Unfazed by Jetstar’s exit, Southeast Asia’s budget airlines go on plane-buying spree
Carriers like VietJet and AirAsia embark on aggressive expansion plans despite rising costs and fierce competition in the region
Low-cost carriers have proliferated in Asia in the past two decades as disposable incomes rise, supported by robust travel demand from Chinese tourists.
Demand for air travel in Asia is expected to grow faster than in other regions in the next few decades, and carriers like Vietnam’s VietJet Aviation and Malaysia-headquartered AirAsia are to buy more planes to add to their already large order books as they seek to gain market share.
But margins are thinner than in other regions. The International Air Transport Association (IATA), an airline industry body, this year expects Asia-Pacific airlines to make a net profit margin of 1.9 per cent, compared with a global average of 3.7 per cent.
Airlines across Asia have largely restored capacity since the pandemic, which has intensified competition, especially for price-sensitive budget travellers, and pulled airfares down from recent high levels.
International airfares in Asia dropped 12 per cent in 2024 from 2023, ForwardKeys data shows. AirAsia, the region’s largest budget carrier, reported a 9 per cent decline in average airfares in the first quarter as it added capacity and passed savings from lower fuel prices onto its customers.