Rise of Budget Carriers Drive Asia Air Traffic Growth

Airlines in the Asia-Pacific are expected to lead the world’s regions in profits this year, and much of it will be reaped by the new budget carriers sprouting in every market.

The region’s carriers are expected to generate $2 billion in profits this year as new budget carriers lure the newly affluent to take trips they wouldn’t have contemplated a few years ago. Since March four new budget carriers has begun flying or will in the next week, including Scoot in Singapore and Peach, AirAsia and Jetstar in Japan. China Eastern and Qantas are planning to debut another one next year.

Budget carriers debuted in Asia with Malaysia-based AirAsia starting in 2001, replicating a trend that has shaken up the industry in the US and Europe during the latter part of the 1970s and the 80s.

The proliferation of new carriers is backed by surging demand from newly affluent consumers.

One indicator of the shift in the center of air travel is Beijing Capital Airport’s rise to overtake Atlanta’s Jackson-Hartsfield as the world’s busiest airport later this year. In 2001 it wasn’t even in the world’s top 30. Five of the world’s 10 busiest airports are now located in Asia.

Within the past five years the number of passenger planes operated by Asia-Pacific carriers has jumped from 3,800 to 5,600. The growth potential remains huge, with 270 cities of over 1 million population in the region still without airports. And the share of traffic that goes to budget carriers is still only about 25% while it’s 35% in the US and Europe.

The growth in air travel in Asia has been too steep for the number of available trained personnel. Even as China pushes to double the passenger capacity of its airports over the next four years, it is embarking on a massive global push to recruit pilots, air maintenance crews, air-traffic controllers and other key personnel.