The potential for low-cost airlines in Asia

Abstract

The purpose of this thesis is to assess the potential for low-cost airlines in Asia. Low-cost airlines have been very successful in North America and Europe and have significantly impacted the airline industry and its stakeholders. In what ways and to what extent this might be repeatable in Asia is the underlying question of this thesis. An investigation of the low-cost airline business model reveals that there are a number of key elements that make it so successful on both sides of the Atlantic. But what works in North America and Europe may not be feasible in Asia. An analysis of the Asian airline industry shows that it differs from the rest of the world in several important dimensions, which will substantially affect prospective low-cost airlines. On the one hand, the rigid regulatory frameworks in most parts of Asia and the fact that many traditional Asian airlines have some of the world's lowest unit costs may not allow Asian low-cost airlines to thrive in the same way as they have in other parts of the world. On the other hand, a breakdown of Asia's socioeconomic indicators shows that the continent is bound to experience significant growth in intra-Asia air travel over the coming years. The low-cost airline business in Asia is therefore challenging in several ways but potentially very lucrative. The possible impacts that an increasing presence of low-cost airlines in Asia would have on the various stakeholders in the region are substantial. While some of these stakeholders will likely benefit from a growing presence of low-cost airlines in Asia, others might have a lot to lose. This thesis analyses several stakeholder groups and suggests potential response options.