Luang Prabang opens to LCCs

LUANG PRABANG, 24 February 2016: Luang Prabang is emerging as one of Southeast Asia’s fastest growing tourist destinations, fueling an expansion of airline services in 2016, according to Centre for Asia Pacific Aviation’s recent analysis.

CAPA says at least four airlines will add services to the UNESCO World Heritage town this year.

The arrival of AirAsia Group will have the biggest impact, providing at least 3,600 seats weekly and giving Luang Prabang its first low-cost carrier option. The airline group has the largest network of services in Asia of all the low-cost airlines.

inside no 2Thai AirAsia is also the first low-cost airline to break a virtual ban on budget airlines by the Lao PDR. It will start services, 24 March, from Bangkok, ending a long battle to gain access to the previously restricted Luang Prabang market.

It still has to convince Laos to open the door to the capital Vientiane, but as the country complies with ASEAN’s Single Aviation Market protocols it is likely to become a reality later this year.

Malaysia AirAsia also has filed an application to serve Luang Prabang from Kuala Lumpur. Lao authorities expect the airline to launch a Kuala Lumpur-Luang Prabang service this June offering a three to four weekly flights.

Another LCC, HK Express, has also stated that it plans to a launch services to Luang Prabang by the end of 2016, providing Laos with its first nonstop link from Hong Kong to Luang Prabang.

Hong Kong is a relatively small tourism market for Laos, but HK Express will be able to provide connections to a wider North Asian markets, including China, South Korea and Japan.

Singapore Airlines’ regional subsidiary, SilkAir, has also filed an application to serve Luang Prabang. Lao authorities expect SilkAir to launch three weekly flights to Laos also this June. The service will not be as convenient as it combines Vientiane and Luang Prabang in a circular route.

The new SilkAir route is strategically important for the SIA Group as Laos is the only ASEAN country currently not served by an SIA Group airline.

Bangkok Airways remains the dominant flyer from Bangkok and offers codeshare services with partner airlines from Australia, Japan, Europe and the Middle East. But as more airlines offer flights it will lose some market share and other gateways other than Bangkok will constitute a positive factor for Luang Prabang.

“SilkAir and SIA will offer a new option for European and Australian passengers while TAA’s entry will inevitably result in lower fares on the local Bangkok-Luang Prabang market,” CAPA commented.

Thai Airways International now offers similar connections but has had a relatively limited presence in the Luang Prabang market. It serves Luang Prabang on a less than daily seasonal basis, but could potentially upgrade Luang Prabang to a year round daily service as it hands the route to its regional subsidiary Thai Smile.

Thai Smile aims to take over the Bangkok-Luang Prabang and Bangkok-Vientiane routes by the end of this year as it takes over the group’s A320 fleet, which is now split between Thai Airways and Thai Smile, it said.

It has a history in Luang Prabang having launched a service in 2013 believing it could piggy-back on TG’s rights. But Lao authorities determined the airline was an independent entity with its own flight designator WE and that it subscribed to the LCC business model. It objected successfully to TG handing over rights to its subsidiary.

Luang Prabang province recorded 531,000 visitor arrivals in 2014, an increase of 14% compared with 2013 and 29% compared with 2012.

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(Source: CAPA with additional input from TTR Weekly)