As many as 10 Southeast Asian LCCs are poised to enter Australia, further pressuring incumbents

Australia is close to attracting service by the end of 2014 from at least three new Southeast Asian carriers. Up to 10 Southeast Asian carriers, including five from Indonesia alone, could launch services to Australia by the end of 2016.

The new entrants, along with continued expansion from the 20 carriers already operating scheduled flights flights between Australia and Southeast Asia, will impact a market that is already suffering from overcapacity. Further reduction in fares will likely result, particularly as all but one of the potential new entrants are low-cost carriers.

The new competition poses yet another new challenge for the Qantas Group, which is struggling to compete in the Australia-Asia market. Other full service airlines - including Singapore Airlines (SIA), Garuda, Malaysia Airlines (MAS) and Thai Airways - will also have to adjust plans as the Australia-Southeast Asia market sees further significant increases in the LCC penetration rate beyond the current 30%.