Asian low-cost carriers (LCC) VietJet Air and Nok Air are set to make landmark aircraft purchases at the upcoming Singapore Air Show. With the LCC market expanding, and overall travel expected to continually increase in the region, the acquisition of new aircraft is vital in order to stay competitive.
VietJet Air is expected to finalise a US$6.1 billion order with Airbus for 62 A320s. The company signed a letter of intent to do so in September 2013.
VietJet Air will launch Thai VietJet in June this year through a joint venture with Kannithi Aviation. While the new LCC will initially fly only within Thailand, the company is looking to expand its routes to include the following: Hanoi-Korea; Saigon-Singapore; Saigon-Hong Kong; Saigon-Taipei and Saigon-Myanmar.
“Market expansion in southeast and northern Asia is a medium-term strategy, we are also aiming at all of Asia-Pacific as well as long-haul markets where overseas Vietnamese people are living, like Europe and the US. This is in parallel with forming joint ventures with local partners,” said VietJet Air spokesperson Dinh Quang Trung.
The feasibility and overall profitability of implementing the LCC model onto long-haul operations has been widely discussed. To learn more about the challenges, read "The long game" in the December 2013 issue of Business Traveller Asia-Pacific (see here). Many LLCs have ceased long-haul services, the latest being Air Asia X which will stop flying to the Maldives this coming April.
Meanwhile, Reuters has reported that Nok Air will be announcing a major deal with Boeing for its B737 narrow-body aircraft, which could be with anywhere between US$1.5-3 billion.
Business Traveller Asia-Pacific will be attending the Singapore Air Show, and will be providing up-to-date reports on major news at the event.