The first of several new Singapore-based airlines planning to launch services this year has begun commercial operations - and major incumbent carriers have already declared war on it.
Valuair launched commercial services on 5 May with an inaugural flight to the Thai capital Bangkok, which it is now serving twice daily. This was followed days later by the launch of daily services to both Hong Kong and the Indonesian capital Jakarta.
The new carrier operates two leased Airbus A320s in all-economy class configurations. Although it calls itself Singapore's first "budget airline", it offers some frills such as meals and in-flight entertainment and its fares are not much lower than the typical fares of incumbent carriers on its chosen routes. It also has assigned seating, aims to carry interline traffic and is negotiating codeshare agreements with other airlines.
Privately owned Valuair, which raised around $20 million ahead of its launch, says it is targeting business passengers as well as leisure travellers who are less price-conscious than "backpackers". It hopes to raise up to $20 million more from new and existing shareholders.
The routes it has chosen are all served by many other full-service airlines, however, and some such as Cathay Pacific Airways and Singapore Airlines (SIA) have reduced ticket prices to match the promotional launch fares offered by Valuair. Chairman Lim Chin Beng expressed surprise at the level of discounting by the majors, saying they "should be fighting with each other" rather than challenging a new player.
Even cheaper airfares are expected in South-East Asia later this year when two other new Singapore-based airlines begin operating, each adopting the strict low-cost/low-fare model.
These are Tiger Airways, which has Singapore Airlines as its largest shareholder, and a still-unnamed new-start that will have Australia's Qantas Airways as its largest shareholder. Both plan to launch services before year-end.
Malaysian low-fare carrier AirAsia has also said it is considering setting up an associate airline in Singapore with local partners and has applied for an air operator's certificate. It already serves Singapore from Bangkok through Thai associate Thai AirAsia.
Valuair is now the fourth scheduled carrier registered in Singapore, the others being SIA and its two subsidiaries, SilkAir and SIA Cargo.
Source: Airline Business
