AirAsia lets go the Singapore dream

air asiaAirAsia chief Tony Fernandes has long been pursuing the Singapore dream – to set up base in Singapore and maybe give its nemesis Singapore Airlines, not just Singapore-based budget carriers Tiger Airways and Jetstar Asia, some hard knocks. But it looks like he is letting that dream go. 

The region’s largest budget carrier has dropped plans to set up an airline in Singapore. It gives two reasons for that decision: Singapore’s high cost structure and its lack of domestic market potential. Mr Fernandes was quoted by The Wall Street Journal as saying, “We are concentrating on markets which have big domestic markets and big populations and markets that are more liberal and market orientated.”

Already the biggest budget carrier by the number of flights calling at Changi Airport, AirAsia probably finds the proposition superfluous. Mr Fernandes had in the past petitioned unsuccessfully to be allowed to operate from a secondary airport, but all commercial passenger flights by and large operate out of Changi Airport. Is cost the real issue, or is it competition?

Mr Fernandes may have a valid point in citing Singapore’s limited domestic market. But that argument is neither new nor surprising. Singapore thrives on being the region’s aviation hub, with good connections whose operations are supported and facilitated by Changi’s impressive infrastructure. If, indeed, AirAsia is looking at the local market alone, then it makes sense to shift its capital to larger markets elsewhere.

But that could be a narrow view as Singapore’s potential is larger than what its domestic market can offer. Take, for example, Indonesia is a huge market which is expected to grow even bigger when Asean Open Skies kicks in by 2015. As Indonesia opens up, so will Singapore benefit as the gateway to Indonesia and the rest of the region.

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About David Leo
David Leo has more than 30 years of aviation experience, having served in senior management in one of the world's best airlines and airports. He continues to maintain a keen interest in the business, writes freelance and provides consultancy services in the field.

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