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A USER’S PERSPECTIVE ON THE ROLE OF LANSERIA AIRPORT AS AN ALTERNATIVE by ELMARIE KRIEL DISSERTATION submitted in fulfilment of the requirements for the degree MASTER COMMERCII in TRANSPORT ECONOMICS in the FACULTY OF MANAGEMENT at the UNIVERSITY OF JOHANNESBURG Supervisor: Prof J Walters October 2015 DECLARATION I, the undersigned, hereby declare that this dissertation entitled ‘A user’s perspective on the role of Lanseria Airport as an alternative’ is my own work and all the sources I have used have been indicated or acknowledged by means of completed references. It is submitted in fulfilment of the requirements for the degree Master of Commerce in Transport Economics at the University of Johannesburg. It has not been submitted before for any degree or examination at this or any other university. Elmarie Kriel October 2015 ii ABSTRACT The deregulation of the airline industry was a landmark event and brought about various changes in the air transport market, both locally and internationally. One important after- effect of deregulation was the entry of low-cost carriers (LCCs), which increased competition in the market and offered passengers the freedom to choose among airlines and the option of lower airfares. Low-cost carriers have been very successful across the globe and the main reason for this lies in their simplified business model. These types of airlines try to keep costs as low as possible. One way of doing this is for LCCs to operate from secondary or alternative airports. This trend is observed in the United States of America as well as Europe. When LCCs fly from secondary airports in areas where there is more than one airport, the need arises to determine what drives passengers to select the secondary or alternative airport. In South Africa and more specifically, Gauteng, Lanseria International Airport1 is considered as an alternative airport and currently two LCCs operate from there. The research presented in this dissertation reflects on the theoretical aspects passengers consider with regard to selecting an airport. Based on this, the research set out to determine the attributes passengers evaluate when selecting an airport. These attributes were grouped as follows: Price Convenience Service Furthermore, the results of this research are compared to previous research conducted at Lanseria International Airport when only one LCC was operating from there. The results indicated that passengers considered these attributes to be important when selecting an airport. When the results were compared with that of previous research, it was found that passengers still considered the same attributes to be important, even 1 Also referred to as Lanseria Airport iii after the entry of a second LCC. An identified difference was that the passengers in the second study tended to be more price-sensitive. This research contributed to this field by examining the factors passengers consider when selecting to fly from Lanseria International Airport. iv TABLE OF CONTENTS DECLARATION ...................................................................................................................... ii ABSTRACT ............................................................................................................................ iii LIST OF FIGURES ................................................................................................................. x LIST OF TABLES .................................................................................................................. xi TABLE OF ACRONYMS ...................................................................................................... xiii CHAPTER 1: BACKGROUND TO THE STUDY .................................................................. 1 1.1 INTRODUCTION ........................................................................................................ 1 1.2 FUTURE PROSPECTS FOR AIR TRAVEL ................................................................ 3 1.3 RECENT TRENDS IN AIR TRAVEL ........................................................................... 4 1.3.1 Low-cost airlines and secondary airports .................................................................... 5 1.3.2 Passengers and secondary airports ............................................................................ 5 1.4 RESEARCH PROBLEM, RESEARCH QUESTIONS AND RESEARCH OBJECTIVES ......................................................................................... 7 1.5 RESEARCH METHODOLOGY ................................................................................... 8 1.5.1 Research philosophy and approach ............................................................................ 8 1.5.2 Hypotheses ................................................................................................................. 9 1.5.3 Research design ....................................................................................................... 11 1.5.4 Unit of analysis.......................................................................................................... 13 1.6 SCOPE AND LIMITATIONS OF THE STUDY ........................................................... 13 1.7 OUTLINE OF THE STUDY ....................................................................................... 14 CHAPTER 2: AN OVERVIEW OF THE AIRLINE INDUSTRY ............................................ 15 2.1 INTRODUCTION ...................................................................................................... 15 2.2 PHASES OF DEVELOPMENT IN AVIATION ............................................................ 16 2.2.1 Regulation ................................................................................................................. 16 2.2.2 Liberalisation ............................................................................................................. 16 2.2.3 Deregulation ............................................................................................................. 18 2.2.4 Privatisation .............................................................................................................. 22 2.3 FULL-SERVICE CARRIERS ..................................................................................... 24 2.3.1 Business model of full-service carriers ...................................................................... 25 2.3.2 Full-service carriers in South Africa ........................................................................... 25 2.3.2.1 South African Airways ............................................................................................... 26 2.3.2.2 British Airways Comair .............................................................................................. 27 2.4 DEVELOPMENT OF LOW-COST CARRIERS .......................................................... 29 2.4.1 Benefits to consumers ............................................................................................... 30 2.4.2 Growth of secondary airports .................................................................................... 30 v 2.4.3 Regional development .............................................................................................. 32 2.4.4 Environment .............................................................................................................. 32 2.5 UNITED STATES OF AMERICA ............................................................................... 33 2.5.1 Southwest Airlines .................................................................................................... 33 2.6 EUROPE ................................................................................................................... 35 2.6.1 Ryanair ..................................................................................................................... 35 2.6.2 EasyJet ..................................................................................................................... 36 2.7 SOUTH AFRICA ....................................................................................................... 38 2.7.1 Kulula ........................................................................................................................ 38 2.7.2 1Time Airline ............................................................................................................. 40 2.7.3 Mango Airlines .......................................................................................................... 41 2.8 CONCLUSION .......................................................................................................... 42 CHAPTER 3: SECONDARY AIRPORTS AND LOW-COST CARRIERS ........................... 43 3.1 INTRODUCTION