Low-cost carriers to account for 50% of the total airline capacity by 2021

And the years going forward will see Singapore Airlines (SIA) attempting to take a larger slice of the no-frills market while merging and acquisitions among other locally-based airlines will become a winning response, says DMG Research.

“Market expectation is that by the end of the year, low-cost carriers (LCCs) will account for 20% of the total air capacity or a marked improvement from just 11% when Singapore-based low-cost airlines began operating in 2004. In ten years time, we will see LCCs accounting half of the capacity as more full-service airlines like SIA going low-cost,” DMG analyst Melissa Yeap told Singapore Business Review.

“SIA’s plan to launch new no-frills, low-fare airline next year is a response to fight for the turf occupied by Jetstar and AirAsia X on long-haul international routes – a trend that will likely persist in the next few years. For other players to remain in the competition, meanwhile, we will see consolidation in Singapore’s aviation industry with bigger fish eating the small ones,” she added.

Valuair’s launching of its maiden flight on May 2004 started Singapore-based low-cost airline operations. It was followed by two locally-based largest airlines which started operating their competing carriers, namely SIA's Tiger Airways and Qantas' Jetstar Asia Airways on September and November of the same year, respectively.

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