ARTICLE IN PRESS

Journal of Air Transport Management 11 (2005) 259–272 www.elsevier.com/locate/jairtraman

Passengers’ perceptions of low cost andfull service carriers: A case study involving , , Air Asia andMalaysia Airlines

John F. O’ConnellÃ, George Williams

Air Transport Group, College of Aeronautics, Cranfield University, Bedfordshire, MK43 OAL, UK

Abstract

Direct competition between full service airlines andno-frills carriers is intensifying across the world.US andEuropean full service airlines have lost a significant proportion of their passengers to low cost carriers, the experience now being repeatedin the domestic markets of Asia. This paper attempts to provide answers to a number of critical questions: What are the key drivers of each type of ’s business model? Is there a difference in passengers’ perceptions between low cost carriers and full service incumbents in a mature European market and in a rapidly developing Asian economy? What are the principle reasons why a passenger chooses a particular airline model? How could a legacy carrier encourage passengers to return and so regain their domestic market share? These questions are addressed using information obtained in passenger surveys that were recently conducted in Europe and Asia. r 2005 Elsevier Ltd. All rights reserved.

Keywords: Full service airline; Low cost carrier; Passenger perceptions

1. Introduction necting traffic, carrier choice criteria andtypes of trips undertaken in the previous 12 months. The aim of this paper is to compare passengers’ selection criteria between a full service airline anda low cost carrier in a mature European market andin a 2. Background of the airlines surveyed rapidly growing Asian economy. Surveys have been undertaken to ascertain why passengers are choosing Low cost carriers have reshapedthe competitive one particular airline over another. This paper con- environment within liberalisedmarkets andhave made tributes to the literature by examining the differences in significant impacts in the world’s domestic passenger passengers’ perceptions between the two airline models markets, which hadpreviously been largely controlled in contrasting geographical markets. by full service network carriers. In Europe, 14% of The paper begins by examining the backgroundof the are now provided by low cost selectedcarriers including traffic carriedandoperating airlines, with the two largest players easyJet and cost performance. It then concentrates primarily on the Ryanair accounting for nearly 9%. These carriers have surveys that were conducted in Europe and Asia, pursuedsimplicity, efficiency, productivityandhigh highlighting key findings such as passenger character- utilization of assets to offer low fares. Table 1 provides a istics, journey purpose, booking methods, fares, con- summary of the main differentiating characteristics between incumbent network carriers andno-frills scheduled airlines. ÃCorresponding author. Prior to 2002, there were no significant low cost E-mail address: john.f.oconnell@cranfield.ac.uk (J.F. O’Connell). scheduled carriers operating in the Asia Pacific rim.

0969-6997/$ - see front matter r 2005 Elsevier Ltd. All rights reserved. doi:10.1016/j.jairtraman.2005.01.007 ARTICLE IN PRESS 260 J.F. O’Connell, G. Williams / Journal of Air Transport Management 11 (2005) 259–272

Table 1 Product features of low cost and full service carriers

Product features Low cost carrier Full service carrier r n O e ba dlwfareBrandOne brand:low Brandextensions:fare+service Fares Simplified: fare structure Complex fare: structure+yield mgt Distribution Online and direct booking Online, direct, travel agent Check-in Ticketless Ticketless, IATA ticket contract Airports Secondary (mostly) Primary Connections Point-to-point , code share, global alliances Class segmentation One class (high density) Two class (dilution of seating capacity) Inflight Pay for amenities Complementary extras Aircraft utilisation Very high Medium to high: union contracts Turnaround time 25 min turnarounds Low turnaround: congestion/labour Product One product: low fare Multiple integrated products Ancillary revenue Advertising, on-board sales Focus on the primary product Aircraft Single type: commonality Multiple types: scheduling complexities Seating Small pitch, no assignment Generous pitch, offers seat assignment Customer service Generally under performs Full service, offers reliability Operational activities Focus on core (flying) Extensions: e.g., maintenance, cargo

