Low-Cost Carriers - AirAsia/Jetstar/Lion/Tiger etc

[ddes]

I don't understand Tiger; cutting routes out of Singapore and Australia. Soon, Jetstar Asia will overtake them (they seem to be doing the right things) in Singapore and now not exactly doing well in Australia either.

At a certain point in time, Tiger may begin flights from Australia to Asia but right now, they have no right to. Not only are they not majority Australian owned, they have a weak domestic network and therefore are not "Australian" enough.

[Nov]

With such troubles, I don't think they will do what JediAlf suggested and get wide-body aircraft.

I'm surprised that they are not setting up their second hub on the Gold Coast. That would complement their services quite nicely. Also, I think Tiger is missing the boat by not having Darwin - Alice Springs, Perth - Port Hedland, Perth - Broome and Port Hedland - Singapore. Even twice or thrice weekly flights on these routes will probably see large demand if the fares are competitave. And not having a Sydney hub (Newcastle doesn't count!) seems bad as well...

I think they might find the trans-Tasman route being a tough sell as well, as there are a large number of airlines on that route.

[ddes]

I think Australia is a very tough nut to crack, that's why it has so far been able to support 2 carriers only, Qantas/ Ansett then Qantas/ Virgin Blue.

I am willing to bet that Tiger did very little research in terms of routes and capacity. For Tiger, AirAsia seemed to be stamping its footprint in Southeast Asia and Australia seemed like an easy entrance to begin operations. For Australia, you more or less just need lots of money, planes and just stick to domestic operations.

Looking at Tiger's growth, one also begins to realize why Sydney is Qantas' main hub....

[blizzardtweaker]

Originally Posted by ddes

I don't understand Tiger; cutting routes out of Singapore and Australia. Soon, Jetstar Asia will overtake them (they seem to be doing the right things) in Singapore and now not exactly doing well in Australia either.

3K can't, even if they wanted to, at least not without cutting existing routes, or flying at 3am in the morning, as they will not have any new aircraft for a long time. 3K will also face major opposition if it wants to fly to Aus cities direct (not via darwin) with widebodies from SG as Qantas (still its parent and majority shareholder) is very worried that Jetstar would 'steal' its Economy class passengers. Jetstar to Qantas is more like what silkair is to SIA (not exactly, but you get the idea). Operating all the lower-demand and less profitable routes and not eating into its parent's market share.

Notice how JQ never flew non-stop widebodies from Singapore despite there being demand. The darwin stop is 'deliberate' as it limits the number of passengers that would want to 'jump ship' from Qantas to Jetstar. (generating 'new' customers and not converting old ones) Most Singaporeans would mind the 3hr stop over and have this mentality that small aircraft are 'unsafe' (which of course is untrue), but most would still prefer a widebody to a tiny A320. And with Jetstar being more premium (and expensive) then Tiger, its stands as a 'neither here nor there' airline.
The only thing that Jetstar (Aus) has going for it, is that since it CAN fly international flights, flights originating from different Aus cities converge at Darwin and split up to fly to different Asian cities, not just Singapore. Hence, with so many possible Asia-Aus combinations via Darwin, sustaining the Darwin hub isn't difficult.

If Tiger had the same rights and followed Jetstar's lead of Multiple Aus cities -> Darwin -> Multiple Asian cities, it could do far better then Jetstar (due to its much lower cost). Maybe Tiger Singapore should also try to negotiate rights from the 'other Asian countries' it wants to fly from to Aus, instead of waiting endlessly for an approval they know they won't get. (Look at how long SQ has been lobbying for the SYD-LAX route, and did they get it? No.) Or maybe they could set up a virtual airline with the asian country or in Australia as Tiger Aus X or something and tied up with a local airline/company (51% stake) and with Tiger Aus having 49%. This paper airline would then automatically gain rights to fly internationally. (Lion Air Australia did this to get around the problem)

[ddes]

I think you can very clearly see what Qantas' plans for Jetstar Asia are... For me, I think it'll become very clear once the full ASEAN Open Skies comes into effect in 2011.

