Despite expensive fuel bills, sharper competition and the merger of two small Singapore airlines last month, Asia's aviation industry is flying high with seats full across the region. Many new airlines are revving up as rising incomes, growing economies and unravelling red tape draw investors.
Jetstar Asia, a subsidiary of Australia's Qantas Airways, merged with Valuair, partly owned by Star Cruises, to cut costs and reduce losses. That means one of the brands will have to go. Even with only one brand, the merged airline will not have it easy. Staying in this game is going to cost Qantas plenty.
'Fending off competition, managing high fuel costs and dealing with integration requirements of the two airlines will create challenges,' says Bill Franke, managing partner of Indigo Partners, a private equity transport fund.
Valuair offered plenty of frills, but at a price not much less than world-leading rival Singapore Airlines. Jetstar's proposition is fewer frills, lower prices.
'Neither of them are particularly low-cost airlines,' says Damien Horth, Asian transport research head at UBS.
To really work, frills need frequent departures and open skies, which is not the case in Southeast Asia now. JetBlue's frills and good service at competitive prices translate into hundreds of aircraft on order, while many US domestic competitors are grounding aircraft and cutting routes, fighting bankruptcy.
Asia could not offer a starker contrast. International traffic within Asia grew 7.5 per cent in the first half of this year compared with the same period last year, reports the Association of Asia Pacific Airlines. (AAPA).
Asians are flying more than ever partly because more and more are stepping on to the escalator from poverty to middle-class comfort. Curious and keen to travel, they find very low fares are just the ticket.
'Most passengers on shorter-haul markets want safe, reliable service and low costs, and in that environment an airline seat becomes a commodity. And, as in commodities, victory belongs to the low-cost producer,' says Mr Franke, a leading investor in Singapore's low-cost carrier Tiger Airways.
New and established Asian carriers, many profitable, are adding flights to schedules and opening new routes to cope. They have ordered hundreds of aircraft this year alone. Of course, it is debatable whether Asians' appetite for travel will survive rising interest rates and oil prices that are pinching economies.
Some consolidation is natural, especially in Southeast Asia. In Europe and in the United States, deregulation came first, followed by waves of new airlines offering cheap tickets. By contrast, regulations still rule Southeast Asian skies.
Four million comfortable - but not rich - Singaporeans do not have the money or time to keep Jetstar, SilkAir, Tiger and Valuair in business. This has left Jetstar and Valuair struggling and then desperately falling into each other's arms.
'What it does show is that local carriers in Singapore and Hong Kong are going to find it tough, because they will be up against strong airlines with big aircraft and, hence, lower costs. Also, running an airline becomes exponentially more complex once you cross a border. Complexity means cost,' Mr Horth says.
If they survive, they can capture territory, build a brand and perhaps be ahead of the pack when Southeast Asia's skies are opened. That day, however, is a good few years off.
Meanwhile, carriers have to make do with a patchwork of bilateral changes and one or two half-baked initiatives by the Association of Southeast Asian Nations.
Nor will all the new carriers in India or the airlines in the busy skies of Indonesia or Thailand survive. Budget travellers do not have much appetite for fuel surcharges, unlike business flyers.
'There's a lot of shaky business models out there. Most of these models were built on jet fuel at US$35 or US$40 a barrel whereas it's looking like touching US$80 soon. There's more competition. I definitely see more consolidation. Like Ryanair and Easyjet, those that survive are going to prosper,' says Tony Fernandes, chief executive of Malaysian low-cost carrier AirAsia.
Still, there could be fewer failures than seen in Europe or North America over the past five or 10 years, and not just because of Asia's solid economic growth. Asia's buses, ferries and trains remain slow - and dangerous. On balance, Asia remains the best airline bet around. Africa and South America do not come close. Europe and the US are pretty much done.
Witnessing the boom in the west has left Asia with a gold-rush mentality towards airlines. Get in first, worry about the rules and regulations later.
AirAsia is leading the way, opening joint-ventures in Thailand and Indonesia. Tiger has just started plying Macau-Manila, a route Filipino workers travel heavily.
Indigo Partners maintains its only overseas office in Singapore. It is now looking at airport and airline projects across Asia, especially India and China.
Temasek, the Singapore government's investment arm, has invested in Indigo and bought into Pacific Airlines based in Ho Chi Minh City and formerly controlled by Vietnam Airlines.
At least four new airlines, many with very strong backers, have taken off with much razzmatazz in India this year, joining three other private airlines and two struggling state-owned carriers.
A dozen more airlines are preparing for launch this year and next, including IndiGo Airlines, with a shock order for 100 Airbus aircraft. 'Volumes in India are booming,' Mr Horth says.
But clouds loom. India's airports, long starved of investment, simply do not have the space for many more aircraft or passengers, threatening growth.
'They are a big problem for everybody in India, more so for the new entrants than for incumbents,' he says.
China, which has been expanding existing airports and building many new ones, could do with more private airlines. This year, only three small private carriers quietly appeared, with three more still wading through the bureaucracy. Beijing's cautious approach gives China's big three airlines a few more years to sort themselves out.
Arguably the biggest threat Asia's new airlines face, especially on international routes, is competition from well-run world-beating carriers such as Cathay Pacific and Singapore Airlines. Their costs are low, their pockets deep. New players may also find state-controlled airlines such as Thai Airways or Philippine Airlines make life tough.
Yet, these second-tier carriers could be in for a tough time too in a few years.
'Probably the biggest competitive threat to the industry is the growth of Emirates out of Dubai. It is very profitable, is growing aggressively and has an excellent management team,' says Mr Horth.
Emirates Airways, often mentioned in the same breath as Cathay or Singapore Airlines, will deploy 45 600-seat Airbus A380s on its network connecting Asia and Europe via Dubai. More seats usually mean lower costs and cheaper tickets.
Perhaps, then, Asia might just see a really nasty airline shakeout.