Budget airlines set to soar in Southeast Asia's open skies

Tue May 17, 2016 1:05am EDT
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* Small plane manufacturers hope for additional sales

* Airport capacity crunch limits growth in air traffic

* Investment can add 25 mln jobs and $298 bln to ASEAN GDP

By Siva Govindasamy

SINGAPORE, May 17 (Reuters) - Low-cost airline groups and manufacturers of smaller passenger aircraft will be among the main winners after Southeast Asia's open skies agreement finally came into effect last month, although airport capacity constraints could limit the benefits.

Ratification of the Association of Southeast Asian Nations (ASEAN) open skies agreements by Indonesia and Laos in April lifts restrictions on capacity and competition, allowing airlines to launch unlimited flights from their home to any point in the region subject to airport slot availability.

Hubs like Singapore, which have a clear expansion plan, could gain from an increase in air services, as will budget carriers which are ideal for a region where no two points are more than a few hours apart, say analysts.

"Airlines can launch any number of international flights as the market can support," said Alan Tan, an aviation law professor at the National University of Singapore. "Travellers can thus look forward to more flights at more competitive prices."

Dominant low-cost airlines like Malaysia's AirAsia , Indonesia's Lion Air, and Philippine carrier Cebu Pacific plan to do just that.   Continued...