Page last updated at 10:47 GMT, Thursday, 4 February 2010

Budget airlines to influence plane design

By Juliana Liu
Asia Business Report, BBC World, Singapore air show

Aircraft model at the Singapore air show
Aircraft makers say they listen to customers before they design planes

They started out as the poor relations of the aviation industry, but no-frills airlines have thrived during the economic downturn, and emerged as winners.

From Europe to the Americas to Asia, budget carriers are making record profits at a time when their full-service rivals suffer losses, and in some cases, bankruptcy.

Flush with cash, customers and a clear growth trajectory, low-cost carriers have started flexing their newfound muscles.

Australia's Jetstar Airways and Malaysia's AirAsia, partners in a strategic alliance, say they want plane makers to design aircraft to suit their special needs.

"I think we could, for the first time, really seriously influence the design of an aircraft for this region and for low-cost carriers," says Bruce Buchanan, Jetstar's chief executive, in an interview with the BBC.

Curb costs

Jetstar and AirAsia have very similar views about what they want, namely, planes designed for flying over water and for Asia's unique terrain, Mr Buchanan explains. They also want larger overhead storage bins, and a design that will help speed up turnaround times.

Randy Tinseth, vice president for marketing at Boeing
[The Asia-Pacific region is] the biggest potential market in terms of demand of any region in the world
Randy Tinseth, vice president of marketing, Boeing

"This is about continuing to drive down costs," says Mr Buchanan, sounding very much like the former management consultant he was before joining Jetstar.

"Real airfares drop every single year, and that's a natural trend that's been going on for 50 years.

"So, if you're not keeping your costs down, you're not keeping up with the game."

Jetstar and AirAsia have approached plane makers Airbus and Boeing with their ideas.

It is still early days, but Mr Buchanan says it is imperative to get their views across in time to be included in the design of the next-generation of narrow body aircraft.

Not influential

Currently, Melbourne-based Jetstar flies the Airbus A320 and the A321 - both single aisle planes, as well as the A330 wide-body aircraft. AirAsia uses the A320.

Airbus chief operating officer John Leahy
In order to design successful aircraft we need to take into consideration the needs of all sectors of the market
John Leahy, chief operating officer, Airbus

Airbus reckons Asia will overtake the US and Europe to become the world's largest air transport market in 20 years. Much of that growth will come from budget airlines.

As a result, the Asia-Pacific region is expected to need 4,560 single aisle planes, as well as 2,570 twin aisle wide body aircraft.

Yet bespoke design for low-cost carriers is a long way off, predicts Shukor Yusof, an aviation analyst at Standard & Poor's.

"They're not in a position to influence manufacturers to create a plane to their specifications right now," he says.

"The significant thing is they've taken low-cost carrier cooperation to a new level. It's not been done before."

Growing importance

Boeing's vice president of marketing, Randy Tinseth, says the Asia-Pacific region is "the biggest potential market in terms of demand of any region in the world".

But he will not comment directly on how receptive the plane builder is to designing a plane for Jetstar and AirAsia, though he points out that customers are always extremely demanding.

European rival Airbus also declines to be say whether it would be ready to offer a bespoke design to low-cost carriers. Instead, it touts its A320 models as ideal for budget airlines.

"In order to design successful aircraft we need to take into consideration the needs of all sectors of the market," says John Leahy, chief operating officer at Airbus.

Mr Buchanan of Jetstar says the next generation narrow body aircraft would be delivered in the second half of the decade, at the earliest.

Depending on how well budget airlines fare in the next few years, they may one day be dominant enough in the aviation industry to commission their own aircraft.



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