence of deregula- markets in the region are the main airplane utilization, and minimizing
tion through ASEAN, where as in engines of growth. The significant airport and cabin services is now
North East Asia there are more increase has been due largely to extending to long-haul routes.
mature markets and just a grow- regional economic growth, market It states that this new model is
ing LCC presence, all of which liberalization, new technology-en- increasingly capturing the atten-
are heavily influenced by the bur- hanced airplanes expanding tion of many airline operators and
geoning Chinese aviation markets. further market opportunities, investors as they start becoming
Airbus cites an interesting number and successful evolution of new profitable and more strategically
in that half of the top ten coun- business models.” According viable to effectively compete with
tries contributing the most traffic to Boeing figures over the past the traditional network carriers.
growth in 2016, were from Asia- decade, jet fleets of Asian airlines Adding credibility to its observa-
Pacific. In the low-cost carrier have nearly doubled, from 3,600 tion Boeing says that “ten years
(LCCs) space Airbus adds that the to 7,000. ago, Asian LCCs essentially had
average size of the aircraft offered no widebody jets flying in the
by these airlines has also grown “The number of Asian medium- to long-haul market seg-
significantly from 133 seats to 165 airlines with jet fleets has ments. Today, LCC groups based
over 10 years, although it must be grown from 200 to 250, in Asia are flying almost 100 wide-
noted that in 2006 these LCCs while airplane orders body jets, with many more in the
were hardly a ripple in the pool of by these airlines have backlog, and continue to widen
capacity in the region. However, increased from the average LCC stage length.”
LCCs today in Asia are reaching 1,940 to 4,400”-- Boeing And that type of growth is all part
Tsunami proportions accounting The capacity that these airlines of Boeing’s assessment that Asia
for a massive 25 per cent of the provide has grown on average by is forecast to be the biggest travel
seats on domestic and intra-re- almost 10 percent annually. Seat market in the world, growing at 5.7
gional flows. This compares to 42 capacity provided by the low-cost- percent annually, and “by 2036
per cent in Europe and the CIS carrier (LCC) business model has passenger traffic throughout Asia
and 31 per cent for North America, grown on average by 22 percent will constitute nearly 40 percent
the home of LCCs. of global passenger traffic.”
annually, currently providing the

ASIAN AIRLINES & AEROSPACE January/February 2018 | 7