Roaring tigers

Air Deccan, which pioneered low-cost travel in India when it launched in 2003, is about to hit the six million passenger mark. Its now operates 35 aircraft.

Sharjah-based Air Arabia hit the two million passenger market earlier this year. It became the Middle East's first low-cost carrier when it launched in 2003 and now operates to 27 destinations in 16 countries with six aircraft.

Singapore's largest budget carrier, Tiger Airways, also expects to reach two million passengers by year-end. The carrier is less than two years old and now operates six aircraft.

India's Kingfisher Airlines should also cross the two million threshold by the end of this year. It is just over one year old but already operates 15 aircraft.

Pakistan's AirBlue crossed the 1 million mark in March and should pass two million next year. It launched in 2004 and now operates six aircraft.

When compared to their counterparts in Europe and North America, what Asia's budget carriers have achieved is a drop in the bucket. Last year alone, Southwest Airlines flew 78 million passengers, Ryanair flew 33 million and easyJet flew 26 million. But given the expansion planned by the fast-growing Asian cadre of low-cost carriers, the gap should slowly narrow over the next several years.

AirAsia and Deccan each have outstanding orders for almost 100 additional aircraft. Deccan, however, is still not assured it will remain India's largest low-fare carrier and even AirAsia's position as the largest in Asia could be threatened. Kingfisher also has nearly 100 aircraft on order including 15 widebodies. India's IndiGo only launched last month with one aircraft but has 99 more on order.

Lion is committed to acquiring 30 737-900ERs and will likely acquire at least another 30. Tiger is only committed to acquiring another six aircraft but will likely buy more if it succeeds in setting up franchises in other Asian countries.

The low-cost market in Southeast Asia and South Asia could quickly become over-crowded. AirAsia now competes with Nok Air and One-Two Go in the relatively small Thai market. Indonesia offers a much larger potential market but also faces possible overcapacity with AirAsia and Lion competing against several carriers (some of which are low-cost, depending on your definition) such as AdamAir and Citilink. India faces possible consolidation with IndiGo, Deccan and Kingfisher competing against fast-growing Go Air and SpiceJet.

Overcapacity has already resulted in consolidation in Singapore with the merger last year of Jetstar Asia and Valuair. The combined entity now operates seven aircraft but is struggling.

There is still room for more players in the Middle East because only Kuwait's Jazeera, which launched last year and now operates three aircraft, is now the only other low-cost carrier besides Air Arabia. But the market there could get more exciting with the planned launch in Saudi Arabia of two low-cost carriers - Sama and a yet-to-be-named carrier established by National Air services.

There is also still plenty of room for low-cost growth in Northeast Asia but only if the regulatory environment changes and airport costs are significantly reduced. China has seen a barrage of start-ups over the last two years but none have kept a pure low-cost model. Japan sort of has two low-cost carriers - it depends on your definition - but both have struggled. Skymark launched back in 1998 and has since only grown its fleet to nine aircraft. Skynet Asia launched 2002 and now only operates six aircraft.