Hong Kong
Budget Airline Industry Analysis

By Jaeyeong Ahn 1155032046 Xie Jianting 1155001899 Shi Weiran 1155002072
Tan Jiayi 1009609441 Gao Jingya 1155001997

TABLE OF CONTENTS

1. Introduction

2. Budget Airline Industry 2.1 Definition & Pricing Model 2.2 Common Practices to Lower Overall Costs 2.3 Development of Budget Airline in America, Europe and Asia 3. Hong Kong Market Analysis 3.1 Competitive Landscape 3.2 Major Budget Airlines in Hong Kong 3.3 Market Analysis 3.4 Target Customer Analysis

4. SWOT Analysis of Budget Airlines 4.1 Strengths 4.2 Weaknesses 4. 3 Opportunities 4.4 Threats

5. Analysis of Success Factors in
2.2.4 Providing less or charged services
Firstly, free catering service may be cancelled. Profits can be generated by selling food and drinks on the plane. Secondly, passengers are encouraged to carry lighter baggage, which can save administration costs. Also, the consumption of fuels are less because lighter baggage result in lighter planes. Thirdly, entertainment is limited on the plane. Free newspapers and magazines are no longer provided. The individual seat-back TVs may be replaced by large LCDs. 2.3 Development of Budget Airline in America, Europe and Asia
The first budget airline is generally considered to be a American company Southwest Airlines which launched in 1971. The idea was to offer flights for prices which are attractive compared to car and train and much lower than those of competing airlines. In 2012, the market share of budget airlines in North America has increased to 30.2 percents of total seats. The market share in Europe was even higher, which was 38 percents. However, the market share in Asia was only 18.6 percents.

With steady development, the budget airlines in western countries have reached a mature stage characterized as large market penetration and slow or even no growth. The case is different in Asia. The history of budget airlines in Asia is relatively short. As the economy takes off, Asian people are getting richer and richer. More and more people choose to spend their holidays in other places other than the