BANGKOK — Low-cost carrier (LCC) airlines in Southeast Asia are regaining momentum after struggling with declining passenger numbers due to the novel coronavirus pandemic.

The recovery of LCCs is likely to affect the business strategies of many Japanese and Japanese-affiliated companies, which are important in Southeast Asian markets.

Admission rules were relaxed.

Don Mueang International Airport, north of Bangkok, serves as a major hub for LCCs, which operate short-haul routes within Asia.

"Thanks to the low prices of LCCs, I can visit my hometown more often than before," said a 41-year-old company employee returning to the Thai capital from southern Thailand.

Southeast Asian economies are heavily dependent on the tourism industry. Following the easing of entry restrictions related to the coronavirus, many LCCs in the region announced major steps up in flight services.

New airlines are also entering the market. In Indonesia last year, SuperAirjet began operating several routes, one of which connects Jakarta and the island of Bali. The company aims to attract young people - known as the "millennial generation" - to local resorts. In Malaysia, meanwhile, plans are underway to launch a new LCC in the near future.

A change of strategy

Many major airlines in Southeast Asia are affiliated with the government, which has affected their business performance. Since the 2000s, LCCs, buoyed by economic growth in the region, have started offering lower airfares.

Many LCCs have increased their presence in regions where flight serves as a major means of mobility. During the pandemic, Southeast Asia, like regions all over the world, saw a sharp decline in passenger numbers, with devastating business consequences. An LCC – a joint venture between Thailand and Singapore – was forced into liquidation.

A number of LCCs have rewritten their respective business strategies. In January, AirAsia, a leading LCC based in Malaysia, changed the name of its holding company to Capital A. The holding company now focuses most of its energy on digital service areas, such as ride-hailing services and food delivery. Tony Fernandes, who heads the holding company, said in a statement that AirAsia "is no longer just an airline firm."

In related moves, Vietnam's VietJet Air has strengthened its cargo flight service, and Thailand's Nok Air has upgraded its services across the board to help differentiate it from competitors.

Tough competition

Scoot of Singapore and Cebu Pacific Air of the Philippines have added larger aircraft and flights on their medium- and long-haul routes. Such actions are likely to affect the business strategies of Japanese rival firms.

In the latter half of the next fiscal year, ANA Holdings launched a new subsidiary airline, Air Japan Co. will begin operating, offering superior services from Peach Aviation Limited, an ANA Group firm. Both subsidiary airlines are eyeing Southeast Asian service routes.

Among the group companies of Japan Airlines Company, Zipair operates services between Tokyo Narita Airport and Thailand as well as Singapore.

Competition among LCCs is becoming increasingly fierce. An official at a Japanese LCC expressed a sense of urgency, saying, “Until [Japanese LCCs] demonstrate Japan-specific advantages, such as high-quality service, for them [foreign [from competitors] will be difficult to differentiate."