Final Year Project Proposal

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Feasibility study of setting up a budget airline in Hong Kong (Success factors of setting up a budget airline in Hong Kong)

Prepared for
Final year project
Coventry University & SCOPE,
City University of Hong Kong

Presented by
Steven
52657161
February 13, 2012
Table of Contents

1. Introduction…………………………………………...P.1

2. Background/ Problem Statement…………………..P.1- 3

3. Literature Review…………………………………P.3 - 6

4. Aim………………………………..…………………..P.6 5. Objectives…………………………………………..P.6 -7 6. Research method……………………………………….P.7 6.1 Questionnaire………………………………………P.7 6.2 Observation………………………………………...P.7

7. Project Plan…………………………………………..P.7-8

8. References……………………………………………...P.9

1. Introduction:
Budget airlines have become a trend in aviation industry over a few decades all over the world, however, as a Asian cosmopolitan city- Hong Kong hasn’t have one yet, therefore a research need to be set up to explore on its feasibility. This project proposal aims to assist to accomplish a research by developing a plan beforehand. Firstly, the background of budget airlines and problem statement would be stated out, then a literature review would be carried out in order to find out its research value, after that, the research aim and objectives could be set up as a research goal, last but not least, research method and project plan could be discussed on how, where and when to carry out this research. 2. Background/ problem statement:

Before Deregulation:
In the United State before 1978, all airline passenger services were regulated and controlled by the Civil Aeronautics Board (CAB). Only 10 trunk airlines were authorized to issue a “grandfather” certificate by CAB at that time. Underneath this certificate, all major scheduled airlines’ route structures and fares were controlled and ruled. For an airline’s route structure, stops and intermediate stops were specified and passengers carrying between stops were limited, a new promoted route needed to go through a lengthy procedure and hearings, even a stoppage of a route service was still needed the CAB’s approval. For an airline’s fare, all fare prices were strictly controlled by the CAB. (John & Clinton, 1984)

After Deregulation:
After passing the Airline Deregulation Act of 1978, CAB no longer had an absolute authority on an airline’s entry, exit, routes and fares. Airlines were given freedom on setting up their own fares within a wide range, route applicant would be submitted and passed easily without any restriction when it performed air transportation properly. (John & Clinton, 1984)

First Successful budget airline:
In 1967, the first successful budget airline was born and started its business in Texas in America, it named itself as Southwest Airlines (SWA). The company began when the US market was deregulated. Its successful model had been influencing a lot of other following budget airlines. It provides low-cost, high rate of short haul flying and this made itself maintain a most profitable airline through years. (Peter, David, Gillen, Otto and Hans, 2005)

What is Budget Airline?
“A low-cost carrier or low-cost airline (also known as a no-frills, discount or budget carrier or airline) is an airline that generally has lower fares and fewer comforts. To make up for revenue lost in decreased ticket prices, the airline may charge for extras like food, priority boarding, seat allocating, and baggage etc.”

Today’s budget airline:
Nowadays, the value for money is a great emphasis placed by travelers. They are willing to buy cheaper tickets to trade off some other aspect such as leg room during flight. However, to determine whether a budget airline can survive and drive down the cost, it mainly depends on government and major airport’s will to open up...
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