Asean open skies good for LCCs, but not for premium airlines

(Oct 16): As the 23rd annual meeting of Asean transport ministers wrapped up last week, the region’s open skies agreement still had miles to go before the full impact and benefits can manifest in the aviation market. When that happens, though, the resulting heightened competition could pile on further pressure for full-service carriers (FSCs) that have been losing much ground against low-cost carriers (LCCs) over the past decade.

“Asean is now an LCC market — in fact, figures show that over 60% of traffic within the region is already captured by LCCs, and growing,” Prof Alan Tan, an aviation law expert at the National University of Singapore, tells The Edge. “But once implementation of Asean open skies hits full swing, the full-service sector will take an even bigger hit.”

According to the Cara Centre for Aviation, LCCs accounted for 32.1% of seat capacity within Southeast Asia in 2007 but that number had risen to 56.2% as of 2016.

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