Back to list

Boeing sees great potential for LCC market in Northeast Asia (update)

2014/11/06 20:28:15

Taipei, Nov. 6 (CNA) A Boeing executive said Thursday that Taiwan, among other Northeast Asian countries, can expect a fast-growing low-cost carrier (LCC) sector in the near future in the wake of greater market liberalization.

Randy Tinseth, vice president of marketing at Boeing Commercial Airplanes, pointed out that the LCC segment posted a market share of just 8 percent in 2014 in Northeast Asia.

This means that the LCC market in that region is likely to grow much faster than in other parts of the world, considering that it is still well below the international average of about 30 percent, he said.

"Northeast Asia was initially slow to adopt the low cost model, but LCCs are now a major driver of growth in this market," he said during a market outlook briefing in Taipei.

"The relative short distances between the many destinations in the Asian corridor provide LCCs with an access to developing nations that will sustain passenger growth over the next 20 years," he predicted.

Citing an Open Sky agreement between Taiwan and Japan reached in 2011, which allows Taiwanese airlines to operate unlimited services to Japanese destinations apart from Tokyo, Tinseth said an open market is what the LCC industry needs.

"This is a great example of how you can be successful," he said.

Japanese destinations accessible from Taiwan have doubled since the pact was signed, which allows budget airlines to take advantage of that opportunity, according to Tinseth.

However, the future LLC market size will be dictated by factors such as the networks of the airlines, liberalization of the market and cost structure, which means it is not likely to surpass the global standard, he said.

Taiwan has seen increasing interests from both foreign and local carriers in the LCC market in recent years.

Among the highlights this year is the introduction of two Taiwan-based airlines, Tigerair Taiwan and V Air.

Tigerair Taiwan, a joint venture between Taiwan's China Airlines and Singapore's Tiger Airways, got off the ground Sept. 26 with an inaugural flight to Singapore.

V Air, a low-cost subsidiary of Taiwan's TransAsia Airways, will launch its services by the end of the year with an inaugural flight to Bangkok as the 15th LLC operating in Taiwan.

Vietnamese carrier VietJet is also scheduled to start operations on Dec. 12.

(By Lee Hsin-Yin)
ENDITEM/J/WH

Related:
●Nov. 6: Taiwan's aviation market forecast to maintain steady growth