AirAsia looking to grow in Singapore

Courtesy Airbus

Courtesy Airbus

IT would appear that Malaysian budget carrier AirAsia is more popular with Indonesians than Singaporeans. On flights out of Changi Airport to Indonesian destinations, Singaporeans make up only 15 per cent of the load, but the business is enjoying much higher demand from Indonesians. 

AirAsia’s chief executive in Singapore Logan Veliatham attributed the carrier’s lower appeal among the local population to one of perception, as an untried experience prejudiced by ignorance, but viewed it optimistically as a potential for growth.

“After people fly with us,” he said, “they want to come back.” 

So, the strategy for AirAsia is to work with travel agencies to push its brand. The hard truth is that competition in the budget market has intensified with not only new budget upstarts but also offshoots launched by legacy airlines entering the arena. (See Budget business matures, Jun 12, 2013). 

Presently AirAsia lags behind Singapore-based rivals Jetstar Asia and Tiger Airways in carriage. You might say those airlines have a measure of home advantage in terms of familiarity, particularly when they are backed by the big names of Singapore Airlines and Qantas. So Mr Veliatham might have a point there. 

But considering Singapore’s comparatively smaller population, AirAsia might be better off building on the faster growth in the burgeoning Indonesian market. Yet Singapore is an important hub in the region that few airlines looking for growth would skip. Indonesian rival Lion Air, heeding the competition posed by AirAsia’s foray into its home market, is already  eyeing Singapore as its hub outside Indonesia.

AirAsia itself is starting flights from Singapore to Medan and Surabaya in Indonesia, bringing the total number of destinations from the island republic to 17. The number may increase yet.


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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