Analysis: Budget airlines ride crest of Southeast Asia boom

Fri Oct 21, 2011 4:12am EDT
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By Ploy Ten Kate and Harry Suhartono

BANGKOK/SINGAPORE (Reuters) - Five years after Southeast Asia's biggest airport by passenger capacity opened in Bangkok, hailed as the dawn of a new breed of Asian mega-airports, the sleek, wave-shaped passenger terminal is already running at over-capacity.

The overflow of passengers at one of the world's largest air hubs illustrates an aviation boom that is accelerating in Southeast Asia, even as airlines in Europe and the United States cut capacity and fleets to salvage profits.

From Bangkok to Kuala Lumpur to Singapore, airlines in the region of 550 million people are expanding fleets and adding capacity even as the International Air Transport Association (IATA), a trade body, warns a weak global economy could shrink industry profits by 29 percent in 2012 to $4.9 billion.

"The ASEAN aviation sector is still one of the few bright spots in the regional sector," said Rigan Wong, an analyst at Citigroup in Hong Kong, referring to the 10-nation Association of South East Asian Nations.

"What is happening in ASEAN is more structural," said Wong.

Rapid economic growth, rising affluence, liberalization and notoriously poor rail, land and sea transportation are reshaping an industry that only a decade ago was hamstrung by heavy handed regulation and government involvement in much of Southeast Asia.

The International Monetary Fund has forecast ASEAN's five biggest economies to grow a combined 5.6 percent in 2012, well compared with 1.8 percent in the United States and 1.1 percent in Europe.

CAUTION   Continued...