It’s a new turf for low-cost carriers (LCCs) where they are setting the rules of the game offering never-before rates with a lot more
flight options. South-East Asia, the second-largest market for airlines from India — with 30% of the total international travel coming from this market — is set to witness a shakeout of sorts with LCCs challenging the dominance of traditional full-service network carriers like Singapore Airlines, Cathay Pacific and Thai Airways.
A virtually non-existent LCC market had helped these carriers garner more than 50% of the market share from India till now. But with Malaysian and Singapore-based low-cost carriers eyeing the void in the Indian market, the dynamics are bound to change. And, it’s only natural that when players like Air Asia, with its budget long-haul service Air Asia X, announced flights from Mumbai to Kuala Lumpur at rock-bottom prices established players like Jet Airways, Cathay Pacific and Malaysian Airlines were forced a re-look at their Indian operations.
In fact, the below cost pricing offered by Malaysian carriers forced the Indian regulator to intervene and sternly warn airlines on the price war and that they cannot sell at the offered prices. For example, a ticket from Mumbai to South-East Asian destinations like Hong Kong, Singapore and Kuala Lumpur is between Rs 14,500 and Rs 18,000 on Cathay Pacific, Malaysian Airlines or Jet Airways. Air Asia has rattled the market with an offer price of Rs 9,000 to Kuala Lumpur. “We are bullish on the Indian market, with a billion people this is a huge market. We will soon take the number of flights to India up to 140 per week from the current 78 flights,” said Sherliza Zaharudin, Air Asia.
What makes the region a lucrative market is the fact that travel trade experts feel the region would evolve as an extension of the Indian domestic travel circuit. “Capacity addition on the India-South-East Asia sectors will impact fares and we expect air fares to get more competitive. This will benefit customers immensely and travelling to South-East Asia for a holiday would be similar to travelling within India. We see a huge increase in tourist traffic to these destinations,” said Peter Kerkar, executive director, Cox and Kings. The number of tourists to Malaysia and Thailand went up by 7% and 6%, respectively, last year.
Indian low-cost carrier SpiceJet, which is soon to launch operations to the region, is cautious to lay its cards on the offerings it has, but the budget carrier is not ruling out the impact of Air Asia on pricing. “Almost 70% of domestic Indian passengers fly the low-cost product. There is rationale to pick that traffic up and our focus is South-East Asia and the SAARC region. We are aware that Air Asia is adding lot of flights and we have factored that in our plans,” said Samyukta Sridharan, chief commercial officer, SpiceJet.
Currently, Indian carriers pick 25% traffic from here and with Kingfisher (flies 28 flights weekly to Southeast Asia) adding flights to Hong Kong and Bangkok and Air India Express (49 flights per week to the region) also watching how the fare wars unfold, it will be interesting what the offerings will be like for travellers. Kingfisher, which currently flies a wide body to the region, is likely to deploy narrow body low-cost product on the route.
Aviation experts say that the boom time for LCCs in the region is just around the corner as there are a host of Airlines waiting in the wings to launch operations to the region.
“Jetstar Airways, Tiger Airways (Singapore-based low-cost airline), Jetlite (low-cost subsidiary of Jet Airways) and also Ryanair (Irish low-cost carrier) will all launch flights to South-East Asia as 70% of the world’s population lives within the flying distance of four to five hours, most suitable to the aircraft type of budget carriers,” said Kapil Kaul, CEO, India and Middle East, Centre for Asia Pacific Aviation. But the LCCs are yet to ruffle feathers of seasoned players like Hong Kong-based Cathay Pacific, which flies 35 flights per week out of India.
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