Competition in the Thai low-cost air carrier (LCC) business is heating up as no-frills airlines fine tune their marketing strategies and expand service coverage domestically and internationally to capitalize on this global uptrend. Such business has grown favorably over the past three years and has a very promising outlook, thanks to thriving tourism and urbanization across Thailand, too. In addition, the growing needs of travelers for affordable airfares, as well as economic growth within ASEAN will likely bolster LCC business ahead.
By the end of FY2012 in September, the number of LCC passengers through all airports in Thailand totaled 20.3 million, up 15.3 percent YoY. We at KResearch expect that Thai LCC business will expand some 15-18 percent in FY2013, with the number of passengers reaching about 23-24 million, as budget carriers broaden service to meet the wide-ranging needs of travelers amid more flexible air travel business regulations. Business should grow steadily with AEC integration due to growing air travel, and since the average per capita income in our region remains low compared to some other regions, people will prefer to travel with LCCs. It is expected that by 2015, the share of LCC passengers to total air passengers worldwide may increase to 35 percent. This would help bolster airfreight services, as well.
During FY2012, the number of LCC passengers traveling via airports in Bangkok reached 13.1 million. The reopening of Don Mueang International Airport is an important policy initiative that will facilitate growing air passenger traffic in the country. AEC integration in 2015 will boost regional air transport and attract more foreign investment into the region, thus helping support LCC business. Given the reopening of Terminal 1 at Don Mueang International Airport recently, KResearch expects that the number of travelers via this airport will increase to some 15-16 million passengers in 2013. That figure may increase to about 36.5 million/year with the reopening of Terminal 2 in the near future.
While the ‘two BKK airport' policy is prerequisite, the government should place great importance on infrastructure development linking Don Mueang Airport to Suvarnabhumi Airport to realize the synergies between them, thus helping Thailand toward becoming an air transport hub for ASEAN.
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