Loading

Southeast Asia’s low cost airline fleet expands by 13% in 2015 as short haul capacity growth slows

Southeast Asia’s low cost carrier fleet has passed the 600 aircraft mark as the region’s 23 LCCs added about 70 aircraft in 2015, resulting in 13% growth. The region’s LCC fleet has expanded by 50% in only three years, from 400 to just over 600 aircraft.

Nevertheless, LCC capacity growth within Southeast Asia slowed significantly in 2015 for the second consecutive year, as several carriers made adjustments in response to challenging market conditions. For the first time since the birth of LCCs in Southeast Asia 15 years ago there was a drop in the LCC penetration rate within Southeast Asia.

There was faster LCC capacity growth in medium/long haul markets connecting Southeast Asia with other regions, driven by a 37% expansion of the Southeast Asian LCC widebody fleet. There are now seven LCCs in Southeast Asia operating widebody aircraft, compared with only seven in the rest of the world.

Southeast Asian LCC sector surpasses 600 aircraft

Southeast Asia’s 23 LCCs ended 2015 with 610 aircraft, according to the CAPA Fleet Database. The fleet grew by about 13% in 2015, matching the growth rate from 2014 but significantly slower than the 20% growth rate in 2013.

Southeast Asia’s LCC fleet has grown by over 50% since the beginning of 2013, when it consisted of about 400 aircraft.

Southeast Asia LCC fleet by carrier: Jan-2016 vs Jan-2015, Jan-2014, Jan-2013

Rank

Carrier

Country 

LCC Group 

Fleet

at

1-Jan-

2016

Fleet at

1-Jan-2015

Fleet 

at

1-Jan-2014  

Fleet at

1-Jan-2013

1

JT

Lion Air

Indonesia

Lion 

 110

103

94

91 

2

AK

AirAsia

Malaysia 

AirAsia 

 80

80

72

64 

3

IW

Wings Air

Indonesia

Lion 

 48

31 

27

27 

4

5J

Cebu Pacific Air

Philippines 

Cebu Pacific

 47

48 

48

41 

5

FD

Thai AirAsia

Thailand 

AirAsia 

 45

40 

35

27

6

QG

Citilink

Indonesia 

(Garuda

 36

32 

24

21 

7

DD

Nok Air

Thailand 

Nok

 28

24 

17

15

8

VJ

VietJet Air

Vietnam 

VietJet

 27

18 

10

9

OD

Malindo Air

Malaysia 

Lion 

 27

19 

11

10

TR

Tigerair

Singapore 

Tigerair 

 24

24 

25

21

 11

QZ

Indonesia AirAsia

Indonesia 

AirAsia 

 24

29 

30

22 

12

D7

AirAsia X

Malaysia 

AirAsia X 

 20 

23 

18

11 

13

3K

Jetstar Asia*

Singapore

Jetstar 

18 

18 

19

18 

14

SL

Thai Lion Air

Thailand 

Lion 

 18

8

2

15

PQ/

Z2

Philippines AirAsia#

Philippines 

AirAsia# 

 13

16 

17

17 

16

BL

Jetstar Pacific

Vietnam 

Jetstar 

 12

5

17

TZ

Scoot

Singapore 

(Singapore Airlines) 

 11

6

4

18

DG

Cebgo^

Philippines 

Cebu Pacific

5

19

 XJ

 Thai AirAsia X

Thailand

AirAsia X

2

0

20

Y5

Golden Myanmar Airlines

Myanmar 

Golden Myanmar 

 3

3

2

 21

XW

 NokScoot

Thailand

Nok 

3

 0

 0

 22

XT

 Indonesia AirAsia X

 Indonesia

AirAsia X 

 2

 0

 0

 23

 

Thai VietJet Air

Thailand

VietJet 

 0

N/A

RI

Tigerair Mandala

Indonesia 

Tigerair 

 0

9

5

 

 

 TOTAL

 

 

 610

537

476

399

Southeast Asia now has seven long haul LCCs

The widebody segment grew at the fastest rate, 37%, but on a relatively small base. There are currently 52 widebody aircraft operated by seven Southeast Asian LCCs. At the beginning of 2014 there were 38 widebody aircraft operated by five Southeast Asian LCCs.

