1. Budget airlines set to soar in Southeast Asia’s open skies

Budget airlines set to soar in Southeast Asia’s open skies

Low-cost airline groups and manufacturers of smaller passenger aircraft will be among the main winners after Southeast Asia's open skies agreement finally came into effect last month, although airport capacity constraints could limit the benefits.

By: | Singapore | Published: May 17, 2016 11:49 AM
Spicejet, Spicejet news, Spicejet flights, Delhi-Mumbai flight, Bangalore-Mumbai flight, spicejet Bangkok-Kolkata flight, Bangkok-Kolkata flight, Indigo, indigo flights ASEAN open skies agreements by Indonesia and Laos in April lifts restrictions on capacity and competition, allowing airlines to launch unlimited flights from their home to any point in the region subject to airport slot availability. (Reuters)

Low-cost airline groups and manufacturers of smaller passenger aircraft will be among the main winners after Southeast Asia’s open skies agreement finally came into effect last month, although airport capacity constraints could limit the benefits.

Ratification of the Association of Southeast Asian Nations (ASEAN) open skies agreements by Indonesia and Laos in April lifts restrictions on capacity and competition, allowing airlines to launch unlimited flights from their home to any point in the region subject to airport slot availability.

Hubs like Singapore, which have a clear expansion plan, could gain from an increase in air services, as will budget carriers which are ideal for a region where no two points are more than a few hours apart, say analysts.

“Airlines can launch any number of international flights as the market can support,” said Alan Tan, an aviation law professor at the National University of Singapore. “Travellers can thus look forward to more flights at more competitive prices.”

Dominant low-cost airlines like Malaysia’s AirAsia , Indonesia’s Lion Air, and Philippine carrier Cebu Pacific plan to do just that.

AirAsia, for example, wants more international flights from the Philippines and Indonesia, a spokeswoman said. This will help its affiliates, which have found it tough to break into the domestic market in those countries.

“Improved connectivity in the region will be a boon to tourism and strengthen ASEAN as an economic union,” the spokeswoman said.

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