AIRLINES
The low-cost carrier (LCC) business model has proved successful
throughout the world but particularly so in Asia Pacific. Typical
LCC strategies include operating at secondary airports, flying
a single airplane type, increasing airplane utilization, relying
on direct sales, offering a single-class product, avoiding
frequent-flyer programs, and keeping labor costs low. Over the
past 10 years, the region’s LCCs have generated an average
annual growth rate of 24.5 percent. By comparison, Europe’s
LCCs grew 13.4 percent annually during the same period,
and North America’s grew a modest 2.2 percent annually.
The countries in Southeast Asia were some of the first in the region
to employ the LCC business model, and today, LCCs are flying
nearly 20,000 weekly flights. Northeast Asia, on the other hand,
has been slower to see the growth of LCCs, owing in part to the
large high-speed rail network in Japan and to an aging population.
China is the latest region to embrace the LCC model, with a