With low cost airlines taking leadership of the skies, South East Asia and its neighbours are rediscovering the joy of easier travel, post-recession. But there is loads of work that needs to be done to keep this second honeymoon going.

The love affair with budget flying in South East Asia, like any other affair, is reaching a cooling point. With a population that has been greedy for a Western-style travel lifestyle, with rising disposable incomes and an enthusiasm to try the latest trending destination, it’s been a great feast for a great while. But now, when ground reality is creating the equilibrium that was bound to happen, it’s obvious that airlines are strategising differently.

Some of Southeast Asia's largest corporations lost money last year due to increased competition and weakening oil prices. Air carriers from Thailand and Indonesia were the poorest performers with both showing a combined loss of over $850 million. Garuda Indonesia was hit by high operational and maintenance costs and failed to turn a profit. Malaysia-based AirAsia, recently in the news for two major air disasters saw its profits bottom out and Malaysia Airlines was actually delisted from the stock exchange.

Even though most airlines tried to keep the battle going and spirits up towards expansion, political realities took their own toll on tourism. Thailand for example, was a booming ground for perennial tourism until the riots that shook Bangkok and swallowed up tourism. Japan’s Skymark Airlines also filed for bankruptcy, being rescued by two Japanese banks, the Development Bank of Japan and Sumitomo Mitsui Banking Corporation.

But despite what looks like grey skies, it appears that airlines are still optimistic. Thai based NokScoot and AirAsiaX are both offering medium to long haul flights. Scoot, the budget airline owned by Singapore Airlines has also been eyeing medium to long haul flights as has Cebu Pacific of the Philippines.

While budget airlines seem to encourage the great middle class to travel more than ever before, it seems that the mathematics on how to turn a profit on a budget airline is missing.

While budget airlines seem to encourage the great middle class to travel more than ever before, it seems that the mathematics on how to turn a profit on a budget airline is missing. Experts say that the answer may lie in re-strategising offers and the introduction of the Boeing’s 787 “Dreamliner” and Airbus’s A350.

The aviation industry predicts that 2015 will be the second consecutive year of slow growth and most airlines might just end up in the red. But this challenging and innovative market can come up with better solutions through lowering fuel prices and improving their market conditions. Over the last ten years, this is the region that has expanded rapidly, creating a new mass class of fliers and has motivated global suppliers to think Asia.

2015 will mark the second consecutive year of slower growth and potentially the second consecutive year when most airlines ended in the red. But improving market conditions, lower fuel prices and restructuring efforts should at least reduce the losses/migrate to profit and allow new growth.

The region has emerged over the past decade as one of the world’s leading emerging markets, capturing the attention of global suppliers. The rapid growth has primarily been driven by fast expansion of LCCs – both independent groups and subsidiaries of full service groups.

Overall the short-medium term outlook for Southeast Asia remains reasonably positive. And this will be good news for travellers, airports and airlines. For the longer term, intensive competition might necessitate a different approach. But for now, low cost and no frill leadership seems to be flying in the big league, as new mergers between West and East Asian airlines are announced frequently, to the delight of the flying Asian.