Low-cost carriers expect 13% growth annually

Almost unknown in Asia eight years ago, the low-cost carrier (LCC) business is gathering strength with annual double-digit growth that will triple its passenger volume by 2020.

Boeing showcases the B737 MAX model for the first time at last week’s Singapore Airshow. BOONSONG KOSITCHOTETHANA

The LCC market is expected to expand by more than 13% annually until 2020, boosting their market share in Asia's airline sector to 31% in 2020 from 19% currently, according to US planemaker Boeing's latest projections.

"The combined effect of rapid growth in emerging economies such as Southeast Asia, and the innovative changes made to airline business models will continue to transform the landscape of air travel in the region," said Randy Tinseth, the vice-president for marketing at Boeing Commercial Airplanes.

Carriers in the region are stimulating air travel by lowering fares and opening new markets, and that will boost passenger traffic for the region's LCCs to triple in terms of capacity, he noted.

The airline industry in Southeast Asia has seen regulations liberalised as carriers look for ways to expand beyond national boundaries to serve burgeoning demand, said Mr Tinseth.

The proliferation of LCCs in Asia should contribute to robust demand for single-aisle jetliners, the workhorse model preferred by no-frills carriers.

Boeing envisages more than 1,700 single-aisle jetliners or 62% of new airplane deliveries entering service in Southeast Asia over the next two decades.

Asia-Pacific carriers will require 11,450 new aircraft of various sizes, worth US$1.5 trillion, by 2030, he added.

Mr Tinseth noted many airlines in Asia have already begun strategic planning to renew their fleets with new and innovative products.

The Boeing 737 Next Generation and Boeing's new 737 MAX series are garnering demand.

LCCs prefer 737s, with almost twice as many serving these carriers than rival Airbus A320s, said Mr Tinseth.

Boeing has already received over 1,000 orders and commitments for the new 737 MAX from 15 customers including some of the world's leading LCCs such as Lion Air, Southwest Airlines and Norwegian.

Mr Tinseth said the 737 MAX's new CFM International LEAP-1B engines reduce fuel burn and carbon dioxide emissions by 10-12% over today's most fuel-efficient single-aisle airplanes.

That plane's wind-tunnel tests start this week, a major design milestone, he said.

Boeing targets delivery of the 737 MAX beginning in 2017.
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