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

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.