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When being the lowest cost is not enough: Building a successful low-fare airline business model in Asia

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  • Lawton, Thomas C.
  • Solomko, Stanislav

Abstract

Following the success of budget airlines in Australia, regulatory barriers were eased elsewhere in Asia Pacific to allow the proliferation of low-fare airlines (LFAs). The aim of this paper is to assess whether the profit and growth potential of Asian LFAs are hampered not just by remaining regulatory barriers but also by the embedded revenue and cost advantages of their full fare rivals. The LFAs business model can survive and succeed in Asia so long as these companies can ensure an even lower operating cost than their already cost-efficient full-service rivals. LFAs based in low-income countries with a relative lack of viable land transport infrastructure (e.g. Malaysia) are likely to achieve the greatest market stimulation.

Suggested Citation

  • Lawton, Thomas C. & Solomko, Stanislav, 2005. "When being the lowest cost is not enough: Building a successful low-fare airline business model in Asia," Journal of Air Transport Management, Elsevier, vol. 11(6), pages 355-362.
    • Handle: RePEc:eee:jaitra:v:11:y:2005:i:6:p:355-362
    DOI: 10.1016/j.jairtraman.2005.03.001
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    References listed on IDEAS

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    1. Henry Ergas & Christopher Findlay, 2003. "New Directions in Australian Air Transport," Agenda - A Journal of Policy Analysis and Reform, Australian National University, College of Business and Economics, School of Economics, vol. 10(1), pages 27-41.
    2. Forsyth, Peter, 2003. "Low-cost carriers in Australia: experiences and impacts," Journal of Air Transport Management, Elsevier, vol. 9(5), pages 277-284.
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    Cited by:

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    10. Stoenescu Cristina & Gheorghe Camelia Monica, 2017. "Hybrid” airlines – Generating value between low-cost and traditional," Proceedings of the International Conference on Business Excellence, Sciendo, vol. 11(1), pages 577-587, July.
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    13. Foong, Jia Jun & O'Connell, John Francis & Warnock-Smith, David & Efthymiou, Marina, 2023. "A product and organisational architecture analysis of the performance of Southeast Asian airlines," Journal of Air Transport Management, Elsevier, vol. 107(C).
    14. Wang, Kun & Tsui, Wai Hong Kan & Li, Lan-Bing & Lei, Zheng & Fu, Xiaowen, 2020. "Entry pattern of low-cost carriers in New Zealand - The impact of domestic and trans-Tasman market factors," Transport Policy, Elsevier, vol. 93(C), pages 36-45.
    15. Alderighi, Marco & Nicolini, Marcella & Piga, Claudio A., 2019. "Is low-cost carriers’ revenue management a firm capability?," Journal of Air Transport Management, Elsevier, vol. 78(C), pages 15-22.
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