DVB boss warns of Asian LCC war as fleet orders swell

Singapore
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The top executive of a leading aircraft financier has warned that the large number of orders for aircraft from Asian low-cost carriers could lead to a costly fare war in the region.

The additional capacity to be introduced by carriers in the coming years will result in them sacrificing yields to build demand and stimulate market growth, says Bertrand Grabowski, DVB Bank's managing director for aviation and rail.

"It is a dangerous race, trying to anticipate growth potential," he adds.

Flightglobal Pro's database shows that AirAsia has 339 Airbus A320s on firm order, while Lion Air has 329 Boeing 737s on order. In addition, Cebu Pacific, Tiger Airways and Jetstar Asia are also planning to add more aircraft to their fleets, albeit in smaller numbers.

Grabowski adds that the airlines could find themselves in trouble if an economic slowdown hits the region - something that few carriers have built into their business models.

"I think the memories of the 1998 Asian financial crisis are gone," he says.