Singapore Airlines' low-cost carriers, others start alliance

[TOKYO] Budget airlines formed the Asia Pacific region's first alliance comprising eight low-fare carriers from Japan to Australia to boost usage of their networks.

Value Alliance includes Singapore Airlines Ltd's Scoot and Tiger Airways, ANA Holdings Inc's Vanilla Air, Tiger Airways Australia, Nok Airlines Pcl, NokScoot, Cebu Pacific Air and Jeju Air, Vanilla Air said in an e-mailed statement Monday.

The partnership follows a Chinese alliance by low-cost airlines linked to HNA Group earlier this year. Value Alliance is the world's largest alliance of budget carriers and offers a website allowing passengers to book tickets and extra services like additional baggage and meals across airlines in the group, according to the statement. The members offer flights to more than 160 destinations with 174 aircraft, it said.

"This is a positive move for the LCCs," said Dan Lu, an analyst in Tokyo at JPMorgan Securities Japan Co.

"The one disadvantage for LCCs is their lack of network brand. It's quite difficult for them to join the full-service alliances so they have to form their own alliances. Through this joint alliance they can expand their network."

IndiGo, AirAsia Value Alliance doesn't include InterGlobe Aviation Ltd, the operator of India's biggest airline IndiGo, and Malaysia's AirAsia Bhd, each with more than 100 aircraft in their fleet, as well as Qantas Airways Ltd's Jetstar group.

Scoot chief executive officer Campbell Wilson is scheduled to hold a briefing on the alliance at 2 pm Monday in Singapore.

Low-cost carriers have flourished in Asia as growing wealth encourages more people to fly for the first time. At least a dozen low-cost airlines started operating in Asia Pacific the past decade, ordering hundreds of aircraft from Airbus Group SE and Boeing Co.

Alliances formed by legacy carriers are global in reach and comprise many more members. Most full-service carriers are part of these three formations - Star Alliance, Oneworld and Skyteam - as they look to extend their connectivity and increase sales while cutting expenses.

Among budget carriers worldwide, Europe's Ryanair Holdings Plc and EasyJet Plc have eschewed alliances while still managing to lure enough passengers to be among the world's biggest airlines.

BLOOMBERG