Low cost carriers still appeal to Taiwanese people despite the fact that the two locally-owned budget carriers are struggling financially, a Boeing executive said on Thursday while discussing the current market outlook in Taiwan.
Taiwan has a growing economy and market penetration for no-frills airlines is relatively low compared with other countries in Northeast Asia, which suggests there is room for growth, said Randy Tinseth, vice president of marketing for Boeing Commercial Airplanes.
Acknowledging recent difficulties faced by V Air and Tigerair Taiwan, the only local budget airlines, Tinseth said he remains confident that the emergence of LCC business -- both in the region and in Taiwan -- is unlikely to slow down.
V Air, a subsidiary of Taiwanese carrier TransAsia Airways, suspended operations on Oct. 1, while Tigerair Taiwan, a joint venture between Tigerair Singapore and Taiwan's China Airlines, is also in bad shape.
"For every market, there will be winners and losers," he said at a press conference in Taipei, adding that with a good business plan, capital and corporate culture, the LCC model remains lucrative.
"I think the challenge here in Taiwan is there is a greater desire for people to come visit Taiwan than necessarily to leave on the low cost model," Tinseth said.
It explains why the more successful LCCs operating in Taiwan are foreign-based, he said, suggesting that Taiwanese LCCs should better cater to local passengers for a more balanced consumer base.
Boeing projects that passenger air traffic in Northeast Asia will grow at an annual rate of 2.6 percent over the next 20 years backed by LCCs.
Taiwan could see even greater growth thanks to a stronger economy, although it might pick up rather slowly in the LCC market, he noted.
Source: Focus Taiwan News Channel