29-Nov-2012 11:07 AM

Asia has grown to become an outbound market, LCC is the 'winning' business model in the market: AAPA

Association of Asia Pacific Airlines (AAPA) director general Andrew Herdman, speaking at CAPA's World Aviation Summit in Hong Kong, stated (28-Nov-2012) “Over the past decade, Asia has gone from being a destination market to being an outbound market. The centre of economic gravity is shifting from West to East”. Mr Herdman noted in terms of purpose of travel, leisure traffic is growing at a faster rate in Asia than elsewhere, with strong intra-regional travel growth which it outpacing long-haul travel and the industry average. He noted globally 8% of the people travelling across premium classes generate 25% of global revenue and in Asia, the proportions are around 10% and 30%, respectively. Mr Herdman also said he does not accept the notion full service carriers are neglecting the economy sector, stating full service carriers are trying to cater for this segment. He, however, conceded the LCC model is the "winning" business model in the market. LCC penetrations in Asia are around 12-15%, compared to the global average of 20-25%. LCCs are capturing around 12% of the global revenue it is around a USD630 billion. He also said alliance is a revenue generating synergy tool airlines use to work around regulation restrictions on cross border mergers and integrations.

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