Airlines expand operations
Airlines have grown strongly as Southeast Asia continues to develop economically. Low-cost carriers are expanding and gaining market share as their attractive fares and new routes stimulate demand. Legacy carriers have restructured their operations and finances to become more competitive and grow. Some have launched subsidiaries or partnered with low-cost airlines to expand product offerings in the quickly evolving market. Rapid market growth will continue as the Association of Southeast Asian Nations (ASEAN) strengthens business and leisure travel ties within ASEAN and with China and Taiwan. Travelers are increasingly likely to book multi-stop itineraries as low fares and network integration make this more attractive. New, efficient airplanes with improved capabilities and lower operating costs are key to airline business strategies. Orders for new airplanes have dramatically increased to meet growing demand and enable new, direct, long-range markets.
Liberalization opens routes
Regulatory changes and infrastructure improvements are crucial to air travel expansion. Many traditional barriers to growth have fallen as ASEAN countries relax market regulation within Southeast Asia and across the strait with Taiwan and China. For example, more than 700 passenger flights per week are now scheduled between Taiwan and China, where service had been limited to charter flights. Increased service between ASEAN capital cities signals a transition toward a unified regional aviation market. Not waiting for liberalization, several carriers are aggressively expanding into new markets by acquiring or partnering with other Southeast Asian carriers to operate as a combined fleet on a single extended network. Governments and airport authorities are eager to expand their aviation infrastructures and capitalize on increased trade and tourism.
Airlines bolster economic growth
Economic relationships and collaboration among Southeast Asian countries continue to strengthen. Air transportation is vital to the region's above-average GDP growth projection of 4.8 percent annually over the next 10 years. For example, more affordable air travel options have spurred growth throughout the services sector, including tourism and financial services. Air cargo operations enable the efficient shipment of manufactured goods. Overall, air travel to, from, and within Southeast Asia is projected to grow at an average annual rate of 6.5 percent over the next 20 years. Traffic within Southeast Asia is expected to grow at a rate of 7.6 percent per year. More than half of new airplane deliveries will be single-aisle airplanes, needed to serve Southeast Asian routes.