Dynamic competition
Southeast Asia is one of the most dynamic regions for air travel. Rapidly expanding low-cost carriers are opening new routes and offering dramatically lower fares than have been customary in the region. These airlines are making air travel more accessible by keeping operational costs low and using innovative distribution strategies to reach people without credit cards. Particularly in island nations, which are predisposed to air travel, carriers like Lion Air, Air Asia and Cebu Pacific continue to expand, despite the worldwide economic slowdown. Such market dynamics have spurred established carriers like Malaysia Airlines, Philippine Airlines, and Garuda Indonesia to focus on improving their efficiency and product offerings to compete. These restructured carriers will also be poised to compete more aggressively against other global network airlines as the economy recovers. New, efficient airplanes with greater capabilities and lower operating costs are integral to all of these carriers' business strategies.
Liberalization and infrastructure
Regulatory changes and infrastructure development are critical components of air travel expansion in Southeast Asia. Traditional barriers to growth are being lifted as market regulations lessen among ASEAN nations and on the cross-strait market between Taiwan and China. For example, the Kuala Lumpur-Singapore market restrictions were lifted in December 2008 and capacity has grown over 35 percent by mid-2009. This trend will continue, as ASEAN intends to establish a unified aviation market by 2015. Governments and airport authorities are also eager to develop their aviation infrastructure. Work is underway to upgrade and expand airports and to improve local connectivity. Committed projects in Taipei, Denpasar (Bali), Kuala Lumpur and Hanoi exemplify this development.
Aviation expansion
Southeast Asia continues to strengthen its economic community and encourage collaboration. Air transport plays a vital role in the region's relatively rapid projected GDP growth. More affordable air travel options spur growth across the spectrum of service industries in the region, from tourism to financial services. Well-developed air cargo operations enable efficient shipment of manufactured goods. The air travel growth rate for Southeast Asia is projected to average 6.6 percent per year over the next 20 years. Travel within the region will grow even faster, averaging 8.1 percent annually. Because much of the traffic increase will be flights within Southeast Asia, more than half of new airplane deliveries will be single-aisle aircraft.
