Mre challenges for the locals!
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Mre challenges for the locals!
Asian LCC's target Australia. Good for consumers but not for our carriers..
Big Changes On Tap For Australian Market | Commercial Aviation content from Aviation Week
Big Changes On Tap For Australian Market | Commercial Aviation content from Aviation Week
Join Date: Nov 2011
Location: Inside their OODA loop
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From The Article:
That's not rational or sustainable, and nor will it be. Sounds like many investors in LCC's are going to lose their shirts. As soon as one brand-less LCC is fatally wounded another will step into the breach. No doubt based on a business model of killing everyone else first. As Sunfish succinctly called it "profitless growth".
Why are they targeting Australia, the same reason as the cruise ships and entertainers - the high dollar.
Given the massive population differential between Australia and Asia you have to wonder if the Asian regional market is already saturated.
LCC investors appear to want to subsidise the travelling public, but for how long can this insanity continue?
In recent years Australia “has seen international airline capacity growing well ahead of . . . passenger movements,” says Mike Mrdak, secretary of the Australian Department of Infrastructure and Regional Development. International seat numbers are up 8% year-over-year, versus a 6% rise in passengers. “You don’t have to be an economic expert to see that this is not a recipe for increasing profitability,” Mrdak notes.
In the past 12 months, Malaysian carriers have increased their capacity on flights to Australia by 40%, while passenger growth has been only 16%, according to Mrdak. He says a capacity oversupply is also apparent in the Singapore and Indonesian markets. The entry of LCCs on international routes has seen some long-haul airfares drop to levels comparable with short-haul domestic fares.
In the past 12 months, Malaysian carriers have increased their capacity on flights to Australia by 40%, while passenger growth has been only 16%, according to Mrdak. He says a capacity oversupply is also apparent in the Singapore and Indonesian markets. The entry of LCCs on international routes has seen some long-haul airfares drop to levels comparable with short-haul domestic fares.
Why are they targeting Australia, the same reason as the cruise ships and entertainers - the high dollar.
Given the massive population differential between Australia and Asia you have to wonder if the Asian regional market is already saturated.
LCC investors appear to want to subsidise the travelling public, but for how long can this insanity continue?
