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Travel & Holiday

Budget no longer a poor man's way to fly

Flexible schedules, good connectivity...
The Straits Times - February 23, 2012
By: Karamjit Kaur, Aviation Correspondent & Royston Sim
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Budget no longer a poor man's way to fly

BUDGET flying is not just for travellers on a shoestring budget.

Eight years after Singapore's first low-cost carrier Valuair started flying, the business has shed its poor man's image.

A growing number of travellers, including those on business trips, are opting for budget carriers, not because they cannot afford to fly full-service but because they prefer to spend the money saved on other things, like eating and shopping.

Growing networks and good connectivity have also made budget carriers more attractive, said Mr Brendan Sobie, Singapore-based analyst for the Centre for Asia Pacific Aviation, a think-tank.

He said: 'Back in 2004/05, budget carriers were very small and targeted mainly at the leisure, price-sensitive market.'

But as they grew and added frequency on key short-haul routes where there is also business traffic, such as from Singapore to Bangkok, Jakarta and Kuala Lumpur, 'it was natural for these carriers to also start attracting suit-and-tie traffic', he noted.

Travellers The Straits Times spoke to at Changi Airport earlier this week said budget carriers provide a good alternative to full-service airlines.

Online content editor Cheryl Eng, who recently flew on Tiger Airways to Bangkok, said: 'For short-distance flights, it is not worth it to pay a few hundred dollars more to fly full-service.'

The 25-year-old added: 'Saving money on my flight gives me more spending power. I can use that sum for shopping instead.'

Another traveller, who wanted to be known only as Gavin, said he simply did not see the value in flying full-service for shorter flights.

'Why would you do that? Why pay $400 when you can pay $200? The most important thing is that the plane takes off and lands safely,' he said.

'It's not that I can't afford it. It just makes more sense to fly cheap unless the flight is longer than three or four hours.'

The 38-year-old manager for a global oil company was flying to Bali on AirAsia for a business trip. He added that his company generally encourages its staff to fly low-cost for shorter flights.

Ms Shanise Kwong, 35, a Hong Kong-based regional manager for a global logistics firm, said she chose to fly Jetstar for a round-trip to Singapore as it fitted her schedule better.

She was here to attend a half-day meeting, and said full-service carriers such as Cathay Pacific required her to stay for a minimum of two nights before flying back, while Jetstar did not.

'With budget airlines, it's a lot more flexible. And the fares are very competitive,' she said.

Mr Benny Tan, 40, decided to fly Tiger Airways to Bangkok for a business trip as it had better schedules than other airlines.

The director of a local manufacturing firm said that while scheduling played a big factor in his choice of airline, the lower cost of budget flights helped as well.

'I run my own company so I must be cost-conscious,' he said.

Apart from those who choose to fly budget carriers, there are also some who have no choice because the places they want to visit are not served by full-service airlines from Singapore.

Examples of such destinations are Krabi in Thailand, Darwin in Australia and Kuantan in Malaysia.

The strong demand for low-cost flights has boosted the industry, which has grown significantly since 2004, when Valuair entered the scene in Singapore.

Within a year, Jetstar Asia and Tiger Airways joined the fray. Valuair and Jetstar later merged to become a single entity.

Today, 12 low-cost carriers fly to Singapore, including Malaysia's AirAsia, India's Air India Express and IndiGo, and Cebu Pacific from the Philippines.

They typically cover destinations within a five-hour flying radius of their bases.

In just seven years, the market share of low-cost carriers at Changi Airport has jumped from 5.6 per cent of total passenger traffic in 2005 to 25.6 per cent last year.

There were 1.8 million passengers who flew on low-cost carriers in 2005, and 11.9 million passengers last year.

These carriers now account for almost a third of all flights at Changi Airport, compared to under 9 per cent in 2005.

Their growth in Singapore and across the region - there are more than 40 budget carriers based in Asia - is expected to continue in the coming years.

A decade ago, budget carriers had a 1.1 per cent share of the intra-Asian travel market, going by the number of aircraft seats. Now, it is a quarter.

The industry projects that over the next 20 years, about 10,000 aircraft will be delivered to customers in the Asia-Pacific region.

Almost seven in 10 will be single-aisle aircraft, and the bulk will go to budget airlines.

The boost in the low-cost carrier market has benefited not just Changi Airport but the larger Singapore economy as well.

From budget hotels to pubs, more businesses are catering to cost-conscious travellers.

The proliferation of low-cost carriers has made air travel more affordable and accessible, thus boosting international tourist arrivals into Singapore, said Mr Oliver Chong, director of communications at the Singapore Tourism Board.

The growth has been well supported by Singapore's strong line-up of leisure and business events, as well as its diverse range of retail, dining, entertainment and lifestyle offerings, he said.

Singapore welcomed a record 13.2 million visitors last year - 13 per cent more than the 11.6 million in 2010.

The low-cost travel market in Singapore and the economic spin-offs it creates will continue to grow as budget carriers press on with expansion plans.

AirAsia, for example, is gunning for a bigger piece of the corporate travel market.

Business travellers currently account for 15 per cent to 20 per cent of the airline's total passenger numbers, a spokesman said.

To cater to corporate needs, AirAsia offers its business clients a more flexible fare option, which allows flight changes to be made up to two hours before departure, compared to 48 hours for regular travellers.

More new products and services to cater to the business segment are in the pipeline, she said, and will be launched in the coming months.

Industry watchers said the current slowdown in the global economy should give the low-cost carrier segment a further boost if travellers and businesses tighten their belts.

A spokesman for Jetstar said: 'During the last financial crisis, anecdotally there was some 'trading down' when it came to both corporate and leisure travel, which gave great exposure to the low-cost carrier product.'

When things recovered, some chose to stick to low-cost flying.

Even as the low-cost air travel market grows significantly in Asia, there is scope for more growth, she said.

Asia-wide, low-cost carriers control about 20 per cent of the total air travel market, but in some countries like China and Japan, it is a much smaller 5 per cent to 6 per cent.

In more mature markets in Europe, for example, budget airlines have a market share of as much as 50 per cent.

It is just a matter of time before Asia gets there, industry watchers said, and travellers like Mr Frank Robertson will pave the way.

The 66-year-old taxi driver from Britain, who was travelling from Manchester to Perth via Singapore to visit his son, told The Straits Times that he also planned to visit Kuala Lumpur and Chiang Mai before heading back.

'Budget airlines mean I can come to this part of the world and travel around to different places,' he said. 'Before, flights were expensive so you were pretty much stuck in one place.'



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