Are low-cost carriers in Taiwan nonviable? Boeing's VP of Marketing: Business strategies need to change

▲ Randy J. Tinseth, Vice President of Marketing for Boeing Commercial Airplanes, discusses the commercial aircraft market outlook (Photo / Provided by Hua-Hui Integrated Marketing Consultants Co., Ltd.)

Reported by Yu Jiayun / Taipei

Is there room for low-cost carriers (LCCs) in Taiwan? Randy J. Tinseth, Vice President of Marketing for Boeing Commercial Airplanes, said on the 13th,while many international visitors currently fly to Taiwan on budget airlines, the number of passengers departing from Taiwan on such airlines is relatively low. In response, he suggested that Taiwan should look at the overall market rather than just formulating suitable business strategies targeting domestic travelers.

TransAsia Airways' low-cost subsidiary V Air officially exited the market in October, while Tigerair Taiwan, affiliated with China Airlines, is struggling amid poor revenue — prompting questions about whether the Taiwan region is suitable for the development of low-cost aviation.

In response, Tinseth said in Taipei on the 13th while releasing a report on the future 20-year commercial aircraft market outlook for Northeast Asia that over the past five years, due to the rise of low-cost carriers, the number of flights in the region has grown significantly. Low-cost carriers have gradually become a trend in Northeast Asia, with strong performances from Malaysia’s AirAsia, Indonesia’s Lion Air, and South Korea’s Jeju Air.

Moreover, due to considerations of cost and service, airlines continue to shift from large wide-body aircraft such as the Boeing 747 to smaller yet more efficient wide-bodies like the Boeing 777. Tinseth estimated that for the Northeast Asia region, the demand for small single-aisle aircraft could account for around 42% of total aircraft purchases over the next 20 years, with medium-sized wide-body aircraft making up about 27% as the next largest segment.

Tinseth believes that the success of the low-cost carrier market depends on the airline’s business plan, execution capability, capital, and corporate culture. Market elimination is a result of competition, and for Taiwan and even the broader Northeast Asia market, data on aircraft demand for low-cost carriers still shows an upward trend.