Malaysian low-cost carrier AirAsia reportedly plans to spend S$115m to set up an airline joint venture in Singapore and has applied for an airline licence, further intensifying regional competition.
"We have applied for an AOC," said AirAsia chief executive Tony Fernandez, referring to the Air Operator Certificate from the Civil Aviation Authority of Singapore, according to Reuters.
The AOC is required for airlines which want to be Singapore registered carriers.
The report also quoted Mr Fernandez as saying he was in talks with a few investors but the joint venture partners had not been finalised.
AirAsia is joining a growing number of budget carriers intending to operate from Singapore's Changi Airport, which has offered to build a separate terminal for such airlines.
Singapore Airlines' Tiger Airways and ValuAir, run by former SIA executives, are slated to begin operations this year.
AirAsia's Thai joint venture has already started operating flights between Singapore and Bangkok with promotional one-way fares of S$50, one-eighth of regular fares. - CNA
Veteran Warns Of Failures
As competition heats up in Asia's aviation industry, Malaysia's AirAsia says it plans to spend S$115m to set up an airline joint venture in Singapore while Thailand's Nok Air, which is linked to Thai Airways, is looking to fly to a number of Asian destinations including Singapore sometime next year.
But even as these plans are being unveiled, an industry veteran is warning that some budget carriers will fail.
The former chief of Singapore Airlines is already predicting their demise, at least for some of them.
"I believe that low-cost carrier failures are inevitable given the increasing number of new players and entry into the market, the low-cost carrier arena of big boys with deep pockets like Singapore Airlines and Qantas. In a bruising free for all, who do you think will be the first to be depleted of cash? And, with the initial failures of some low-cost carriers, will that deter potential entrants into the market, leaving the field to the big boys?" said Cheong Choong Kong, former CEO of SIA.
Mr Cheong said that it's the experienced players like SIA and Cathay Pacific that'll still be around in a decade or two.
Still there's no stopping the proliferation of low cost airlines in the region.
Indonesia's Lion Air is already touching down in Singapore, while local start-ups ValuAir and Tiger Airways are gearing up to take off soon.
And Thailand's Nok Air, which is launching domestic services out of Bangkok in the second quarter of this year, could soon join the pack.
Nok Air's chief executive Patee Sarasin said: "In the first phase, we're actually looking at 6 destinations in terms of Phuket, Chiang Mai, the traditional areas and looking at the market demands. We haven't decided yet where the first flights are going to take off to because it's still very much under consideration, but within the 12 months and if everything goes well in this first phase we call domestic, we'll start moving to the region." - CNA