Jetstar launches new Perth-Singapore* services
Friday, 11 July 2008

Fares from $129# one-way at Jetstar.com

Australia’s low fares airline Jetstar has today announced it will commence daily A320 services between Perth-Singapore* (*flights subject to regulatory approval) on 2 December 2008, with special fares launched today for $129, all inclusive one way.

Singapore will become the third international destination to be serviced by Jetstar from Perth, with Perth-Jakarta* and Perth-Denpasar (Bali)* services to commence in October.

For a limited time only, Jetstar is offering special one-way web sale fares of $129# for customers booking Perth-Singapore at Jetstar.com (Australian point of sale only). The sale fares are available from 12.00 pm (AWST) 11 July 2008 until 21.59 pm (AWST) 11 July 2008 unless seats sell out prior.

The special offer is for travel between 2 December 2008 – 15 December 2008 and 3 February – 31 March 2009*. Fares are subject to availability and are not available on all flights or days. Sale terms and conditions are available via Jetstar.com. The sale fares are available at Australian point of sale only* and are for JetSaver Light fares.

All day, every day low fares will start from $199 for all-inclusive, one-way JetSaver Light fares on the Perth-Singapore route.

Like on all Jetstar routes, Jetstar is committed to offering the lowest fares on its Perth services.

Jetstar Chief Executive Officer Alan Joyce said the new route would be covered by Jetstar’s Double the Difference Price Guarantee, which applies to all Jetstar routes.

“Low fares leadership is at the core of our offering to Western Australia. We believe we have the lowest lead-in airfare in the market. Our Double the Difference Price Guarantee is a demonstration of our commitment to delivering low fares that allow more people to travel more often,” Mr Joyce said.

Any customer who books a lower fare on an alternative airline on the same route at a comparative time, receives a Jetstar travel voucher worth double the difference.

Mr Joyce said that by the end of the year Jetstar would offer 14 weekly international services from Perth to South East Asia, operated by A320 aircraft seat configured for 177 passengers in one class.

“Perth has been flagged as an important new port for Jetstar as we look to expand our Pan Asian blueprint and link more operations from Australia into our sister networks from Jetstar Asia and Jetstar Pacific,” he said.

“The Perth-Singapore market continues to be the third biggest international route in Australia in terms of traffic and has continued to grow at over 13 per cent over the last year.

“Singapore is the biggest source of South East Asian traffic to Australia and this, combined with the strong Western Australian economy, shows great potential for the Jetstar brand,” Mr Joyce said.

Jetstar’s commitment to offering West Australians the most competitively priced international airfares is demonstrated by the low fares airline’s first sale to mark the commercial launch of the Perth-Singapore* route.

Mr Joyce said Jetstar was looking forward to establishing a positive relationship with the West Australian community as the airline continued to establish its connections and grow its services from the city.

“These new international services to Singapore*, Jakarta* and Denpasar (Bali)* are in addition to our existing double daily domestic services between Melbourne and Perth, including individual daily direct flights from both Melbourne and Melbourne Avalon airports.

“We expect that our flights will be extremely popular with West Australians seeking the best value-for-money airfares when travelling to South East Asia for leisure or business,” Mr Joyce said.

“Importantly, this new service will link into the Jetstar Asia hub in Singapore, with travellers from Perth able to connect to a further seven South East Asian destinations including Hong Kong, Bangkok, Ho Chi Minh City, Kuala Lumpur, Yangon, Taipei and Macau.”

Jetstar passengers will be able to book fares at Jetstar.com with fares starting from $282** to Bangkok, $333** to Hong Kong, $242** to Kuala Lumpur, $317** to Macau, $359** to Yangon, $295** to Ho Chi Minh City and $431** to Taipei. **These fares are current at 10 July 2008. Exchange rates may fluctuate and lower fares may be available.