Carriers such as JAL Express, Air Do andSkymark in Table 2 Japan andCitilink in Indonesiaexistedsome years Low cost carriers currently operating in the Asia-Pacific rim earlier, but did not significantly impact their respective Carrier Base Start date Fleet markets. The initial slow development was in part due to the perception that the low cost model adopted in the Air Asia Jan 2002 737-300 UnitedStates andEurope couldnot be replicatedin Air Deccan India Aug 2003 ATR-42 adding Asia, because of the longer aircraft stage lengths, lack of A320 Air Do Japan Dec 1998 767-300ER secondary airports and regulatory restrictions prevent- Cebu Pacific Philippines Mar 1996 757-200, DC-9 ing access to international markets. The latter being Freedom Dec 1995 737-300 particularly relevant given that the bulk of traffic Jetstar Australia May 2004 717, A320 andrevenues are drawn from international markets in Lion Air Indonesia Jun 2000 MD-82/-83 Asia. Nok Air ThailandJun 2004 737-400 One-Two-Go ThailandDec 2003 757-200 Thus, the low cost experience is a relatively new Pacific Blue New ZealandJan 2004 737-800 phenomenon in the Asia Pacific rim with much of the Air Singapore tba 737-300 necessary management experience brought in from Asia outside the region, for example, from Ryanair. Asian Skynet Asia Japan Sept 1998 737-400 low cost carriers accordingly are in the initial growth Skymark Japan Sept 1998 767-300ER Thai Air Asia ThailandFeb 2004 737-300 phase of their development, while many of their Tiger Airways Singapore July 2004 A320 American andEuropean counterparts are approaching Valuair Singapore May 2004 A320 or have reachedmaturity. Due to this, little data is Virgin Blue Australia Aug 2000 737-700/800 available about low cost operations in Asia. Table 2 Source: O’Connell andIonides(2004) . highlights the surge in low cost airlines commencing operations in the Asia Pacific rim within the last 2 years.

2.1. Ryanair and Aer Lingus andAer Lingus transported3.7 million. It took only 7–8 years for Ryanair to catch up. Fares chargedby Aer Fig. 1a andb show the annual passenger traffic Lingus on the Dublin– and Cork–London carriedby Ryanair andAer Lingus between 1997 and routes were cut by 70% when Ryanair enteredthe 2003 andtheir respective falling unit cost levels over this market (Barrett, 1999). period. The incumbent has managed to reduce its unit During the late 1990s andearly 2000s, Ryanair cost to a level that it can now challenge its low fare rival. achieveda compoundannual traffic growth rate of The carrier’s business model has been effectively 30.5%. The company has set itself the target of reshapedfor it to compete out of Irish markets with becoming the largest airline in Europe with over Ryanair. 40 million passengers a year (Ryanair, 2002). This When Ryanair was restructuredandre-launchedas a ambitious plan is evidenced by the airline taking delivery low cost carrier in 1991, it carried0.7 million passengers of its 51st 737-800 in March 2004. ARTICLE IN PRESS J.F. O’Connell, G. Williams / Journal of Air Transport Management 11 (2005) 259–272 261

25 Aer Lingus’s structural reformation into a low fares Ryanair Aer Lingus airline causedRyanair’s profits on the city pair to fall by 20 20% in 2003. In 2001, Aer Lingus hadaccumulateda net loss of h149 million andwas losing h2.5 million a 15 day, with passenger numbers having fallen by 4.6% over the previous year. The new management instigateda 10 survival plan targeting an annual cost reduction of 16%, representing h90 million. The carrier turnedin a net

Millions of Passengers profit of h69 million in 2003, producing an operating 5 margin of 9.3%. Between 2001 and2003, the trans- formedcarrier increasedits passenger traffic by 7% and 0 (a) 1997 1998 1999 2000 2001 2002 2003 its loadfactor by 11%, while reducingseat capacity by 6%. Over the same period, Aer Lingus managed to 15 Aer Lingus reduce its operating costs significantly as a newly Ryanair focusedmanagement team trimmed31% off fuel costs, 28% from airport charges, 51% off aircraft rentals, 12% from maintenance, 53% off distribution, 21% from staff 10 cuts, 36% off overheads, 21% from depreciation and 49% off other miscellaneous direct operating costs, which nettedthe carrier an overall saving of h340 mil-

