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The large Asian population, combined with a rapidly developing middle class in a period of economic growth, is spurring demand for more and cheaper flights. This year Asia will see a sizable increase in the number of low-cost carriers flying around the region, offering travellers more options.

March alone saw the announcement of three budget carriers in Japan with Peach Aviation, AirAsia Japan and Jetstar Japan, an offshoot off Qantas’ low-budget Jetstar, all spreading their wings.

The Centre for Asia-Pacific Aviation estimates that an additional 200 million air passengers (from the roughly 650 million Asia-Pacific air travellers currently flying), could be travelling in north Asia each year if the Japan-South Korea-northern China triangle continues to liberalise its airspace.  

Don’t expect to see a complete deregulating of Asia’ skies anytime soon however, with the kind of bargain basement pricing seen in Europe and North America. The main issue in Asia, when compared to these regions, is that there are no multilateral open-sky agreements.

The low-cost model is currently more prevalent in the South Asia market place than the North Asia one, according to the Centre for Asia-Pacific Aviation. In northeast Asia low-cost carriers only account for 7% of capacity, while in Southeast Asia they account for one third, and in South Asia it’s close to a half. (Expect to see those percentages increase in the coming months.)

However, Japan’s aviation market, one of the most regulated in the region in terms of restrictions on access to the number of airport gates and airline ownership , is in the process of embracing the low-cost model of air travel popular in other regions.

All Nippon Airways is backing Peach Aviation, which has already started flying from Osaka’s Kansai Airport to Fukuoka, Kagoshima, Nagasaki and Sapporo and is offering fares about one-half those of major airlines. In July, the airline will add Okinawa and international routes to Hong Kong, Seoul and Taipei will be launched later.

From August, AirAsia Japan plans to operate domestic flights from Tokyo's Narita Airport and international flights in 2013. It has the muscle of the region’s biggest low-cost carrier Kuala-Lumpur based AirAsia, which now dominates this sector in Southeast Asia.

Come the end of 2012, Jetstar Japan, which is a budget venture between Japan Airlines and Qantas’ low-fare unit, will connect Tokyo and Osaka. Expect keen fares going forwards, as Jetstar Japan’s CEO has already made promises to local media not to lose a price war. China Eastern Airlines and Qantas are also joining hands to launch a low-cost carrier called Jetstar Hong Kong. This follows in the path of other carriers from the same group, such as Jetstar Pacific, which has setup in Vietnam. But in China, where Spring Airlines is currently the only mainland low-cost carrier operating international destinations including Hong Kong and Japan, none of the big four mainland operators has a budget airline at present.

The current high-priced buses and trains to and from airports is still an issue in Japan and could dampen enthusiasm for any  budget air travel. A one-way train fare from central Tokyo to Narita airport by train could cost the same price as a one way budget airline ticket to Hokkaido – roughly 3,000 Yen.  

Elsewhere across Asia, Singapore Airlines has launched Scoot, which will begin operations later in 2012, flying long-haul across the region from Singapore to Sydney and Australia’s Gold Coast. Other budget airlines are expanding, including Cebu Air, a dominant player in the Philippines. Along with Malaysia’s AirAsia, Singapore’s Tiger Airways and Indonesia’s Lion Air  are all taking delivery of new planes within the next year.

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