Mr Joyce said Jetstar’s short haul fleet growth over the next few years would continue to be focused on broadening the Jetstar footprint in the region.

“Perth will play an important role in this expansion and this new flight is a strategic next step,” he said.

The Perth-Singapore* service is in addition to Jetstar’s existing twice daily services between Singapore and Darwin.

Jetstar’s new daily service Perth – Singapore* from 2 December 2008
(Departure times shown)

Perth - Singapore
JQ 109 01:05

Singapore - Perth
JQ 110 17:45

*Flights subject to regulatory approval

[blizzardtweaker]

Originally Posted by ddes

I think you can very clearly see what Qantas' plans for Jetstar Asia are... For me, I think it'll become very clear once the full ASEAN Open Skies comes into effect in 2011.

Heres an old article clearly stating their intentions..

Jetstar mulls option for Asean open skies
SYDNEY

Wednesday, June 6, 2007

AUSTRALIA'S Jetstar will consider adopting a franchise system to expand in Southeast Asia if Asean adopts an "open skies" policy next year, it was reported yesterday.

The Australian Financial Review said flights within the 10-member Association of Southeast Asian Nations (Asean) were due to be deregulated next year, opening up one of the world's fastest growing aviation markets.

But it said wholly-owned Jetstar subsidiaries could not benefit from the agreement as they would be regarded as foreign owned, forcing Qantas's discount offshoot to instead examine a franchise system.

Jetstar chief executive Alan Joyce told the newspaper that the airline would consider taking minority stakes in airlines throughout the region as a means of expanding its brand.

Joyce compared Jetstar's growth potential in Asia to that of Southwest Airlines in the United States and Ryanair in Europe before trade liberalisation in their respective markets.

"Before that, no one had even heard of them," he said.

The Financial Review said Qantas was looking to invest in carriers in the Philippines, Indonesia and Thailand.

It said carriers minority owned by Jetstar would carry the airline's logo and use its ticketing and distribution systems, as well as possibly gaining access to its loyalty scheme.

The newspaper said Qantas would also use second teams of pilots and engineers to lift the carriers' standards and offer Qantas-accredited training schemes.

Qantas already owns a 49 per cent state in Singapore-based Jetstar Asia, which flies under the Jetstar banner. It also confirmed in April that it was taking a 30 percent stake in Vietnam's Pacific Airlines. AFP

[JediAlf]

ASEAN Open Skies only applies to all ASEAN members carriers, not applicable to any non-ASEAN carriers.

JetStar would face difficulty to make its own impact in ASEAN as existing Australian agreements with individual ASEAN nations do not permit JetStar to have seven freedom rights (i.e flying between foreign nations, instead of from home country).

JetStar Asia and JetStar Pacific (first two franchises of JetStar) would definitely benefit from ASEAN open skies with start by end of 2008 - unlimited routes between capitals of ASEAN nations. All ASEAN carriers are allowed to fly over ASEAN skies without landing, making stop in country for fuelling and maintenance without transferring cargoes or passengers.

After this, other routes between ASEAN non-capital cities would be opened up at later dates. There are other details like deregulating the airlines, relaxing foreign controlled in airlines etc..awaiting to be refined and implementation.

Full fledged single aviation for the entire ASEAN, similiar to what EU do now is targeted by 2015. India, China, Japan and South Korea have expressed their interest to work with ASEAN Open Skies.

[ddes]

Actually they already refined the 2nd stage of the non-capital cities Open Skies. I remember reading it with alot of hope because they had push forward the date time and time again, this time to 2011 if nothing goes wrong.

And the Open Skies is probably the only reason why Tiger Airways (Singapore) and Jetstar Asia are still alive. Yes, I don't believe both TR and 3K are profitable. Just because they say so doesn't mean its real. That's why many people believe in companies which have gone 'public'. I believe QF and SQ are supporting these airlines long enough for the awaited Open Skies.

