First birthday for Asia’s low cost terminals

Kuala Lumpur International Airport’s LCC Terminal (LCCT) and Singapore Changi’s Budget Terminal (BT) celebrated their first anniversary this week. The two facilities have performed well during the year, backed by the continued expansion of Tiger Airways (Changi) and AirAsia (Kuala Lumpur).

Changi’s BT handled approximately 1.4 million passengers in the period (4% of total pax handled at Changi in 2006 and equivalent to 50.7% of the BT’s total capacity) and was served by LCCs, Tiger Airways and Cebu Pacific, linking 18 cities in the Asia Pacific region. According to the Civil Aviation Authority of Singapore, not only did the BT deliver healthy passenger traffic growth, but airport retail sales also reported good growth.

Meanwhile, Kuala Lumpur’s LCCT, handled a massive 6.2 million passengers in the period (26.6% of total pax handled at Kuala Lumpur in 2006, and equivalent to 62% of total LCCT capacity). It was aided by AirAsia’s expansion, particularly on domestic routes following the introduction of a new domestic aviation policy involving the transfer of many loss-making routes from Malaysia Airlines to the LCC. The facility also benefited from rising passenger traffic from Thai AirAsia, Indonesia AirAsia and Cebu Pacific.

The outlook for both facilities is positive, as budget travel continues to grow rapidly in Asia (one in ten seats in the region is now provided by LCCs). Passenger traffic at the BT is expected to keep growing, as Tiger Airways adds three more A320s to its fleet of eight in 2007.

But greater things are expected from the LCCT. Malaysia Airports announced plans to expand its capacity from 10 million passengers p/a to 15 million to accommodate AirAsia X long-haul operations, expected to commence in 2008. The facility will also benefit this year from an expected increase in passenger throughput, due to travel promotions related to the Visit Malaysia Year 2007.


Changi and Kuala Lumpur’s successes with dedicated LCC facilities may encourage other hubs in the region to implement a similar market segmentation strategy. Perhaps Airports of Thailand, which now has two operational airports in Bangkok, may now consider allowing Don Muaeng (official new spelling) to operate international services (in addition to domestic services) to further strengthen its hub position from increased LCC point-to-point traffic growth?