Asia's budget-airline king, Tony Fernandes, is vowing to expand even as rivals founder under high fuel prices. He says his six-year-old start-up, AirAsia, has grown through "SARS, bird flu, tsunamis, earthquakes, terrorists, you name it," and he sees hard times as the right moment to add routes at home and abroad, buy new jets and grab market share from higher-priced competitors. But this is no ordinary downturn. With Asian airlines already suffering from severe overcapacity (by the equivalent of 240 Boeing 747s), jet-fuel prices up 100 percent from last year and passenger travel dropping sharply in key markets like China and India, budget carriers "are not a good proposition," says HSBC transport analyst Mark Webb in Hong Kong.
Across Asia, and more broadly in emerging markets, a decadelong economic boom is quickly turning into a bust as the slowdown that first gripped the United States and Europe spreads. Last week Asian stocks fell to their lowest point since 2005, a drop of 32 percent since last November. Key industries that defined the boom—including airlines, manufacturing, construction, automotive manufacturing and even finance—face dangerous new constraints. "Exports are slowing, inflation is up, there's monetary tightening and the lending crunch has hit consumers," says Sherman Chan, an economist at Moody's Economy in Sydney. "Across the board, we're seeing a slowdown for the whole Asia-Pacific region."