Airlines expand operations
Southeast Asia’s airlines are growing rapidly as the region continues to develop economically. Low-cost carriers are expanding and gaining market share, stimulating passenger demand with attractive fares and new routes. Network carriers have restructured, both operationally and financially, for growth and increased competitiveness, some launching subsidiaries or partnering with low-cost airlines to expand their product offering in the quickly developing marketplace. The heightened competition has increased the availability and affordability of air travel within the region.
Regional markets will continue to grow rapidly as the Association of Southeast Asian Nations (ASEAN) strengthens ties for business and leisure travel. Travelers are increasingly likely to include multiple stops on their itineraries as low fares and integration of regional networks make this more attractive. Southeast Asian airlines have dramatically increased their orders for new airplanes to meet growing demand and open new, direct, long-range markets. In fact, more than half of the region’s forecast 2,160 single-aisle airplane deliveries over the next 20 years are already on order. New, efficient airplanes with improved capabilities and lower operating costs are integral to carriers’ business strategies.
Liberalization opens routes
Regulatory changes and infrastructure improvements are crucial to air travel expansion. Relaxation of market regulations among ASEAN countries has removed many traditional barriers to growth. Flights among ASEAN capital cities have also increased, marking an intermediate step in the path to a unified regional aviation market. Several carriers are aggressively expanding into new markets by acquiring or partnering with other carriers in Southeast Asia and surrounding regions. Governments and airport authorities in the region are eager to expand their aviation infrastructures and capitalize on increased trade and tourism.
Airlines bolster economic growth
The economic relationships and collaboration among the region’s countries continue to strengthen. Air transportation plays a vital role in the region’s projected above-average 4.9 percent annual GDP growth over 10 years. For example, affordable air travel options have spurred growth throughout the region’s services sector, including tourism and financial services. The region’s strong air cargo operations enable efficient shipment of manufactured goods. Overall, air travel to, from, and within the region is projected to grow at an average annual rate of 6.7 percent over the next 20 years, led by 7.5 percent annual growth in the intraregional sector. About 70 percent of new airplane deliveries will be single-aisle airplanes to serve markets within the region.