Home' Asian Aviation : AAV Dec Jan2011 2012. Contents AIRBUS
Osaka-based Peach Aviation plans to launch services from Kansai Airport in March.
32 AsianAviation | DECEMBER 2011 / JANUARY 2012
"Over the past six months, King sher Class [full-
ser vice economy class] has generated higher yields
and seat factors than the no -frills King sher Red class
of service," the airline says.
" e airline industry in India is going through a
tough period due to high costs and lower yields," says
Sanjay Aggar wal, the carrier s chief executive o cer.
" is is evident by the unprecedented losses recently
reported. To counter these pressures and leverage
its strengths, King sher decided to rationalise the
network, drop unpro table ights and expedite its
eet recon guration. is initiative will improve the
long-term pro tability of the airline."
Over the past two years, LCC capacity in India
has outpaced the demand in the domestic market.
Meanwhile, business-related travel is increasing
signi cantly, says Aggar wal. e airline s analysis
shows that "of the incremental yield, only 25 percent
is spent on providing the extra ser vices associated
with a full-service carrier. e remaining 75 percent
is net contribution to the bottom line," he adds.
Aggarwal notes that there are currently five
carriers operating in India s LCC market and only
three full-service carriers. "Like any other prudent
business, we are taking steps to improve our nancial
performance," he says.
Elsewhere in the region, new carriers are keen to
enter the LCC market. In Japan, for example, Osaka-
based Peach Aviation plans to launch ser vices from
Kansai Airport in March. e airline -- Japan s rst
true LCC -- will operate ten Airbus A320s in 180-
seat, single-class con guration initially on domestic
routes and later internationally across Asia.
e carrier is being established by All Nippon
Air ways (ANA), First Eastern Investment Group
and Innovation Network. ANA is the latest full-
service carrier to make moves into the LCC market
by establishing a low-cost o shoot.
Another emerging development in the sector
is the interest in long-haul, low-cost operations.
New, Singapore-based budget airline Scoot is a
wholly owned subsidiary of SIA, which will operate
medium- and long-haul no-frills ights. e airline
will be independently operated and managed.
e airline is currently working with the Civil
Aviation Authority of Singapore (CAAS) to secure
its air operator s certi cate, which it hopes to achieve
around the end of the rst quarter of 2012. Scoot
will operate four Boeing 777-200s purchased from
the parent company.
Engineering retrofit and certification of aircraft
is scheduled for April-June and the rst commercial
ights are targeted for the middle of the year, Scoot says.
Scoot will operate from Singapore Changi Airport
Terminal 2. Destinations in the rst year will include
points in Australasia and China, with the network
growing -- and longer-range aircra joining the eet
-- to cover points in India , Europe, Africa and the
The aircraft will operate in a two -class
con guration, with passengers able to customise their
travel experience, including meals, preferred seats and
baggage. e airline is aiming to o er fares up to 40
percent cheaper than legacy carriers.
Airlines in the region have tried long-haul, low-cost
operations in the past, with Oasis Hong Kong Airlines,
for example, failing in the market. Others, such as
AirAsiaX and Jetstar, have been more successful in the
medium- and long-haul low-cost market. Jetstar was
the rst LCC to o er long-haul international ser vices
in November 2006. International markets ser ved
to and from Australia including the Philippines,
Indonesia, Vietnam, Singapore, Fiji, ailand, Japan
and the United States (Honolulu).
AirAsia X was established in 2007 and ser ves
Australia, China, India, Japan, Taiwan, the Middle
East and Europe with A330-300s and A340-300s,
with considerable expansion on the horizon.
If the rst ten years of LCC operations in Asia
have shown anything, it is that exibility is the key
to sur vival in an unpredictable air transport market.
is lesson will ser ve the industry well as Asia is
forecast to lead global air tra c growth over the next
"The airline industry in India is going through a tough period
due to high costs and lower yields." -- Kingfisher Airlines
CEO Sanjay Aggarwal
AirAsia X serves Australia, China, India, Japan, Taiwan, the Middle
East and Europe, with more expansion on the horizon.
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