The Adaptation of Low-Cost Airline Business Model in Thailand: The Consequences of Competitive Pressures and Challenges

Main Article Content

Ekkarat Suwannakul
Rugphong Vongsaroj

Abstract

          This academic article aims to study the adaptation of business models and strategies by low-cost airline business in Thailand. By adopting hybrid strategies, low-cost airlines incorporate some service characteristics, product features and operations of full-service airlines into their attributes. This article also attempts to understand the factors influencing those changes which resulted from the challenges, obstacles, and concerns that the airline industry faces as a result of increasingly fierce competition, especially in terms of costs. It is widely known that price strategy is common among low-cost airlines due to its easy implementation and quick results. Nonetheless, many scholars have argued that such a strategy does not contribute to sustainable competitive advantage and profitability. Consequently, low-cost airlines, both in Thailand and worldwide, must adapt in order to survive in a rapidly changing market. The final section of this article offers appropriate strategies that low-cost airlines should consider to lessen the impacts of those challenges and avoid price competition, in order to achieve true business sustainability.

Downloads

Download data is not yet available.

Article Details

Section
Academic Article

References

[1] Airbus. (2016). Mapping Demand 2016-2035. Retrieved July 15, 2016, from https://www.airbus.com/company/market/global-market-forecast-2016-2035/?eID=maglisting_push&tx_maglisting_pi1%5BdocID%5D=109011.

[2] Akamavi, R. K., Mohamed, E., Pellmann, K., & Xu, Y. (2015). Key Determinants of Passenger Loyalty in the Low-Cost Airline Business. Tourism Management, 46, 528-545.

[3] AOT. (2016a). Annual Report 2015 - Airports of Thailand Public Company Limited. Retrieved July 18, 2016, from https://aot.listedcompany.com/misc/AR/20160112-aot-ar-2015-en.pdf.

[4] AOT. (2016b). AOT Air Traffic Calendar Year 2016 (Jan-Dec 2016). Retrieved March 03, 2017, from https://aot.listedcompany.com/misc/statistic/2017/20170123-aot-traffic-calendar-2016-12m.pdf.

[5] AOT. (2016c). AOT LCCs Air Traffic Calendar Year 2016. Retrieved March 15, 2017, from https://aot.listedcompany.com/misc/statistic/2016/20161025-aot-lccs-traffic-fiscal-2016.xlsx.

[6] Asia Aviation. (2015). Annual Report 2015. Retrieved June 07, 2015, from https://aav.listedcompany.com/misc/AR/20160404-aav-ar2015-en.pdf.

[7] Association of Asia Pacific Airlines. (2016). Asia Pacific Airlines Traffic Results – May 2016. Retrieved June 28, 2016, from https://www.aapairlines.org/resource_centre/AAPA_PR_Issue09_MayTrafficResults_28Jun16.pdf.

[8] Boeing. (2015). Current Market Outlook 2015–2034. Retrieved July 15, 2016, from https://www.boeing.com/resources/boeingdotcom/commercial/about-our-market/assets/downloads/Boeing_Current_Market_Outlook_2015.pdf.

[9] Centre for Aviation. (2012). AirBerlin Joins Oneworld Alliance, But Its Full Potential will not be Immediately Realised. Retrieved June 18, 2016, from https://centreforaviation.com/analysis/airberlin-joins-oneworld-alliance-but-its-full-potential-will-not-be-immediately-realised-70096.

[10] CNN.com. (2016). Low-Cost Airlines: They Changed the World -- But What Next?. Retrieved June 18, 2016, from https://edition.cnn.com/2016/03/20/aviation/budget-airline-trends-2016/.

[11] Department of Airport. (2016). Air Transport Traffic at DCA’s Domestic Airport in 2016. Retrieved March 15, 2017, from https://www.airports.go.th/th/content/349/1394.html.

[12] Doganis, R. (2010). Flying Off Course: Airline Economics and Marketing. 4th ed. New York Routledge.

