Jimmy Lim Chin Hwa abandoned Singapore Airlines Ltd.’s coach class for budget carrier Jetstar Asia Airways Pte two years ago to save 65 percent on the cost of flying. He’s noticed more people following suit.

“Normally, the flights are half full but since the start of the year it’s packed,” said Lim, 50, a marketing manager at Unicane Furniture Pte, waiting to board a flight at Singapore’s Changi airport to Indonesia.
Losing economy-class customers like Lim adds to pressure on carriers such as Singapore Air, forecast to post its worst annual profit in two decades, as travel dwindles amid the global recession. Jetstar Asia, AirAsia Bhd. and other regional discount carriers meanwhile are adding more planes after cut-rate fares helped double their market share since 2005.
“Low-cost carriers are making it so affordable now,” said Tan Teng Boo, who oversees $200 million as managing director at Kuala Lumpur-based iCapital Global Fund. “The full-fare carriers will have to sit down and think about reinventing themselves.”
-----Morphed marketing
Singapore Air, the world’s second-largest airline by market value, Malaysian Airline System Bhd., and Thai Air, are altering networks and cutting capacity. Singapore Air is parking planes, lowering pay, and removing 11 percent of capacity in the year ending in March. The airline said last week it will reduce seats on some planes by 14 percent as part of a cabin upgrade.
The carrier may post a full-year profit of S$627 million ($435 million) in the year ending in March, the worst in at least two decades, according to the median estimate in a Bloomberg survey of 13 analysts. The airline reported its first operating loss in six years in the quarter ended March.
Performance at Thai Air was “pretty bad in the last two months,” Executive Vice President Pandit Chanapai said July 16.
---------Cheaper tickets
PT Lion Mentari Airlines, Indonesia’s biggest low-fare carrier, is buying 178 Boeing Co. planes, the highest number for the aircraft maker in Asia over the last five years. Malaysia’s AirAsia, with a tagline “Now Everyone can Fly,” has ordered 175 aircraft from Airbus SAS, the largest client for single- aisle models in the region for the world’s biggest planemaker.
AirAsia last month lowered ticket prices by scrapping administrative charges. Tiger Airways Pte, a no-frills carrier partly owned by Singapore Air, is selling tickets at 9 Singapore cents, excluding taxes, to more than a dozen destinations.
Singapore-based Jetstar Asia has almost 400 corporate clients now, compared with 300 at the start of the year, said Chief Executive Officer Chong Phit Lian.
--------Eating their business
Singapore Air was little changed at S$13.38 at the close of trading in the city-state and Malaysian Air gained 4.6 percent to 3.18 ringgit. AirAsia rose 0.8 percent to 1.30 ringgit.
“Budget carriers are simply eating into their business,” said Jim Eckes, managing director of industry adviser Indoswiss Aviation. “That’s why full-service airlines are fighting back with discounts.”
The cuts will need to be deep to convince Lim, the furniture executive, to return. He flies at least 10 times a year to Surabaya, Indonesia, and pays on average S$176 for a return ticket, compared with S$500 on SilkAir, Singapore’s regional unit.
(Source: Bloomberg)