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Asia's Budget Airline Industry Taking Off

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Asia's budget airline industry taking off

SINGAPORE - The future of Asia's fledgling budget airline industry is looking increasingly bright with the entry of aviation's big players but massive European-style price cuts are unlikely, analysts say.

Singapore Airlines (SIA) and the founder of successful European budget airline Ryanair became the latest to stake their claim with an announcement on Tuesday they were setting up Tiger Airways to start flying from the city-state next year.

Malaysia's AirAsia is currently the most well-established and successful no-frills carrier in the region and is planning on expanding its intra-country routes into Thailand next year.

Other players in the industry include Indonesia's Lion Air, which flies a no-frills service from Jakarta to Singapore, Orient Thai Airlines, Malaysia's Athena Air Services and Singapore's ValueAir, which expects to start flights next year.

But it is the recent rush by the major airlines to establish no-frills services that analysts and industry players believe has confirmed the future of low-cost carriers in Asia and will lead to stronger competition.

Aside from SIA and Ryanair founder Tony Ryan, Australia's Qantas Airways this week named its new budget airline, Jetstar, to counter the success of low-cost upstart Virgin Blue, which has 28% of the domestic market.

Flamboyant British businessman Richard Branson, who launched Virgin Blue three years ago, has said he too wants to enter the Asian market and is looking for partners.

The Sydney-based managing director of the Centre for Asia Pacific Aviation, Peter Harbison, said he was "extremely bullish" on the future of the region's low-cost airline industry, especially after the announcement of Tiger Airways.

"I think this significantly steps up the level of competition and the importance of this type of model in the region," Harbison said.

"The low carrier model works best in... the short-haul point-to-point market where price is extremely important and the deciding factor is price."

Jimmy Lau, a spokesman for Singapore's ValueAir, also said SIA's decision to establish a no-frills airline would ease concerns there were too many obstacles for budget carriers to succeed in Asia.

"More importantly for us internally, what SIA is doing has validated our business model. It means the model can work in Asia,"

he said.

Some of the reasons previously cited for Asia being unable to replicate the European no-frills success include the relatively long distance of the routes and the lack of cheap alternative airports away from the main ones.

Europe is also regarded as having a far bigger surplus of pilots that drives the cost of salaries down and Asia does not have a common market.

Hong Kong-based ING Financial Markets aviation analyst Philip Wickham said these factors meant passengers in Asia were unlikely to enjoy the ultra-cheap flights available in Europe, where tickets can sometimes cost less than a pint of beer.

"I think you will see some cheaper flights (in Asia) but you might not see anything dramatic," Wickham said.

He also pointed out the lack of a common market meant it was highly unlikely a budget airline would be able to operate as a pan-Asian service.

Instead Wickham said the low-cost airlines in Asia will generally only be able to fly routes that begin or end at their own airport.

Nevertheless, passengers can expect to pay hundreds of dollars less for many popular destinations that currently are not serviced by no-frills airlines, analysts said.

For example Wickham said Tiger Airways' destinations will include Bali, Bangkok, Hong Kong, Jakarta, Manila and Phuket.

--AFP 2003-12-10

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SINGAPORE - Singapore Airlines (SIA) roared into Asia's budget aviation market on Tuesday, announcing it will begin operating a no-frills carrier called Tiger Airlines with three partners next year. :D

Tony Ryan, the founder of successful European low-cost carrier Ryanair, is part of the venture along with the Singapore government's investment arm, Temasek Holdings, and US private investors Indigo Partners.

'Singaporeans and travellers in the region will get to fly to destinations in Southeast Asia at really low fares from Tiger Airways when it begins operations from Changi airport in the second half of 2004,' a joint statement published on the Monetary Authority of Singapore's website said.

'We have observed that almost all attempts by full service network airlines to operate wholly owned low-fare carriers have been unsuccessful,' Mr Chew said.

'This is because the low-cost model requires completely different methods and procedures, marketing approaches and skills.

It is hard to be both premium, full-service and low-cost, no frills at the same time.'

Mr Chew said SIA's inability to run a low-cost carrier was the reason for seeking a partnership with Ryan through his family's investment vehicle, Irelandia investments, and Indigo.

Ryan, who transformed the European airline sector by establishing Irish-based Ryanair in 1985, said Tiger Airways would boost the tourism industry in Southeast Asia.

'I am confident that the new airline will deliver the benefits that low-cost carriers can bring in terms of tourism and job creation, not only in Singapore but also to the other countries it serves,' Ryan said in the joint statement.

Former Ryanair director of operations Charlie Clifton, who has been appointed to establish a base in Singapore as well as outstations across Southeast Asia, flagged a campaign that avoided middle men.

'We're looking at going direct and using the Internet,' he told a press conference.

Tiger Airways is the latest entry into Asia's fledgling but rapidly growing budget airline industry.

Malaysia's AirAsia is seen as the region's leading no-frills carrier but most of its routes are within the country and its efforts to secure landing rights in neigbouring Singapore have been thwarted.

However AirAsia's routes will take on a regional flavour when the carrier begins flying to Bangkok from February.

Malaysia's Athena Air Services and Indonesia's Lion Air are other Asian no-frills carriers, while a Singapore consortium called Valueair also intends to take off next year.


however get it right.. B)

Tiger Airways! How many tigers do you know that can fly? - Now I'm worried! :o

I made the arrangements for 10:30am (to allow for the low cloud to disperse as Chris told me), surely I wasn't going high enough to worry about clouds, was I? and with my trusty photographer Jules in tow we set off up the M5. The instructions were very simple, once you make the turnoff at Junction 11, Staverton Airfield is clearly signposted from the M5. >>>>>>

As we turned into the airport I got my first glimpse of my transport, it was bright red with white stripes and a BI-PLANE


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