[13] Francis, G., Humphreys, I., Ison, S., & Aicken, M. (2006). Where Next For Low-Cost Airlines? A Spatial and Temporal Comparative Study. Journal of Transport Geography, 14(2), 83-94.

[14] Gilbert, D. (1996). Relationship Marketing and Airline Loyalty Schemes. Tourism Management, 17(8), 575-582.

[15] Han, H., Hyun, S. S., & Kim, W. (2014). In-flight Service Performance and Passenger Loyalty: A Cross-National (China/Korea) Study of Travelers Using Low-cost Carriers. Journal of Travel & Tourism Marketing, 31(5), 589-609.

[16] IATA. (2011). Vision 2050 – Shaping Aviation’s Future. Retrieved June 30, 2016, from https://www.iata.org/pressroom/facts_figures/Documents/vision-2050.pdf.

[17] ICAO. (2015). Continuing Traffic Growth and Record Airline Profits Highlight 2015 Air Transport Results. Retrieved July 15, 2016, from https://www.icao.int/Newsroom/Pages/Continuing-Traffic-Growth-and-Record-Airline-Profits-Highlight-2015-Air-Transport-Results.aspx.

[18] Klophaus, R., Conrady, R., & Fichert, F. (2012). Low-Cost Carriers Going Hybrid: Evidence From Europe. Journal of Air Transport Management, 23, 54-58.

[19] Lawton, T. C. (2003). Managing Proactively in Turbulent Times: Insights from the Low-fare Airline Business. Irish Journal of Management, 24(1), 173.

[20] Lück, M., & Gross, S. (2013). Low-Cost Carrier Worldwide: Ashgate Publishing Ltd.

[21] Mikulić, J., & Prebežac, D. (2011). What drives Passenger Loyalty to Traditional and Low-cost Airlines? A Formative Partial Least Squares Approach. Journal of Air Transport Management, 17(4), 237-240.

[22] Nadiri, H., Hussain, K., Haktan Ekiz, E., & Erdogan, S. (2008). An Investigation On the Factors Influencing Passengers' Loyalty in the North Cyprus National Airline. The TQM Journal, 20(3), 265-280.

[23] Nok Air. (2015). Travel Classes. Retrieved June 14, 2016, from https://www.nokair.com/contents/on_board/travel_class/en-US/index.html.

[24] Nok Air. (2016). Annual Report 2015. Retrieved June 07, 2016, from https://nok.listedcompany.com/ar.html.

[25] Ostrowski, P. L., O'Brien, T. V., & Gordon, G. L. (1993). Service Quality and Customer Loyalty in the Commercial Airline Industry. Journal of Travel Research, 32(2), 16-24.

[26] Prachachart Turakij Online. (2017). Don Muang Airport – Expanding Phase 3 to increase its Capacity From 35 Million to 40 Million Passengers per Year. Retrieved March 15, 2017, from https://www.prachachat.net/news_detail.php?newsid=1489495623.

[27] Schlumberger, C. E., & Weisskopf, N. (2014). Ready for Takeoff?: The Potential for Low-cost Carriers in Developing Countries: World Bank Publications.

[28] Taneja, N. K. (2014). Designing Future-oriented Airline Businesses. Burlington, VT: Burlington, VT: Ashgate.

[29] Thai AirAsia. (2016). Fare Types. Retrieved June 14, 2016, from https://www.airasia.com/th/en/our-fares/fare-types.page.

[30] Thai Airways. (2016). Annual Report 2015. Retrieved Dec 4, 2016, from https://thai.listedcompany.com/misc/ar/20160325-thai-ar2015-en.pdf.

[31] Thai Lion Air. (2016). Terms and Conditions. Retrieved June 14, 2016, from https://www.lionairthai.com/en/Terms-And-Conditions.

[32] Thai Smile Air. (2016). Terms & Conditions. Retrieved June 14, 2016, from https://www.thaismileair.com/en/Terms-and-Conditions.