14 February 2003
The advent of low cost airlines in the region is being
watched with great interest by national carriers in ASEAN,
anxious that their long-protected patch may be cannibalised
by their more aggressive and nimble competitors.
In Malaysia, the rapid take-off of AirAsia with its
aggressive fares on domestic routes has not only caught
Malaysia Airlines' attention but that of Royal Brunei
AirAsia's routes to Miri, Sarawak and Labuan, Sabah,
with their close proximity to Brunei, are reported to have
caused some erosion of RBA's revenues as Bruneians get wise
to the idea that for a little inconvenience, they can save
substantially on airfares.
Miri is a mere hop from the Brunei border while Labuan
is an hour's boat ride from the sultanate.
Nurul Suzainee Abdullah, manager product development of
RBA, said the airline was watching the situation
AirAsia has been advertising heavily in the local Brunei
media, touting its low fares from Miri and Labuan to points
in peninsular Malaysia.
The Kuala Lumpur-based airline has also flagged that it
may set up a hub at Senai airport in Johor Baru, a move
that would be aimed at attracting customers from across the
causeway in Singapore.
In Thailand and Singapore, both national carriers have
raised the possibility of setting up a no-frills airline to
protect their patch.
Both governments have been taking the lead on this front
with their heads of state discussing a possible partnership
of a no-frills airline to be based in Chiang Mai.
Thai Prime Minister Thaksin Shinawatra's suggestion in
the media that SIA be one of the key drivers of the new
airline has created rumblings at Thai International.
However, decisions such as who would own the airline and
Thailand's potential investment have not yet been
The Bangkok Airways model has also proved successful
with the airline saying it expects sales to rise about a
quarter this year as it adds new planes and extends its
Sales may rise to about 5.5 billion baht (US$129
million) in 2003 from 4.4 billion baht last year, said
chairman Dr Prasert Prasarttong-Osoth. It posted a net
profit of 150 million baht in 2002.
Meanwhile, the Australian low-cost airline, Virgin Blue,
has signaled that its international ambitions extend beyond
New Zealand and the Pacific Islands, and will extend north
from Australia to South-east Asia.
"We are looking at destinations of not more than five
hours duration, but less than 10," said David Huttner,
Virgin Blue's head of commercial.
Tony Fernandes, chief executive of AirAsia, said that 25
percent of bookings for the airline were made via the
Internet. He said that in a region where road
infrastructure was not as well developed as in the US and
Europe, and where there were many island destinations, a
low-cost carrier could flourish.
Kevin O'Connor, Deutsche Bank director of transport,
aviation and logistics, said that the poor shape of the
major airlines meant that they could not afford to "squeeze
out the low-cost boys".
"Low-cost is the answer for a large part of the market,"