Low Cost Carriers in Asia


Code : COM0015

Year :

Industry : Transportation

Region : Asia

Teaching Note:Available

Structured Assignment :Available

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LCC The concept of LCC that started in the early 1970s revolutionised the aviation industry in the US. A Texas lawyer named Herb Kelleher, along with his client, Rollin King, a businessman, wanted to offer customers air travel at the lowest possible fare. This led to the inception of the Southwest Airlines. LCC gained instant popularity in the US, and Europe also adopted this concept in the 1980s. The success of the LCC lay on the key strategic imperatives of its business model: high utilisation, simplicity, a low cost focus and scalability. The LCCs typically achieved aircraft utilisation of 12 hours from a fleet of short haul carriers. Simplicity was maintained by offering ‘no-frills’ flight, and this had a huge cascading effect on the underlying cost...

Thailand The history of LCCs in Asia could be traced back to the 1990s, when Udom Tantiprasongchai (Udom), a textile industrialist in Cambodia started the 'Orient Thai Airlines' (Orient Thai) to tap the inter-provincial routes in Thailand with fares one third of that offered by ThaiAirways International (TG) (national carrier in Thailand). Orient Thai wanted to fly non-stop from Chiang Mai and other states to Bangkok (routes serviced by TG) in 1996 and being confident of the government approval for the same, Udom bought two Lockheed L1011 Tristars from Cathay Pacific Airlines...

Malaysia In 2001, the second airline of Malaysia, 'AirAsia' was incurring losses and was burdened with a debt of $37 million. The search for a buyer had been real tough for 'DRB-Hicom', a government-linked conglomerate, which owned the airline. Anthony Fernandes, working with Warner Music as Vice President for Southeast Asia entered the scene in July 2001, quitting his previous job to take up the reins of the loss making, debt burdened AirAsia. Due to the terrorist attack of September 11th 2001 on the World Trade Center in US, the aircraft leasing costs were down by 40% and so Anthony Fernandes quickly leased out three commercial jets adding to the two that AirAsia already had...

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