Low-cost carriers eat into market

Low-cost carriers eat into market

Thai AirAsia X staff celebrate the arrival of the long-haul low-cost carrier's sixth Airbus 330-300 at Don Mueang airport yesterday. Low-cost carriers are increasingly the choice for local flyers.
Thai AirAsia X staff celebrate the arrival of the long-haul low-cost carrier's sixth Airbus 330-300 at Don Mueang airport yesterday. Low-cost carriers are increasingly the choice for local flyers.

Low-cost carriers (LCCs) continued to flex their muscle in Thailand's aviation sector last year, capturing more than 40% of the market with over 45 million passengers.

As the popularity of budget air travel grows, no-frills carriers are poised to increase their share of the overall airline market by 5-10 percentage points annually.

Tassapon Bijleveld, chief executive of Thai AirAsia (TAA), the country's largest LCC, believes LCCs can make up for half of total commercial air traffic passing through Thai airports this year.

"It would not be irrational to envisage LCCs comprising 75% of air traffic in Thailand in five years or so," he told the Bangkok Post.

The local situation is in line with the global trend as LCCs in more developed nations account for 50-60% of the market share, said Mr Tassapon.

Low fares, easy booking, a wide and growing route network, increasing frequencies and new passenger-friendly features are attracting flyers, eating into the market share of legacy airlines.

For domestic air travel, half of passengers already choose LCCs.

"For flights of less than four hours, many people will opt for budget airlines," he said.

But flyers' preference for LCCs is limited once flights reach six to eight hours, as legacy carriers offer services passengers typically expect for long-haul flights, said Mr Tassapon.

Last year saw discount airlines carry 46.12 million of the 109.81 million passengers processed through the six main Thai airports operated by Airports of Thailand Plc (AoT), including Suvarnabhumi and Don Mueang.

The 2015 LCC passenger volume accounted for 42% of AoT's entire passenger traffic.

The number of LCC passengers would be greater if those passing through smaller airports run by the Ministry of Transport were included, but the ministry has not made those figures available yet.

LCC passengers processed by AoT-operated airports last year leapt 30.38% from 2014.

The robust 2015 LCC growth was apparent for both local and international streams -- there were 31.28 million domestic passengers, up 29.7% year-on-year, and 14.83 million international passengers, an increase of 31.8%.

AoT records showed steady growth in both carried passenger volumes and penetration rates over the past five years.

LCC passengers rose from 17.7 million in 2011 (a 26.6% market share) to 21.9 million in 2012 (28.8%), 28.2 million in 2013 (31.9%) and 35 million in 2014 (38.6%).

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