Budget Carriers Notice Low Demand

7th Aug 2014

Budget carriers are disappointed with the Australian market after they notice a sluggish demand ever since they started their service to the continent. This, according to AirAsia X and Singapore-based low-cost carrier, Scoot.

According to Scoot CEO, Campbell Wilson, airlines have a hard time attracting Australian customers to fly via budget carriers, doing any way they can like changing frequencies and even holding promos just to entice them. Some airlines even pulled out completely their city pairs operations to cut down losses.

Scoot, a wholly-owned low-cost subsidiary of Singapore Airlines, operates daily flights between Singapore and Australia while its major rival, AirAsia X serves Australia from its Kuala Lumpur hub with daily flights as well. It even increased its capacity by up to 40% between Malaysia and Australia. AirAsia X currently flies to five cities in Australia, namely, Adelaide, Gold Coast, Melbourne, Perth and Sydney.

The Australian market for low-cost carriers has been low, but it has been disappointingly lower in recent weeks, according to Stuart Myerscough, AirAsia X head of commercial operations for Australia & New Zealand.

Another low-cost carrier which is feeling the pinch is Jetstar Airways, which flies between Singapore and Australian cities of Melbourne and Perth. The airline even increased its capacity to Bali only to discover later it has a hard time filling its bigger planes. Demand for Thai flights plummeted since the political crisis gripped the country late last year.

Nok Air CEO, Patee Sarasin, claimed that its domestic operations were profitable until the Thai political crisis broke out. Since then, it has not recovered and, currently, is still unprofitable.

The airline is joining forces with Singapore's Scoot to set up a long-haul low-cost airline, NokScoot. It will base its operations from Bangkok with planned routes mostly to China, Korea, and Japan. Due to perceived weak demand, it doesn't include Australian routes for the time being when it commences operations before the end of this year.

Thai AirAsia X begs to differ as it even plans to launch service between Bangkok and Australia, while an Indonesian subsidiary, AirAsia Indonesia, is set to launch a Bali-Melbourne direct service as early as next year.