A Tale of Two Low Cost Airlines

The study object of our project is the low cost airlines, better known as the low cost carriers (LCCs), which have been entering the market as new and strong waves in recent years. The service providers we will study are Air Asia, Asia's LCC market leader and Jetstar Group, the largest low cost airline in the Asia Pacific by revenue. More detailed information on the two airlines is given below.

Company AirAsia

Background Starting from an airline with two aircrafts flying six routes in Malaysia in January 2002, the Malaysian-based LCC AirAsia is Asia's largest low-fare, no-frills airline and a pioneer of low-cost travel in Asia. AirAsia group operates scheduled domestic and international flights to over 400 routes spanning 23 countries, mainly ASEAN countries, and other Asia Pacific areas like Australia, New Zealand, China, Hong Kong, Macau, Taiwan, Japan, South Korea. Its main hub is the Low-Cost Carrier Terminal (LCCT) at Kuala Lumpur International Airport (KLIA).The services AirAsia provide include flight information checking, booking, inflight services and other services such as hotel booking and car rentals. According to Airbus, 103 A320ceo are right now under service at AirAsia with about 272 more planes to be delivered in coming years.

Company Jetstar Group

Background Launched in 2004 by Qantas, Australia's foremost domestic and international carrier, Jetstar Group has grown rapidly to become one of the biggest LCCs in the Asia Pacific market. With its planes flying to Japan, Singapore, Vietnam, Australia, New Zealand and in near future possibly Hong Kong and a fleet size of 90 aircrafts, Jetstar Group flies to over 60 destinations in 16 countries and territories with 3,000 flights a week. Customers are offered two types of fares - Economy or Business (on selected international flights). Besides basic online booking service and a minimal inflight service, value bundles such as seat selection, in-flight products, fare flexibility, lounge access and Qantas Frequent Flyer Points can be added to the basic services with an additional cost..

There is no doubt that the LCCs have changed the way people travel in recent years. Although the LCCs operate under a low fare, no frills model, which makes the service almost nothing more than a point-point transportation, customers still have massive demands on service and the offerings can take various forms including inflight products, airport lounges, connectivity etc. Market leaders are evolving to meet market needs. Facing the mentioned market background, how can LCCs achieve service satisfaction while keeping cost-effectiveness? The question will be addressed by comparing the biggest LCC players in the Asian Pacific market.