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Sky's the limit? South-east Asia budget airlines bet big on growth

Published on Mar 24, 2013 12:15 PM
 
A Lion Air airplane takes off at Soekarno-Hatta airport in Jakarta, in this picture taken on March 18, 2013. Lion Air's record aircraft orders underline the ambitious plans the privately held Indonesian group is hatching to emerge as a pan-Asian low cost carrier, throwing a serious challenge to AirAsia Bhd, the region's biggest budget airline. -- PHOTO: REUTERS

SINGAPORE (REUTERS) - Lion Air's record aircraft orders underline the ambitious plans the privately held Indonesian group is hatching to emerge as a pan-Asian low cost carrier, throwing a serious challenge to AirAsia Bhd, the region's biggest budget airline.

The rivalry intensified on Friday when Lion Air launched its first service in Malaysia, barging onto AirAsia's home turf, but the pace of expansion has raised questions about whether airlines are overextending themselves.

Financiers and industry executives, however, say the party is just starting, with the region's budget carriers just beginning on the rapid growth path enjoyed by Ryanair Holdings Plc and Easyjet Plc in Europe and Southwest Airlines Co, the pioneer of the model, in the United States.

"I think it's been pretty rational in the sense that it is underpinned by economic prospects," Mr Eric Eugene, BNP Paribas's global head of transportation banking, told Reuters in an interview in Singapore.

 
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