Network carriers in the Asia-Pacific region have been undergoing some major transformations to meet the needs of a variety of market segments.
Asia has, for the most part, been a bright spot for airlines in recent years. This year's World Airline Rankings show Asian carriers now, if only by a small margin, comprise the largest chunk of passenger traffic among the 200 largest carriers. Profitability, meanwhile, improved at both operating and net levels.
"It's still growing particularly on the passenger side and that seems to be a steady trend even with the global economy," says Association of Asia Pacific (AAPA) director general Andrew Herdman.
However, that rosy picture hides some of the challenges network carriers in the region have been facing. High-yield, short-haul routes have now become the domain of fast-growing, low-cost carriers such as AirAsia.
Long-haul carriers in the region have also come under pressure. The poor economic environment in Europe - a key market for most Asian long-haul carriers - has driven down yields, while the high price of fuel has increased cost. Increased competition from the Middle Eastern carriers has also added pressure on long-haul services.
In light of these market challenges, a number of blue-chip carriers have changed their strategies to tap into what they see as the best opportunities.
"Airlines are tailoring their investment for particular market segments, whether that is four classes on the aircraft or separately tailored offerings in terms of low-cost carriers," says Herdman. "I think it's an experimentation phase and Asia-Pacific is a focal point of this experimentation."
For carriers such as Singapore Airlines, Garuda Indonesia and Qantas in particular, a major part of their strategy has revolved around creating budget brands to tap into the growing market for low-cost travel.
"The model of having subsidiary LCCs and ventures hasn't worked well in the past in Europe and the USA, but there are examples of where it is doing well in Asia," says AAPA's Herdman.
SIA has certainly made a major shift in the past year. Despite being a founding shareholder in Tigerair, the premium airline stayed largely hands-off the budget carrier - until recently.
SIA now counts Tigerair as one of the key brands in its portfolio strategy, which also includes wholly owned, long-haul, low-cost carrier Scoot.
Tigerair has signalled it intends to further expand its footprint into the high-growth markets of Indonesia and the Philippines through its affiliates there - Tigerair Mandala and Tigerair Philippines respectively.
The Singaporean flag carrier recently showed its faith in Tigerair's strategy when it entered into an agreement to acquire a number of rights in the low-cost carrier, which could have taken its holding up to 49%.
"We believe that there is good growth potential in a different segment, which is the low-cost segment, and Tiger is in a position to tap those growths, especially in Southeast Asia," says SIA chief executive Goh Choon Phong.
Thai Airways International has taken a slightly different tack. The Star Alliance carrier is in the process of moving its domestic and regional international services across to Thai Smile, which plans to be operating as a separate subsidiary from 2014.
While Thai Smile offers a full-service product, the lower cost base of the carrier will help it to maintain its market share against the likes of Thai AirAsia.
Even Virgin Australia, which has transformed itself into more of a full-service carrier in recent years, has put itself back into the budget market with the acquisition of a 60% stake in Tigerair Australia.
For some carriers, though, the answer to the low-fare market has come through other means, such as adjusting their revenue management practices or making changes to their products that lead them to offer more of an a la carte service.
Cathay Pacific, for example, has focused on revenue management with its Fanfares website. The site is used by Cathay and Dragonair to sell competitively priced seats on their existing services, primarily to China and other regional destinations.
Air New Zealand has taken the approach of offering tailored onboard offerings on its transtasman and domestic services. Under the brand of "seats to suit", passengers can choose the lowest fare without baggage, meals or seat allocation, and either add options or purchase higher fares with more inclusions.
For all the enthusiasm in the region for low-cost carrier subsidiaries, Herdman warns that network carriers need to ensure their main brands can maintain their positions rather than only focusing on the new growth market.
"There is no point of having a model of how it should be done if most of your capacity is in the part of the business that hasn't been managed in a way to make it competitive on cost," he says.
As well as pursuing growth opportunities in the budget market, many carriers in the region have also continued to invest in their products, particularly on long-haul services.
SIA unveiled new first-class suites and business-class seats in July that will feature on its Boeing 777-300ERs and Airbus A350s.
Garuda Indonesia has also jumped on the premium bandwagon. For its newly delivered 777-300ERs, the carrier has reintroduced first class, with eight private suites up the front of the three-class aircraft.
Cathay Pacific has moved forward with the adoption of premium-economy cabins on its Boeing 777s and Airbus A330s.
The Hong Kong carrier's premium economy appears to be aimed at recovering some of the leakage of passengers to higher-yielding business-class cabins. In revealing an 83% fall in profit for 2012 to HK$916 million ($118 million), the airline noted its yield was impacted by the tightening of corporate travel policies that discourage employees from choosing business class.
In addition to product changes, there have been some major shifts in alliances for carriers in the Asia-Pacific region - particularly towards the Middle Eastern carriers that have been reliant upon the same market to fuel their growth.
The most seismic shift has come from the Qantas and Emirates alliance, which started operating in April. That has facilitated Qantas moving its hub for European services from Singapore to Dubai, while it has also retimed its services to Singapore and Hong Kong to better meet the needs of travellers to Asia.
Initial results from the airline seem to be mixed. Qantas's own operational data shows that in the months following the start of its alliance, its international traffic went down. However, the airline says bookings to Europe have increased strongly as a result of the greater number of connections it can offer through Emirates' extensive network from Dubai.
Abu Dhabi's Etihad Airways is also planning a seismic shift of its own, with the acquisition of a 24% stake in India's Jet Airways for $300 million. As well as giving Etihad exposure to the huge potential of the Indian domestic market, Jet is proposing a radical reshaping of its network to operate many of its long-haul services via Abu Dhabi.
However, that plan has been on hold as the Indian government deferred a decision on the Etihad investment until issues over the control of Jet are made clearer.
With the constantly changing dynamics of the Asian market forcing carriers to alter and mould their offerings, it seems airlines will continue to experiment for some time.