Low-cost carriers edging out premium airlines in Asia-Pacific

Sources: Center for Asia Pacific Aviation, eTurbo News, Financial Express

Increased momentum for regional air liberalisation in recent years has fuelled a booming budget travel industry. In 2009, passenger traffic within Asia-Pacific hit 647 million - more than a quarter of the total number of international air trips made worldwide - compared with 638 million in North America. South-east Asia alone is now home to more than 20 low-cost carriers (LCCs), compared with just a handful a decade ago. Over the past couple of years, Asia's no-frills LCCs have used the global economic crisis as a golden opportunity to gain market share and consolidate their positions against premium airlines.

According to the Center for Asia Pacific Aviation, LCCs accounted for 15.7% of Asia's aviation market in 2009, or just under one in every six seats sold in the region. That was up from just over 14% in 2008. Those market gains have come at the direct expense of the region's premium airlines. Premium airlines, many burdened with rigid fixed-cost structures and high debts, were slow to respond to changing consumer preferences and trends, and as a result lost out to nimbler LCC competitors who reacted more quickly to the shifts.