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Fernandes wouldn't have it any other way. "I love it when I struggle to find a seat," he says, beaming. With ticket prices as low as 29¢--yes, you read that right--seats have often been hard to find. Fernandes expects to fly 4 million passengers this year, twice as many as in 2003. His success heralds a revolution in the airline industry in Asia. Although Americans and Europeans have benefited from low-cost air travel for years, tight regulation, powerful national-flag carriers and a dearth of airports have kept budget airlines at bay in Asia. But finally...
...Asia's premier airlines, deny they are cutting prices in response to this new threat. But they have been offering what they call routine special promotions. In May Cathay Pacific sold round trips between Hong Kong and Singapore for $128even less than the $160 fare offered by Singapore-based low-cost carrier Valuair, which started flying that same month. Major airlines "have been advertising prices even lower than ours," says Lim Chin Beng, Valuair's chairman. If they "want to lose money by undercutting us, good luck to them...
Still, even Fernandes doesn't expect budget airlines to create the same upheaval for big carriers in Asia that they have in the U.S. and Europe. A tighter web of regulation provides established airlines more protection by preventing low-cost carriers from hopping from city to city around Asia the way Ryanair does in Europe. With only 2% of airline capacity in the region, the budget carriers have a long way to go to challenge the big boys. Most of all, major Asian airlines have much lower costs than their U.S. and European counterparts, allowing them to compete more easily...
With so many budget carriers starting up, they might be a bigger threat to one another than to the major carriers. Thailand has no fewer than seven low-cost operators. In September, Singapore's A-Sonic Aerospace said it plans to start a budget carrier in China with a Chinese state company. Tiny Singapore will be home to three low-cost airlines: Valuair, Jetstar Asia (which boasts Australia's Qantas Airways as a large shareholder) and Tiger Airways (backed by Singapore Airlines). "We'll grow as quickly as we can and fly wherever we can," vows Stephen Johnson of Indigo...
...says he routinely employs a team in his office to go on the Internet and buy as many of the cheapest tickets on AirAsia flights as it can get, often spending more than $3,500 a day. That's a small price to pay, he argues, to keep the low-price tickets out of the hands of potential AirAsia customers and to foster ill will toward his competitor. (Fernandes contends that this has not damaged his business in Thailand.) "I buy them and throw them away," Udom says, adding, "I didn't expect this dogfight to be so serious...