Airlines expand operations
Airlines in Southeast Asia have emerged from the global economic downturn in a much stronger position. Low-cost carriers expanded and gained market share, and their attractive fares and new routes continue to stimulate demand. Legacy carriers restructured both their operations and their finances to grow and become more competitive. Regional markets will continue to grow rapidly as the Association of Southeast Asian Nations (ASEAN) strengthens ties for business and leisure travel, both within ASEAN and with China and Taiwan. Travelers are also increasingly likely to include multiple stops on their itineraries as low fares and integration of regional networks make this more attractive. Southeast Asian airlines have dramatically increased their orders for new airplanes in an effort to meet growing demand and open up new, direct, longer range markets. New, efficient airplanes with improved capabilities and lower operating costs are integral to the carriers' business strategies.
Liberalization opens routes
Regulatory changes and infrastructure improvements are crucial to air travel expansion. Relaxation of market regulations among ASEAN nations, as well as in the cross-strait market between Taiwan and China, has removed many traditional barriers to growth. For example, more than 400 passenger flights per week are now scheduled between Taiwan and China, where service had previously been strictly limited to charter flights. Scheduled service will soon increase to more than 700 flights per week. Flights among ASEAN capital cities have also increased, marking an intermediate step in the path to a unified regional aviation market. Several carriers, not waiting for regulatory liberalization, are aggressively expanding into new markets by acquiring or partnering with other Southeast Asian carriers-operating their fleets as extensions of their own networks. Governments and airport authorities in the region are eager to expand their aviation infrastructures and capitalize on increased trade and tourism. Twenty-seven projects to upgrade and expand airports have been completed, begun construction, or are being planned.
Airlines bolster economic growth
Countries in Southeast Asia continue to strengthen their economic relationships and encourage collaboration. Air transportation plays a vital role in the region's above average (4.8 percent annually over 10 years) projected gross domestic product growth. For example, the development of more affordable air travel options has spurred growth throughout the region's services sector, including tourism and financial services. The strength of the region's air cargo operations enables the efficient shipment of manufactured goods. Overall, Southeast Asia's air travel-to, from, and within the region-is projected to grow at an average annual rate of 6.8 percent over the next 20 years. Intraregional traffic alone is expected to grow at a rate of 7.4 percent per year. More than half of the deliveries will be single-aisle airplanes, which will be needed to serve routes within the region.
