Asian Budget Carriers Join Hands in a New Customers’ Driven Alliance

Copying traditional legacy airlines alliances, eight budget carriers based in Asia have federated their efforts to create the first trans-company low cost carrier alliance in the world. Earlier this year, HNA Group (Hainan Airlines) in China launched a budget carriers alliance, however limited to Chinese carriers and the Chinese market.

The new entity is named Value Alliance and is the brainchild of SCOOT CEO, Campbell Wilson. It includes the two carriers under the Singapore Airlines umbrella – Tiger Air, Scoot-, associated carriers to Scoot such as Nok Air and NokScoot (Thailand), Tiger Airways Australia as well as Cebu Pacific (Philippines), Vanilla Air (Japan, a subsidiary of All Nippon Airways) and Jeju Air (Korea).

Seats Capacity Value Alliance June 2016The alliance will bring a range of benefits to travellers by offering possibilities of booking and transfer for the entire network of all these carriers. They currently fly to 160 destinations with 174 aircraft. A website is already open but will soon have a booking engine proposing to passengers not only air tickets for point to point or transfer destinations but also for  a selection of ancillary services: That includes meals, premium service or additional luggage. Passengers will benefit of more attractive fares for connecting flights through the 17 hubs of the eight carriers.

And above all, a single payment is made available, a major simplification process for passengers. Value Alliance expects to see a sharp rise in booking across all the carriers -particularly in markets they have less exposure. All the partners estimate to see a boost of at least 20% in revenues.

The alliance is likely to attract more players -Vietjet in Vietnam and Tiger Air Taiwan are potential future members, but it is rather unlikely that AirAsia might join the group anytime soon.

Top Routes by Seats Capacity Value Alliance June 2016If looking overseas where large budget carriers prosper, there is the example of Easyjet and Ryanair. None of both carriers are currently members of any alliance. This does not hinder them of growing and expanding. Both carriers are today among the five largest airlines by passengers in Europe.

AirAsia own strength – 122 destinations, 170 aircraft and 51 million passengers as well as half a dozen carriers-, does certainly not turn an alliance into a strategic priority to the group. Lion Air is also not part of the grouping probably for reasons similar to AirAsia. Lion Air the largest domestic carrier in Indonesia while its international network remains extremely limited. Another major budget carrier group missing into the new formed alliance is Jetstar, the affiliate of Australian Qantas Airways. Jetstar is however in direct competition to SIA own affiliate of budget/hybrid carriers.