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Russell Barling

There is no small irony in the fact that the industry that brought us travel at the speed of sound has been slow as a tortoise to embrace its next great frontier - air travel for the masses.

Asia has been particularly slow to break down the regulatory and ownership barriers that keep air travel beyond the financial reach of most of its people. But now the winds of change are blowing.

The aviation industry's traditional power brokers - the national carriers and the governments that regulate them - are not the greatest impetus for change.

Instead, it is the newcomers. Intentionally or not, low-cost carriers have become the agents of change in this region, breaking down the barriers to open skies and forcing nervous bureaucrats to acknowledge the merits of budget travel.

From nothing five years ago, low-cost carriers are expected to control 9 per cent of the Asia-Pacific market this year.

Going by the manufacturers'  order books, they will have 600 aircraft flying across the region by 2012, 150 per cent more than now.

And they will do so without damaging the revenue prospects of the full-service airlines. Why? Because low fares stimulate demand - budget carriers are expanding the consumer base.

It is a fact that most governments have reluctantly come to accept.

Yet, burdened with the responsibility of protecting 'national interests', few have taken the brave steps that would attract budget carriers.

The region's top airports, most of them state-owned, also have been slow to make room for the upstarts.

In fact, most governments appear content to ignore the 'problem' - a sort of consent by omission.

While not an optimal strategy, that decision-making void has allowed AirAsia's Tony Fernandes and his ilk room to breathe.

Though not exactly keen to be seen promoting low-cost travel, neither have governments gone out of their way to choke its growth.

In some cases, they have turned a blind eye to the creative joint-venture structures that allow the AirAsias of this world to legally skirt arcane ownership rules and exploit traffic rights outside their countries of origin.

This has resulted in the creation of joint-venture companies in which an offshoot of a foreign carrier retains management control without, on the face of it, majority equity.

The model has been so successful - AirAsia says it will move 16 million passengers next year, up from 9.3 million this year - that many in the industry feel that full-service carriers might do well to adopt it.

It is interesting to note that while the full-service carriers have been among the most vocal proponents of regulatory and ownership liberalisation, they have shown nothing like the inventiveness of their low-cost rivals.

Maybe that is because the status quo is more comfortable for some than for others.

Because budget carriers are creative, governments can let their citizens enjoy budget travel and leave decisions on thorny issues such as changes to the scheme of ownership control for another day.

But, perhaps most importantly, there is a growing body of irrefutable evidence that the benefits of low-cost travel extend beyond the airline and airport community to business. And that may be slowly - very slowly - redefining what governments regard as in their 'national interests'.



Budget airlines bring winds of change