AirAsia gains access to Luang Prabang after long battle
On 9-Feb-2016 Thai AirAsia (TAA) confirmed plans to launch a daily flight from Bangkok Don Mueang to Luan Prabang from 24-Mar-2016. Securing permission from Lao authorities to serve the Bangkok-Luang Prabang route is a major breakthrough for AirAsia Group, which has tried for several years to gain access to Luang Prabang.
Lao authorities have historically been reluctant to open up Luang Prabang to LCCs in an apparent attempt to avoid a large influx of visitors to the town, which is a UNESCO heritage centre. Laos seems to have adopted a new, more relaxed policy on LCCs and growth generally at Luang Prabang, as part of an overall initiative to boost tourism and improve connections with other ASEAN countries. The chairmanship of ASEAN, which rotates annually, is with Laos in 2016.
AirAsia Group’s Malaysian subsidiary has served Vientiane since 2007, when Malaysia AirAsia (MAA) became the first LCC to serve Laos. Vientiane has historically been more open than Luang Prabang, and also attracted service from two Korean LCCs – initially from Jin Air, which launched service from Seoul in early 2012, and from T’Way, which joined Jin Air on the Seoul-Vientiane route in early 2015. However, Vientiane at times has been relatively restrictive, with several foreign airlines unable to secure the slots or traffic rights needed to mount new or additional flights.
AirAsia Group also plans to launch Bangkok-Vientiane and Kuala Lumpur-Luang Prabang
TAA has bas been seeking for several years to serve Bangkok-Vientiane, which is a much larger market than Kuala Lumpur-Vientiane, as well as Bangkok-Luang Prabang. With Vientiane TAA was repeatedly thwarted in efforts to secure traffic rights, while for Luang Prabang it faced a general policy restricting LCCs.
For several years Thai Airways was designated as the only Thai airline for Bangkok-Vientiane, and when the route opened up to a second Thai airline in 2012 Bangkok Airways secured the rights over an application from TAA. At broadly the same time Thai Airways secured the rights as a second Thai airline for Bangkok-Luang Prabang.
Thailand-Laos traffic rights seem no longer to be an issue as Laos adopts a more liberal stance towards ASEAN open skies. TAA is now planning to enter the Bangkok-Vientiane market in early 2017. Bangkok Airways, meanwhile, has submitted an application for a second daily frequency on Bangkok-Vientiane, which in theory should be approved, given the new more liberal policy adopted by the Lao government.
Malaysia AirAsia also has filed an application to serve Luang Prabang from Kuala Lumpur
Malaysia AirAsia also has filed an application to serve Luang Prabang from Kuala Lumpur. Lao authorities expect MAA to launch Kuala Lumpur-Luang Prabang in Jun-2016 with a less than daily service. MAA will likely serve Luang Prabang with three of four weekly frequencies, complementing its current thrice weekly service to Vientiane.
While the AirAsia Group is keen to link its two largest hubs with both main international airports in Laos, daily services from TAA are more feasible since Thailand is a much larger market from Laos than Malaysia. In 2014 there were over two million visitor arrivals from Thailand compared with only 24,000 visitor arrivals from Malaysia, according to Laos Tourism Development Department data.
HK Express to provide first link with Hong Kong
HK Express has also stated that it plans to launch services to Luang Prabang by the end of 2016, providing Laos with its first non-stop link to Hong Kong and Luang Prabang with another LCC option. Hong Kong is a relatively small local market for Laos, but HK Express will be able to provide connections to larger North Asian source markets, including China, Korea and Japan.
China is Laos’ third largest source market after Thailand and Vietnam, while South Korea is the fourth largest. Japan, Australia, France and the US are the next largest source markets for Laos and are approximately similar in size.
While Thailand and Vietnam are the largest source markets, a majority of visitors from these countries cross into Laos by car, bus or train. In 2014 Laos recorded 4.2 million visitor arrivals but only 500 million of these visitors entered the country at one of its four international airports.