TransAsia Airways

SIA’s Scoot again targets under-penetrated Taiwanese market with new service to Seoul

Singapore Airlines' (SIA) long-haul low-cost subsidiary Scoot is further exploiting the absence of a local LCC in Taiwan by selecting Singapore-Taipei-Seoul Incheon as its seventh route. Scoot is already the largest low-cost carrier serving Taiwan, which has the lowest LCC penetration rate among major Asian markets. Following the mid-2013 launch of Jetstar Hong Kong, Taiwan will also be the last remaining medium or large-size market in Asia without a local LCC.

Scoot launched service in Sep-2012 on the Singapore-Taipei-Tokyo Narita route, which the carrier now serves daily. The carrier has been focusing primarily on stimulating demand in the local Singapore-Taipei and Taipei-Tokyo markets rather than on Singapore-Tokyo through passengers.

Scoot will similarly focus on the under-served Taipei-Seoul market after launching the Singapore-Taipei-Seoul route on 27-May-2013 with an initial three weekly frequencies. The new route will also boost Scoot’s presence in the competitive Singapore-Taipei market as the additional three weekly flights make Scoot the largest carrier on the route, just ahead of SIA.

TransAsia growth Pt III: considering intercontinental services as cross-Strait capacity limits bite

In this third and final part on the growth of Taiwan’s TransAsia, the carrier sees great potential for cross-Strait traffic once restrictions are loosened: governments have opened more cities that can be linked, but these are smaller and difficult to maintain a sustainable service. Even if greater access at primary cities were offered, obtaining slots is a challenge.

Once ETOPS is secured around 2015, this may pave the way for TransAsia’s A330s to launch intercontinental services, but before then the carrier is considering how it can grow outside its Taipei hub by using liberal traffic rights in Macau, Japan or Thailand, possibly in conjunction with its growing branch offices. TransAsia would be open to gaining overseas scale by working with local airlines – but airlines around Asia have not shown themselves to be eager to enter into strategic partnerships.

And meanwhile the invasion of low-cost operators is quietly growing, largely under the noses of the incumbent Taiwanese airlines.

Taiwan’s TransAsia growth Pt II: responding to LCCs, res system cutover & alliances/partnerships

In the second part of this report, TransAsia weighs how it can expand traffic in Northeast and Southeast Asia but also counter growing foreign LCCs as well as the inevitable local Taiwanese LCC that has yet to form. TransAsia has laid out an undisclosed pathway to guide it depending on what outcomes occur in the Taiwanese market with respect to LCC development.

TransAsia believes it can counter LCCs and competitors in general with the carrier's forthcoming cutover to a new reservation system that will offer it greater agility and be the impetus for the carrier to raise online sales from at least 15% to, perhaps optimistically, over 50% within two years.

TransAsia is also watching the developments with alliances and partnerships and it is interested in having more friends, although the carrier thinks it is early days for it to consider joining a global marketing alliance; this could change if it were invited.

Taiwan’s TransAsia Airways' growth Part I: Expanding role in Northeast Asia-Southeast Asia traffic

Part one of this report on the growth strategy for Taiwan's TransAsia Airways looks at how the carrier is seeking a greater role in Northeast Asia-Southeast Asia connecting traffic. To facilitate a greater ranger of destinations – the carrier's sole Southeast Asian point is Singapore – TransAsia plans to open service to Bangkok as well as destinations in Indonesia and Malaysia. In Northeast Asia, a Tokyo service may be added while frequency boosts will occur at existing Japanese destinations.

One Asian market TransAsia is not interested in is Taipei-Hong Kong, the world's most populous international route and which is currently experiencing over-capacity following the opening of cross-Strait flights between Taiwan and mainland China, a market TransAsia is present in. The carrier's new A330s, its first widebodies, will initially be used on blue-chip regional routes to raise awareness and also where demand justifies their presence.

China Airlines and EVA Air respond to massive change in Taiwan – but the foreign LCCs are coming

Profits have tumbled or become losses at China Airlines and EVA Air, Taiwan's two largest carriers and its only intercontinental ones. But the financials – affected by the usual suspects of high fuel and depressed freight and economic certainty – belie sound restructuring the carriers are making to respond to significant changes in the Taiwanese market, long one of the quietest areas in North Asia.

The opening of cross-Strait flights to China has, in a short time frame, delivered them an entirely new and very profitable market. It has meant pulling back elsewhere to pump capacity into the mainland - although additional aircraft were also acquired.

China Airlines is looking to permanently de-emphasise cargo's revenue contribution, sensing it to be too volatile, while EVA Air wants to increase its share. As the mainland market continues to expand, new growth (and competition) is also emerging from Japan after an open skies bilateral agreement. Further liberalisation across Asia will open new markets, but serving regional routes bears the risk of being pushed off if low cost carriers, much discussed in Taiwan - but mostly ignored - gain traction.

For all the change that has occurred, much more is inevitable in 2013.

Eight North Asian low-cost airline trends to watch in 2013

It certainly took North Asia some years to have momentum for low-cost airlines that was anything like booming Southeast Asia. 2012 delivered on that with three new LCCs launching in Japan and plans underfoot in Hong Kong for Jetstar Hong Kong as well as a possible transformation of Hong Kong Express into a LCC. While elsewhere the region may not have gone as far as producing LCCs, there is active discussion of having LCCs and the reforms needed to welcome and support them.

Talk is strongest in Taiwan, which has seen considerable growth from LCCs in North and Southeast Asia. South Korea is considering how and when its LCCs can become better competitors, shedding some of the comforts they have been unwilling to charge passengers. Japan will see growth, from existing LCCs and new ones, a challenge for incumbents. Reforms in China may enable LCCs in the future to launch, while all LCCs are watching how to be hybrid and chase yields. These are eight North Asian LCC topics to watch for in 2013.