Thailand’s NokScoot and Indonesia AirAsia X launched operations in 2015, joining Malaysia AirAsia X, Thai AirAsia X, Scoot, Cebu Pacific and Lion Air with widebody operations. Cebu Pacific and Lion operate widebody aircraft alongside predominately narrowbody fleets, while the other five carriers are purely widebody operators.

Southeast Asia LCC widebody fleet size ranked by operator: Jan-2016 vs Jan-2015

Rank Airline Country 1-Jan-2016 1-Jan-2015
1 D7 AirAsia X Malaysia 20 23
2 TZ Scoot Singapore 11 6
3 5J Cebu Pacific Philippines 6 5
4 JT Lion Air Indonesia 5 2
5 XJ Thai AirAsia X Thailand 5 2
6 XW NokScoot Thailand 3 0
7 XT Indonesia AirAsia X Indonesia 2 0
    TOTAL   52 38

Scoot recorded the biggest growth among Southeast Asia’s long haul LCCs, adding five aircraft. This Singapore Airlines long haul low cost subsidiary took delivery of 10 787s in 2015, while retiring five of its six 777-200s.

See related report: Scoot approaches profitability & becomes SEAsia’s top performing long haul LCC, boosting SIA outlook

Thai AirAsia X, which launched in 2014, added three aircraft in 2015. Indonesia AirAsia X launched in 2015 with an initial fleet of two A330s. But parent Malaysia AirAsia X shrank its fleet by three aircraft as it phased out its inefficient A340s and restructured its network.

Lion took three A330-300s in 4Q2015. The new A330s are expected eventually to replace Lion’s fleet of two ageing 747-400s but at least for now these two 747-400s are still being operated.

See related report: High density A330-300s give Indonesia’s Lion Air an opportunity to test a long haul low cost model

(Note: Indonesia AirAsia X has been operating some of Indonesia AirAsia's A320s to meet minimum aircraft regulations in Indonesia, but in this report these A320s are still counted under Indonesia AirAsia as they are still being operated under the AirAsia brand.) 

Southeast Asian LCC turboprop also grew by more than 30% in 2015

The turboprop segment also grew rapidly from 58 to 77 aircraft, representing 33% growth.

Lion Group regional subsidiary Wings Air accounted for almost all the additional aircraft, expanding its ATR 72 fleet from 31 to 48 aircraft.

Thailand’s Nok Air also added two Bombardier Dash 8 Q400s as its turboprop fleet expanded from six to eight aircraft. Malindo Air, Cebgo and Golden Myanmar are the other turboprop operators in the Southeast Asia’s LCC sector, but none of these carriers added any turboprops in 2015.

Lion Group leads narrowbody growth

The remaining 510 aircraft in Southeast Asia’s LCC fleet are narrowbody jets – a mix of 737 and A320 family aircraft. The narrowbody segment grew by a relatively modest 9% in 2015 but on a much larger base than the widebody or turboprop segments. There are currently 40 more narrowbody aircraft in service at Southeast Asian LCCs, compared with the situation one year ago.

Thai Lion Air underwent the fastest narrowbody growth, adding 10 737s. Its Malaysian sister carrier, Malnido Air, added eight 737s, while Indonesian parent Lion Air added four 737s.

As outlined above, Lion’s Indonesian regional subsidiary Wings Air added 17 ATR 72s, making it the fastest growing LCC in Southeast Asia, based on aircraft numbers. The rapid growth of the Lion Group fleet in 2015, including growth at full service subsidiary Batik Air, was analysed in a separate report published on 9-Jan-2016.

See related report: Lion Group added 57 aircraft in 2015, overtaking AirAsia as SE Asia’s largest airline group fleet

Vietnam’s VietJet Air added the second highest number of narrowbody aircraft among Southeast Asian LCCs: eight A320 family aircraft. The fast growing LCC ended 2015 with 24 A320s and three A321s, compared with 18 A320s at the end of 2014 (excludes wet-leased aircraft).

See related report: VietJet Air 2016 outlook: overtakes Vietnam Airlines in domestic market as IPO planned for 1H2016

Other Southeast Asian short haul LCCs growing their narrowbody fleets in 2015 included Thai AirAsia with five aircraft, Citilink with four aircraft, and Jetstar Pacific with four aircraft. The fleet of AirAsia Group’s Malaysian subsidiary was flat, while the group’s affiliates in Indonesia and the Philippines shrank their fleets as part of turnaround efforts. Jetstar Asia and Tigerair also did not grow their fleets in 2016, as both responded to challenging conditions in Singapore’s short haul market.

