The Resurgence of Budget Long-haul Carriers

After the failure of previous attempts like OasisHK, new budget carriers like Air Asia X are expanding their fleets by over 50% to run long-haul flights. The main reason why they might succeed where OasisHK and others failed is that these new carriers are affiliated with other domestic, short-haul carriers. For example, Air Asia X runs point-to-point long-haul flights but has plenty of feed-in traffic from Air Asia which is one of the largest short-haul budget carriers in Asia. Hence, while OasisHK also ran point-to-point long-hauls, they had periods of limited traffic because there weren't that many people at either end. It is unlikely that Air Asia X will face that problem as Air Asia will source them constant traffic.

These budget carriers are also cutting costs and increasing revenue by adding 35% more seats on each plane and using light equipment. Hot meals are only provided on previous request, saving up to US$100 per seat. These budget airlines are also saving by booking slots at second-tier airports - for example, Air Asia X's Kuala Lumpur-London flight lands at Stanstead Airport rather than Heathrow.

The outlook: This resurgence may not affect normal carriers like Singapore Airlines (SIA) who target a different class of passengers - 40% of SIA's revenue comes from 'premium passengers'. However, industry analysts still predict that budget carriers will increase their market share of all flights (short and long) from 20% to 30% in the near future.