Airasia

Question 1: Evaluate the opportunities exist in the Asia-Pacific region for the entrance of new low-fare airlines. Discuss how demand for low-fare service might differ in the Asia-Pacific region and in North America and Europe.

With the growing economy and increasing population the Asia-Pacific region does presents much opportunity for low-fare airline to enter. The reasons behind this new found market for low-fare airlines are many; one such cause is the weakening airspace regulations which previously impeded connections between various nations (). As, the case mentions, “The key ingredient is liberalization.” Hence, the deregulation of airspace means that low-fare airlines can entre more e more international market, thereby, significantly increasing the number of routes they can fly to (). For instance, Hong Kong’s restriction over more than one local airline operation on one route has been eased, which means more airlines can opt for the same destination, increasing the options available to the customers. Thus under these circumstances chances are that low-fare airlines will have the upper hand, due to the fact that they offer the basic service of air transport at much cheaper prices as compared to full service airlines ().

Furthermore, the geographical structure of Asia-Pacific region itself provides many opportunities for low-fare airlines in this market. Being surrounded by sea or treacherous mountain, cheap transport plays an important role in the travel market (). However, due to the lack of inter-connecting highways or high-speed trains, low cost carries have advantage since most passages would prefer faster and more convenient mode of travel especially when making an international journey (). This combined with the huge population of the Asia-Pacific region, provides low-fare airlines with a large market and many prospects ().

Additionally, low-cost airlines must also consider the fact that Asia-Pacific is a fast developing region with many...