Competition Takes Off in Asia’s Budget-Airline Market

Competition in Asia’s budget-airline market is heating up as rival carriers raise more money and launch services to take on Malaysia’s AirAsia Bhd., the undisputed heavyweight of low-cost flying in the region.

A decade ago, AirAsia was the upstart, bringing the no-frills airline model to Asia after it succeeded in Europe and the U.S. Although some doubted it would work in Asia, where many residents don’t earn enough to fly, AirAsia took off. Now Asia’s other carriers are fighting back more aggressively.

Airlines such as the Philippines’ Cebu Pacific have raised hundreds of millions of dollars over the past year to expand their fleets, while several of Asia’s biggest flagship carriers have announced plans to start low-cost carriers in recent months. Singapore Airlines Ltd., Thai Airways International PCL and Japan’s All Nippon Airways Co. have all unveiled intentions to back new budget carriers recently.

Last week, the low-cost Jetstar Airways unit of Australia’s Qantas Airways Ltd. said it will spend $500 million on its Singapore operations by buying seven additional aircraft by year’s end and will add 40 weekly flights by then.

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