Spring Airlines’ CEO Xiuzhi Zhang kicked off the CAPA World Aviation Summit this morning in Hong Kong with a prediction that we’ll see the first true low cost carrier alliance soon.

“Expect a whole new dialogue,” she said, as competition among low cost airlines steps up across the region.

She painted a picture of “congestion, rationalization, synergies, interline agreements and alliances” as Asia Pacific-based low cost airlines focus their energies on the China market and Chinese-based airlines like hers fan out to the region.

The next logical step is interline agreements among carriers interested in providing connections in the Greater China region, she said.

Undoubtedly Spring, which is now in the pre-IPO phase, intends to fully stay ahead of the competition. The key is to avoid network complexity and over-expansion, said Zhang.

She said that Spring has had to follow its own path, given the unique characteristics of the China market, but whatever model you choose to call it, it’s been consistently profitable with profit margins higher than industry average. “Despite difficult times, low cost airlines are seeing growth and it’s proof that the Chinese market can be lucrative,” she said.

Load factors have been at over 90% but it’s staying flat and so critical to maintaining profitability is keeping costs low.

And one area Spring is focusing on is distribution with its website now generating 80% of sales and the airline will continue to invest in technology to drive costs down.

She said the changing Chinese consumer was demanding more from Spring, driven by growing sophistication and more experience of international LCC product.

She said consumers were demanding unbundled product, have become increasingly brand-conscious and they want real-time connectivity at each touchpoint – which is why Spring is investing in multi-lingual websites as well as mobile. (It’s launched a Thai website and will soon introduce a Korean site.)

Social media engagement is also key to Spring’s distribution strategy. “The next task is to transform new media into sales channel for the future.”

Outlining Spring’s future plans, she said it would set up a base in Kunming in 2013 (in addition to its four bases now) and by 2015, will have seven domestic and one international base, to be determined. (She did however hint that Changi Singapore had been talking to Spring.)

Spring, she said, had no plans to start longhaul but will focus on regional points and she named Manila, Siem Reap, Taiwan and Korea.

She said that low cost airlines’ focus on the Chinese market will bring about competition for sure and it is possible foreign airlines will revolutionise the industry “but Spring will be ready for every new opportunity”.