The skies over South-East Asia are set to become even more crowded with new low-cost international players this year, as Qantas Airways enters the fray in Singapore.

Qantas, which is launching a domestic low-fare subsidiary in Australia in May known as Jetstar, announced early in April that it would also establish a low-fare/low-cost associate airline in Singapore with local partners. It is now one of as many as four new airlines that plan to launch out of Singapore's Changi airport.

The new carrier, which has yet to be named, plans to start operating before the end of this year with four leased Airbus A320s or Boeing 737-800s. It will "build to a fleet of more than 20 aircraft over the following three years", and will serve destinations within 5h flying time of Singapore.

Qantas will hold 49.9%, while the second-biggest shareholder will be local businessman Tony Chew, with 21.1%. Singapore government investment arm Temasek Holdings, which is the majority shareholder of Singapore Airlines (SIA), will have 19%, while another Singaporean businessman, FF Wong, will have 10%.

Qantas will contribute S$50 million ($30 million) to the venture, while its partners will invest the same amount. "This is a modest investment for Qantas but it is an excellent opportunity to participate in the growing intra-Asia travel market," says Qantas chief executive Geoff Dixon. "The region, which has a population of more than 3 billion people, is enjoying strong economic growth and features many potential destinations for point-to-point travel from Singapore."

The Qantas plans were unveiled around a month before Singapore's first new carrier, Valuair, planned its launch, with Singapore-Bangkok as its initial intended route. Valuair will operate two Airbus A320s and is describing itself as a low-cost airline offering some in-flight frills.

Later in the year a second new carrier plans to start operating from Changi, using the strict no-frills model. That carrier, Tiger Airways, will be 49%-owned by SIA. Temasek will also have a minority stake, as will investors from the USA and Ireland. Malaysia's AirAsia has also said it is considering launching a low-fare airline in Singapore with local partners and has already applied for an air operator's certificate.

Meanwhile, in Thailand, AirAsia associate carrier Thai AirAsia now serves Singapore, while Thai Airways International is preparing to launch a low-fare associate carrier called Nok Air. Already flying domestically within Thailand is no-frills carrier One-Two-Go, which is owned by international operator Orient Thai Airlines. It launched services in December using Boeing 757-200s on a handful of domestic routes and recently added more routes to help it better compete with Thai AirAsia.

Chief executive Udom Tantipra-songchai acknowledges that operating conditions have proven difficult, although losses have been "bearable" and One-Two-Go will soon be expanded with a third 757. He says, however, that if demand does not pick up he has "no obligation to continue" and may instead focus on Orient Thai's international services. Analysts are already predicting consolidation, even before several of the new airlines start operating.

Is the market big enough for so many new players to be based in Singapore? When asked that question, SIA chief executive Chew Choon Seng told local media: "At least four independent parties think it is. Only time will tell. It might be big enough for some, but not big enough for others. We shall see."


Source: Airline Business