Lex: Asian low-cost carriers | FT

Asia's skies may not be open, but they are starting to look a little crowded. Qantas has added to the traffic, investing $30m in a new Singapore- based budget airline. That gives Singapore five discount airlines shuttling in and out of its airport, and Qantas two. Yet the drivers for the low-cost market in Europe, including open skies and a wealth of short-hop journeys, are conspicuously absent.

As a result, the Asian discount carrier looks very different from its western peers. One Asian characteristic is the presence of a government partner: a handy asset in securing bilateral air agreements. Malaysia's AirAsia has a joint venture that links it to Thaksin Shinawatra, the Thai prime minister. Meanwhile, Temasek, the investment arm of the Singapore government, has come on board with Qantas. Temasek owns most of national carrier Singapore Airlines and its budget airline. That gives it a serious conflict of interest - until you recall that all these aircraft zooming into Changi airport means more money spent in Singapore. Besides, Temasek's 19 per cent stake cost barely a week's revenue at Changi.

For the airlines, there is also the tyranny of distance. In Asia, a short-haul flight can be up to five hours, which rather spoils the point of aircraft squeezing in several journeys a day. The prospect of cheaper holidays will cheer the rising Asian middle classes, but it is too early to do the same for the airlines that carry them.

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