SINGAPORE — Eight budget airlines from Southeast Asia, Japan and Australia said Monday they have formed what they called the world’s largest alliance of low-cost carriers, enabling customers to book connections using a shared platform.
The announcement comes at a time of increased popularity for budget carriers in Southeast Asia, which industry players say is a key growth market for low-cost air travel.
"Customers will be able to view, select and book the best-available airfares on flights from any of the airlines in a single transaction, directly from each partner website," said the statement, describing the alliance as the world’s biggest.
Value Alliance brings together Singapore Airlines’ medium- to long-haul budget wing Scoot, the Philippines’ Cebu Pacific, South Korea’s Jeju Air, Thailand’s Nok Air and NokScoot, Tigerair Singapore, Tigerair Australia and Japan’s Vanilla Air.
The alliance will serve more than 160 destinations with a collective fleet of 176 aircraft, the statement said.
"Value Alliance is a clear example of how (budget airlines) can accomplish more by working together than we could do individually," said Lance Gokongwei, president and chief executive of Cebu Pacific.
Members of the alliance together served more than 47 million travelers from 17 hubs last year, according to the statement.
The increasing popularity of no-frills airlines, which typically do not offer free meals or in-flight entertainment, is driven by the region’s growing middle class, many of whom are traveling for the first time.
Shukor Yusof, founder of Malaysia-based aviation consultancy Endau Analytics, said the alliance will benefit carriers more than passengers.
"The idea would be to align airfares so that there will not be too much disparity between the different discount carriers," he said.
Notable exclusions from the new alliance were AirAsia of Malaysia, Southeast Asia’s biggest budget carrier, Qantas Airways’ Jetstar Group of Australia and India’s IndiGo.
Yusof said their absence could mean they are taking a wait-and-see approach.
"But I suspect they will look closely, especially (now) that Scoot and Tiger and the Japanese and Korean LCCs are part of the equation," he said, referring to low-cost carriers.
The alliance will increase the geographical reach of its members by using the strength of each partner’s website in its home market, Campbell Wilson, chief executive officer of the medium-haul airline Scoot, told reporters in Singapore.
“We are doing this for our own strategic reasons,” Wilson said, when asked if AirAsia and Jetstar from Australia’s Qantas Airways Ltd were invited. “The fact that you don’t see the others here speaks for itself.”
The goal is to bring together smaller airlines as an alternative to the AirAsia and Jetstar branded groups across the region, according to people in the industry.
In a single transaction, travelers can select seats, meals and baggage allowances across the websites.
But the cooperation will not be as extensive as full-service partnerships such as Star Alliance, Oneworld and SkyTeam. Those programs feature extensive codes haring agreements, access to a network of waiting lounges and the ability to redeem points on partner flights.
Deeper partnerships including cooperation across frequent flyer programs, joint sales and marketing, and coordination on network and prices requires regulatory approval, and are not on the cards, Wilson said.
Asian budget carriers are looking to take advantage of a travel boom in the region, placing orders for several hundred aircraft from Airbus Group SE and Boeing Co.
Boeing’s 2015 global market outlook showed Asian low-cost carriers generated average annual growth of 24.5 percent over the previous decade. By comparison, European peers grew 13.4 percent.
The US planemaker also forecast 100 million new passengers entering the Asian market annually for the foreseeable future, creating demand in the next 20 years for 10,370 single-aisle planes such as Boeing’s 737 and Airbus’ A320. — Agencies
