Budget carriers in SE Asia stepping up fleet expansion
MANILA, Philippines – Fleet expansion of low cost carriers (LCC) in Southeast Asia is expected to accelerate this year after a single-digit growth in 2016, aviation think tank Center for Asia Pacific Aviation (CAPA) said.
In a report, Capa said Southeast Asia’s low cost airline fleet is expected to grow by 11 percent or approximately 70 new aircraft this year.
Last year, Southeast Asia’s low cost airline fleet went up by only seven percent, the slowest growth rate posted in several years.
Southeast Asia’s low cost carriers have 623 aircraft in December 2016, up by a modest 41 aircraft compared to the beginning of the year.
In previous years, Southeast Asian low cost carriers had more additional aircraft with 67 aircraft added on the fleet in 2015 and 61 in 2014.
Capa said several airlines responded to overcapacity, which peaked in 2014 following a period of overzealous capacity expansion, by deferring aircraft deliveries.
While overcapacity continues in several Southeast Asian markets, low cost carriers are seen to be reaccelerating expansion in 2017.
Capa said the AirAsia Group would be driving the accelerated growth rate in fleet expansion this year as it intends to acquire 20 additional aircraft for the Southeast Asia fleet.
In a separate report, Malaysia’s AirAsia X Bhd said it had become Asia’s first low-cost carrier to receive approval to operate scheduled passenger flights to any destination within the US.
The long-haul airline in a statement said it gained approval from the United States’ Federal Aviation Authority (FAA) and that it was considering flights to several US states, including Hawaii.
“Our expansion up until now has concentrated on Asia, Australasia and the Middle East, and we are excited about our first foray into an entirely new market as we look beyond Asia Pacific,” Group chief executive officer Kamarudin Meranun said in the statement.
AirAsia X also said it was mulling the resumption of flights on its London route. The airline suspended its London flights in March 2012 due to high taxes, but has held on to hopes of continuing the route since.
The Lion Group’s three LCC are also expected to add 15 to 20 aircraft this year, while the VietJet Group is planning to expand its fleet by 12 aircraft this year.
The Philippines’ leading budget carrier, Cebu Pacific Group is also planning a modest fleet expansion this year.
Capa said Cebu Pacific’s fleet plan involves having two additional aircraft this year, including one for its regional subsidiary Cebgo.
“Market conditions in the Philippines could support faster growth, but Cebu Pacific is waiting for the A321neo before accelerating its rate of growth.The group’s fleet plan includes eight additional aircraft in 2018, driven by the A321neo,” Capa said.
While the Southeast Asian market remains attractive as economic growth and middle class growth drive demand, Capa said there is risk capacity would grow faster than demand.
“As the region’s LCC (low cost carriers) significantly accelerate their rate of fleet growth in 2017, it could become increasingly difficult to find markets for the additional aircraft, exacerbating the overcapacity situation and impacting profitability,” Capa said.