Budget flyers to benefit as Asian low-cost airlines form new alliance

Budget airlines have formed the Asia Pacific region’s first alliance comprising eight low-fare carriers from Japan to Australia to boost usage of their networks. Value Alliance includes Singapore Airlines‘ Scoot and Tiger Airways, ANA’s Vanilla Air, Tiger Airways Australia, Nok Airlines, NokScoot, Cebu Pacific Air and Jeju Air, Vanilla Air said on Monday. The partnership […]

Budget airlines have formed the Asia Pacific region’s first alliance comprising eight low-fare carriers from Japan to Australia to boost usage of their networks.

Value Alliance includes Singapore Airlines‘ Scoot and Tiger Airways, ANA’s Vanilla Air, Tiger Airways Australia, Nok Airlines, NokScoot, Cebu Pacific Air and Jeju Air, Vanilla Air said on Monday.

The partnership follows a Chinese alliance by low-cost carriers (LCC) linked to HNA Group this year. Value Alliance is the world’s largest alliance of budget airlines and offers a website allowing passengers in a single transaction to book tickets and extra services such as additional baggage and meals across airlines in the group, according to the group. The members offer flights to more than 160 destinations with 174 aircraft, it said.

The alliance, which excludes bigger budget carriers lsuch as AirAsia, will increase the geographical reach of its members by using the strength of each partner’s website in its home market, Campbell Wilson, the chief executive of the medium-haul airline Scoot, said in Singapore.

“We are doing this for our own strategic reasons,” Mr Wilson said, when asked if AirAsia and Jetstar from Australia’s Qantas Airways were invited. “The fact that you don’t see the others here speaks for itself.”

Value Alliance also excludes Indonesia’s Lion Air and India’s IndiGo.

The goal, instead, is to bring together smaller airlines as an alternative to the AirAsia and Jetstar branded groups across the region, according to people in the industry.

“This is a positive move for the LCCs,” said Dan Lu, an analyst in Tokyo at JPMorgan Securities Japan. “The one disadvantage for LCCs is their lack of network brand. It’s quite difficult for them to join the full-service alliances so they have to form their own alliances. Through this joint alliance they can expand their network.”

Low-cost carriers have flourished in Asia as growing wealth encourages more people to fly for the first time. At least a dozen low-cost airlines started operating in Asia Pacific the past decade, ordering hundreds of aircraft from Airbus and Boeing.

Boeing’s 2015 global market outlook showed Asian low-cost carriers generated average annual growth of 24.5 per cent over the previous decade. By comparison, European peers grew 13.4 per cent.

The US plane maker also forecast 100 million new passengers entering the Asian market annually for the foreseeable future, creating demand in the next 20 years for 10,370 single-aisle planes such as Boeing’s 737 and Airbus’ A320.

The new alliance is not as extensive as the “Big Three” full-service carrier partnerships such as Star Alliance, Oneworld and SkyTeam. Those alliances feature extensive codesharing agreements, access to a network of waiting lounges, and the ability to redeem points on partner flights.

However, doubts has been cast over their effectiveness and, indeed, Emirates and Etihad Airways have both declined to join any of the Big Three.

Among budget carriers worldwide, Europe’s Ryanair and EasyJet have also eschewed alliances while still managing to lure enough passengers to be among the world’s biggest airlines.

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Source: Business

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