AirAsia jet incident could be test for SE Asia’s thriving budget carriers

The disappearance of AirAsia Flight 8501, which vanished over Indonesian waters during the weekend with 162 people on board, could be a test for the low-cost, regional Southeast Asian airline industry, but some analysts say the latest incident isn't part of any clear pattern and the badly needed budget carriers will likely continue to thrive in the long term.

The apparent loss of Flight 8501 caps a disastrous year for carriers associated with Malaysia, which is where AirAsia is based and is one of the region's most prosperous and developed countries. Malaysian Airlines Flight 370 went missing on March 8 during a trip from Kuala Lumpur to Beijing with 239 passengers and crew on board and has yet to be recovered. On July 17 the same airline's Flight 17 was shot down over Ukraine, killing all 298 people on board. 

The Malaysia Airlines flights were operated by a national carrier, the kind of established airline that upstarts such as AirAsia, founded in 2002, have challenged with low-cost flights connecting Southeast Asia’s massive cities. The budget sector has expanded rapidly, making the region "one of the world's fastest growth markets," according to a report from the Australian aviation consulting group Center for Asia Pacific Aviation (CAPA).  

That growth in coverage for Southeast Asia has been fueled by a combination of demographics, economics and geography. Much of the area consists of large tracts of wilderness and thousands of remote islands, making rapid surface transit impossible. But more than 600 million people live in the region, and rising incomes have put low-cost airline tickets within reach of customers unable to afford them before.

The growth has been so rapid — low-cost carriers accounted for almost 60 percent of air traffic in the region in 2013 — that as of May, airlines based in Southeast Asia reportedly had almost as many planes on order as they had in service. The biggest low-cost airline in the region, Lion Air, had 96 planes in service and 561 on order; AirAsia, the third-largest carrier, had 76 in service and 331 on order, according to CAPA figures for 2013 in its "World Aviation Yearbook 2014." 

With so little known about the circumstances surrounding the disappearances of AirAsia Flight 8501 and Malaysia Airlines Flight 370, aviation experts contacted by Al Jazeera said there is little reason to believe they are connected or part of an emerging regional trend.

"I don't really see any pattern," said Keith Mackey, an American aviation safety expert. "The only thing I see in common was the companies were both registered in Malaysia."

Mackey said that pilot training standards are less rigorous in Malaysia than in the United States. However, there is no indication that had anything to do with either disappearance. 

It is also unclear what effect the most recent incident will have on AirAsia, which posted a 238 percent increase in net profit from 2012 to 2013 even as it has begun to face more intense competition in Southeast Asia. The company has an excellent safety record, never having lost a plane before.

Whether the low-cost airline industry can continue to expand so quickly in the face of high-profile disasters remains to be seen. Malaysia Airlines is already struggling, in part because of the disappearance of MH370. The company has since been renationalized by the Malaysian government.