Opportunities- in Asia-Pacific Region

Topics: Low-cost carrier, Airline, US Airways Pages: 3 (900 words) Published: March 15, 2010
Opportunities- in Asia-Pacific region
To take AirAsia as an example, and use PEST analysis to look over the airline industry in the Aisa-Pacific and the differ in the Asia-Pacific region and in North America and Europe

a)Malaysian government support
The growth of low cost airlines in south-east Asia has a significant effect on which airports will dominate the regional aviation market. Low cost airlines are seen as helping funnel more passengers to airport hubs. Therefore, there is a realization among regional governments that they need smashing airports and feisty carriers or they are going to miss out big time. Therefore, these governments are more willing to support low cost airlines. For example, the Malaysian government supported the establishment of AirAsian in 2001 to help boost the under-used Kuala Lumpur International Airport, and Thai premier’s Shin Corp. forms a join venture with AirAsia that would benefit Bangkok’s new airport and create a new hub at Chiang Mai. Therefore, under this situation, it helps AirAsia grow in Asia.

b)Political connections
Flying outside Malaysia is difficult. Bilateral agreement is one of the obstacles in the way of truly pan-Asia budget carriers. Landing charges at so-called "gateway airports" and navigation charges are often prohibitively expensive, and in key destinations like Bangkok, Beijing, Hong Kong and Singapore there are no cheaper, secondary airports. The budget airline industry in south-east Asia has been underdeveloped because the aviation market is tightly regulated by bilateral air rights agreements.

The growth of low fare carriers has great potential to spill over the broader tourist and business travel economy: more air passengers’ higher demand for more hotel rooms. In addition, low fare carriers may offer options for Asian American and European business travelers do, by extending trips or bringing family members to accompany them. Also, low cost airlines in Asia...
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