[blizzardtweaker]

Okay, let me get this straight,
Dec 2008: Asean carriers will be able to mount unlimited flights between capital cities not originating from their home country? (like 3K could fly KUL-CGK?) What about flights originating from the home country to non-capital cities? (like AK doing PEN-SIN?)

2011: Full Open skies? As in 9th freedom rights for all of Asean? (like TR could fly KUL-PEN and AK could fly HAN-MNL?) Similar to what the EU has now, like what Ryan air is doing? So all carriers in Asean can fly from any other Asean country to non-Asean countries as though they were carriers of that Asean country? (like MH can fly SIN-LHR?) If this is true, then 2011 will be a very exciting year for flyers!

Any docs on the timeline and details of how 'open' the open skies will be? I can't seem to find them on google...

[JediAlf]

Originally Posted by blizzardtweaker

Okay, let me get this straight,
Dec 2008: Asean carriers will be able to mount unlimited flights between capital cities not originating from their home country? (like 3K could fly KUL-CGK?) What about flights originating from the home country to non-capital cities? (like AK doing PEN-SIN?)

2011: Full Open skies? As in 9th freedom rights for all of Asean? (like TR could fly KUL-PEN and AK could fly HAN-MNL?) Similar to what the EU has now, like what Ryan air is doing? So all carriers in Asean can fly from any other Asean country to non-Asean countries as though they were carriers of that Asean country? (like MH can fly SIN-LHR?) If this is true, then 2011 will be a very exciting year for flyers!

Any docs on the timeline and details of how 'open' the open skies will be? I can't seem to find them on google...

Here you are - Executive Summary - Preparing ASEAN for Open Sky, published in 2004.

Not official document. But this will provide you a glimpse of what ASEAN intends.

http://www.aadcp-repsf.org/docs/02-0...iveSummary.pdf

[ddes]

Come Jan 1 2009, all Singapore carriers can fly as many times as they want between Singapore and an ASEAN Capital City. The real increases for Singapore would probably be the SIN-CGK and SIN-KUL routes. Bangkok is already as frequent as it can get, Hanoi is not as lucrative as Ho Chi Minh, Yangon is unstable, Manila and Brunei are now high yielding or popular.

On various articles that can be found all over Google, the plans for the current EU-style Open Skies is a definite, but implementation of that range from 2011 to 2013 but one thing ASEAN countries seem to have agreed is that it'll happen by 2015.

But something is definitely happening in 2011, this much I can remember in the ASEAN meeting about Open Skies late 2007.

Perhaps 5th freedom rights like a SIN-BKK-SGN kinda thing. This I'm not sure.

[Nov]

Singapore has an open Skies with Thailand anyways, so there's no need to wait until 2009 for extra SIN-BKK flights.

[blizzardtweaker]

^ i don't think its 'open skies' with thailand per se. Singapore has unlimited 3rd and 4th freedom rights between Singapore and anywhere in Thailand. this means they cannot start flights stopping over at BKK without extra permission.

According to the document:
Phase 1- double designation, move to substantial ASEAN ownership; unlimited 3rd
and 4th freedom within ASEAN; and opening of secondary gateways. (2005-2007)

Phase 2- Multiple designation; restricted 5th freedom beyond rights; completion of
opening up of gateways, remove restrictions on fares. (2008-2010)

Phase 3 - Principal place of business for ownership; 5th freedom within ASEAN;
possible 7th freedom within ASEAN, charter liberalization. Allowing domestic cabotage.(2011-2012)

Given that the 1st Jan 2009 milestone development is only phase 0.5, I'd say the document's timeline is very off, even what was suppose to be done last year (phase 1 - have unlimited flights from any point in an airlines home country to any other point in another Asean country non-stop), wont be carried out any time soon.
I doubt that 7th freedom (EU-style open skies) will happen by 2011, or judging from current delays, even 2015...

