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Budget Airlines Take Off in Asia


Since they entered the Asia-Pacific market a few years ago, budget airlines have quickly become a success, and have helped fuel growth in the region's tourism industry.

Compared with Europe and North America, cut-price air travel is still a new business in the Asia-Pacific region. The first budget airline in the region, Australia's Virgin Blue, was established in 2000, followed two years later by Malaysia's Air Asia.

In the past two years, the number of budget carriers has soared. Travelers in Asia can now chose from about 30 low-cost airlines from India's Spice Jet, or Thailand's Bangkok Airways to Indonesia's Lion Air and the number is growing.

Many no-frills airlines, especially in India and Australia, fly mainly to domestic destinations. But more and more carriers bring travelers from Asia's cities to regional tourist hubs, and have opened new routes previously not served by major airlines.

John Koldowski, strategy director of the Pacific Asia Travel Association in Bangkok, says cheap flights are one of the reasons behind the region's current tourist boom.

"There have been some incredible gains, for example, into China. We see an increase of almost 20 percent in foreign arrivals. We are looking at foreign arrival into Macau growing 26 percent last year. Cambodia grew by 44 percent. And, a lot of that is being fueled by the low-cost carriers and new routes," said Koldowski.

Peter Harbison is executive director of the Center for Asia Pacific Aviation in Sydney, Australia. He says the introduction of low-cost airlines has been a phenomenal success in Asia. The boom has partly been driven by countries such as Singapore, Thailand and Indonesia, which have granted landing rights to budget carriers in the hope of boosting tourism.

But Harbison says the growth of low-cost airlines is still hampered by strict regulations on international air travel in other countries.

"Once the respective governments start to liberalize - and, I think it will happen fairly quickly, in the next couple of years, we will see, I think, well above predicted traffic growth, he said. "The potential is quite remarkable."

Harbison says the introduction of low-cost carriers has brought major changes to the aviation industry in Asia, which has long been dominated by national airlines that have built reputations for top-quality service.

In response to the new competition, big airlines such as Singapore Airlines, or Thai Airways have set up low-cost subsidiaries. That way, they can tap the market for budget travelers, without having to change their premium images.