LCC capacity growth within Southeast Asia slows

Decisions to slow expansion, by the AirAsia Group and some of the region’s smaller players, led to a significant reduction in short haul LCC capacity growth in 2015. Within Southeast Asia LCC seat capacity was up by only about 9%, according to OAG data. Not surprisingly, this matches the 9% growth figure for Southeast Asia’s narrowbody fleet.

FSC seat capacity within Southeast Asia was up by 14% in 2015, outpacing LCC growth for the first time since the first Southeast Asian LCCs launched operations about 15 years ago. As a result, the LCC penetration rate within Southeast Asia dipped for the first time, after 15 years of steady gains.

Southeast Asia annual LCC penetration rate: 2003 to 2015

LCC seat capacity between Southeast Asia and other regions continued to grow faster than FSC capacity, but on a much lower base. LCC seat capacity between Southeast Asia and other regions was up 14% in 2015, driven by rapid expansion of Southeast Asia’s long haul LCC sector.

As the above chart illustrates, LCCs accounted for 18.6% of total seat capacity to and from Southeast Asia in 2015, and 56.4% of seat capacity within Southeast Asia.

Again in 2016 - relatively slow short haul LCC growth

2016 will likely experience a similar trend line, with relatively slow LCC capacity growth within Southeast Asia and more rapid growth on routes connecting Southeast Asia with other regions in Asia Pacific.

There are still opportunities for short haul LCC growth within Southeast Asia as the overall market continues to grow, boosted by economic growth and expansion of the region’s middle class population. Pioneer markets such as Myanmar and Vietnam, particularly, have a lot of potential.

That said, with the LCC penetration rate on short haul routes within the region already approaching 60% the market overall is now relatively mature. The extremely rapid growth rates from prior years, such as the 30% growth in LCC seats that was recorded in 2013, are simply no longer a realistic outcome.

The market began slowing down in 2014, with LCC capacity growth for the year at 14% within Southeast Asia. The 9% growth figure from 2015 represents a reasonable figure for the future.

Medium haul markets should see faster growth

CAPA projects 70 to 80 aircraft will be added to the Southeast Asian LCC fleet in 2016, resulting in a similar rate of fleet growth as in 2015. Once again, capacity in 2016 will grow much faster in markets connecting Southeast Asia with other regions, particularly North Asia, using a combination of widebody and narrowbody aircraft. There are still huge opportunities for growth in markets such as Southeast Asia-China, given the relatively low penetration rate and surging demand.

There will still be some opportunities for domestic and short haul international growth. Southeast Asian LCCs currently have over 1,100 aircraft on order, but inevitably a large portion of the aircraft on order will be used to replace the 600 aircraft currently in service, and to grow in medium haul markets that are still relatively underpenetrated.

Southeast Asia LCC group fleet size and order book: as of 1-Jan-2016

Airline Group  Number
of carriers 
Current
fleet size 
Orders
Lion Group 4 203 507
AirAsia/AirAsia X  7 188 385
Cebu Pacific                         2 55 51
Garuda (Citilink) 1 36 44
SIA (Scoot/Tigerair)  2 35 49
Nok         2 31 13
Jetstar 2 30 0
VietJet 2 28 88
Golden Myanmar             1 3 0
TOTAL  23 609 1,137

Fewer than 100 of the 1,100 plus orders are for widebody aircraft. New generation narrowbody aircraft account for the majority of the orders.

The 737 MAX and A320neo families come with improved range and efficiency, enabling Southeast Asia’s LCC narrowbody operators to reach new markets outside the region and reduce their reliance on the relatively saturated short haul market.

The long term outlook for Southeast Asia’s LCC sector remains bright as long as the airline groups continue to make adjustments, avoid aggressive expansion in saturated markets, and direct growth to markets where there are better opportunities.

Want More Analysis Like This?

CAPA Membership gives you access to all news and analysis on the site, along with access to many areas of our comprehensive databases and toolsets.
Find Out More