[Nov]

^ Sorry Blizardtweaker, but Singapore and Thailand has more than 3rd and 4th. Remember the SIN - BKK - KIX flights a while ago? That was done after Singapore, Thailand and Brunei signed the open skies agreement which gave each other 1st, 2nd, 3rd, 4th, 5th and 6th freedoms!

MOT announcement: http://app.mot.gov.sg/data/s_04_12_27v1.htm

[ddes]

Not to mention, SIN-BKK-NRT, which is still in operation as of July 2, 2008.

I'm actually wary of a future in ASEAN when 7th freedom is in place, it's not a matter of if, but when, especially if ASEAN-EU, ASEAN-USA, ASEAN-China Open Skies are in place. (They WILL follow after that, a question of when too)

Driven by profit, and no longer by public service obligations, our very own SQ and likewise other nations could be chasing profitable routes, possibly leaving SIN itself, alone. Sure, SIN can still be SQ's home, but 7th freedom and future Open Skies with other blocs and nations mean that Changi actually need be SQ's hub.

This also means possible merger in the AF-KLM sense, most ASEAN citizens who see airlines as a national prestige could see this as threatening sovereignty.

What do you people think?

[Nov]

I can't see where else SQ would go besides Singapore. Bangkok is a possibility, but THAI will probably have none of that... unless...

A TG-SQ merger? That in itself would be interesting, but then as you said, it'll be like the AF-KLM merger with both still operating almost independently at their different home base/hubs.

[ddes]

SQ could go to BKK, SGN, KUL, CGK and do what it does best; the Kangaroo route. Of course, airlines could and will "retaliate" and begin flights from Singapore.

Singapore Airlines would never merge with any ASEAN airline. In my opinion, the best, if I had to squeeze, is Qantas. With the right amount of cooperation, SQ-QF, and by extension, MI/TT/TR/JQ/3K/BL, could dominate the Asia Pacific routes. Of course, under regulators, this was never happen because of anti-monopoly issues. SQ is the largest foreign airline into Australia.

[Nov]

Originally Posted by ddes

SQ could go to BKK, SGN, KUL, CGK and do what it does best; the Kangaroo route. Of course, airlines could and will "retaliate" and begin flights from Singapore.

I agree that it would probably do excellently in CGK, but it'll have a tough fight at BKK with TG.

And I'm also curious why someone flying on the kangaroo route would matter if there was a choice between LHR-BKK-SYD or LHR-SIN-SYD. The only thing there that would matter is the airport choice for the 1 hour (or more) stopover. In this case, Changi wins hands down as BKK is really boring...

So I doubt SQ could increase its yield any more by moving to BKK. It might start flights from CGK on the Kangaroo route, and do extremely well, but I doubt it'll be well enough to force it to move out of Changi.

One of the secret of SQ is not that it is a great airline - I mean it is a great airline, but there are other great airlines out there as well, and TG is probably in the same league. The secret is that Changi has had the foresight to develop itself as a friendly stopover place. There's shopping, gym, hotels, good food, great entertainment and a pleasant environment. No other airport in the region can match Changi for traveller's comfort.

[hkskyline]

Actually, the kangaroo route has a lot more competitors now, notably Emirates via Dubai. Bangkok actually has a very strong fundamental draw simply due to the strength of the Thai tourism machine. Bangkok receives more passengers than Singapore a year.

We're seeing a diversification in choice for the kangaroo route. Several carriers have started such routes through Hong Kong in the past few years, including Virgin, Air New Zealand, and Qantas. I won't be surprised if Qatar or Etihad would be interested in joining the competition as well.

[RafflesCity]

Correct me if I'm wrong, but I believe in terms of international transit traffic, Changi is ahead of Bangkok. In fact I believe Changi receives more international traffic than Bangkok, which is supported by a domestic base.