Cost per ASK lion. 5 Tables 3 and4 provide details of the passenger traffic carriedby Aer Lingus andRyanair between each main Irish airport andthe five Londonairports between 1997 0 and2002. The growth in traffic carriedby Ryanair (b) 1998 1999 2000 2001 2002 2003 between 1997 and2002 is very high, with Dublin–- Stanstedincreasing by 36% andCork–Stanstedby 58%, Fig. 1. (a) Passengers carriedon Aer Lingus andRyanair. (b) Cost per while Shannon–Stanstedgrew by 300,000 passengers in ASK for Aer Lingus andRyanair. Source: Air transport intelligence andanalysis from company reports. just over 3 years. Aer Lingus has also witnesseda growth in its traffic, with passenger numbers on the Dublin–Heathrow route increasing by 29% andon Cork–Heathrow by 30% between 1997 and2002. The In late 2003 the carrier ordered 125 -800s traffic carriedby Aer Lingus on the Shannon–Heathrow andplacedoptions on a further 125 ( Air Transport route however remainedflat. Intelligence, 2003). It increasedits capacity by 44% in By the endof 2002, low cost carriers accountedfor 2003 alone andhas tripledits seat capacity overall since one-thirdof the total intra-European market involving 2000. the UK andIreland.Between Irelandandthe UK, low A significant proportion of its earnings are derived cost carriers accountedfor 47.2% of the traffic from ancillary revenues. In 2003, the carrier made (Aviation Strategy, 2003b). By 2004, Ryanair has h28 million from commissions on car rentals, h23 million carriedover 45 million passengers to/from Irelandsince from in-flight sales, h12 million from Internet sales and operations commencedin 1985. h35 million from nonflight sales. It also gave away 20% According to forecasts from Tourism Ireland, ap- of its flights for nothing in 2003 andaims for 50% free proximately 7.7 million tourists are expectedto visit in seats by 2009. 2005 andthe tourism minister is expectedto invest over Aer Lingus, the Irish flag carrier, which is 95% state- h110 million in support of tourism of which almost ownedandpart of the Oneworldalliance, now carries h70 million will be spent in support of marketing and over 6 million passengers annually using 7 long-haul promotion. Travellers from Britain, France, Germany aircraft and24 short-range types. The carrier’s andthe US accountedfor 83% of the total number of 120 weekly transatlantic flights account for 40% of its visitors to Irelandin 2002. revenue. Traffic feedvia codesharing to at London Heathrow is key to its UK–Ireland profit- 2.2. Air Asia and Malaysia Airlines ability. Eighty-eight percent of Aer Lingus’ cargo business is accountedfor by its transatlantic and The history of Malaysia’s Air Asia is similar to that of German markets; however airfreight overall is impor- Ryanair, as both carriers have transformedthemselves tant to Irelandas nearly one-quarter of the country’s from loss making regional operators to profitable low exports andimports by value are transportedby air. cost airlines. Perhaps this is not surprising, given that ARTICLE IN PRESS 262 J.F. O’Connell, G. Williams / Journal of Air Transport Management 11 (2005) 259–272

Table 3 Aer Lingus’s traffic on Ireland–London markets

1997 1998 1999 2000 2001 2002

Dublin–Heathrow 986,832 1,063,822 1,282,036 1,174,986 1,207,018 1,274,928 Dublin–Stansted230,393 299,953 338,237 – – – Dublin–Gatwick – – – n/a 198,541 174,992 Dublin–City – – n/a 20,887 168,002 164,486 Cork–Heathrow 314,205 319,335 371,852 348,190 380,226 409,232 Shannon–Heathrow 303,079 295,957 317,159 338,684 284,183 312,533

Source: Aer Lingus.

Table 4 Ryanair’s traffic on Ireland–London routes

1997 1998 1999 2000 2001 2002

Dublin–Stansted766,267 787,724 786,648 824,672 854,191 1,048,618 Dublin–Luton 237,646 299,044 285,382 297,404 358,356 368,146 Dublin–Gatwick 279,910 293,185 287,567 283,310 302,779 322,679 Cork–Stansted236,769 236,962 252,536 251,619 234,402 290,753 Shannon–Stansted– – – 138,375 268,137 307,795

Source: Ryanair.

Air Asia is managedby Conor McCarthy, an ex- 20 Air Asia Ryanair director. Besides attracting passengers from Malaysia Airlines buses andferries, both carriers have experienceda large 15 proportion of first time flyers, largely attractedby the low fares on offer. Air Asia currently has a 30% share of the domestic 10 Malaysian market. Since the airline’s inception in December 2001, the market has grown from 9 million passengers annually to 13 million. Bankers are valuing Millions of Passengers 5 the carrier between $750 million and$1.2 billion (Ionides, 2004). Currently, the airline has 14 Boeing 0 737-300s in its fleet andby the endof 2004 it will have (a) 1998 1999 2000 2001 2002 2003 2004F acquiredup to 30 aircraft, representing a 114% compoundgrowth in capacity. In midJune 2004, it 10 issueda tenderto manufacturers that it was interestedin Malaysia Airlines acquiring up to 80 new aircraft comprising 40 firm Air Asia orders and 40 options (Air Transport Intelligence, June 2004). Figs. 2a andb show passenger enplanements andunit costs for Malaysia Airlines andAir Asia between 1998 and2004. The unit cost differential is very significant 5 andis dueto Malaysia Airlines excessive labour force, its poor productivity, low aircraft utilisation, unprofi- Cost per ASK table domestic routes and the limitations of intra-Asian bilaterals. With the world’s lowest unit cost of $0.023/ASK and a passenger break-even loadfactor of 52%, Air Asia is showing all the signs of being a Ryanair clone. It has 0 hedged 100% of its fuel requirements for the next 3 (b) 1999 2000 2001 2002 2003 years, achieves an aircraft turnaroundtime of 25 min, Fig. 2. (a) Passengers carriedon Malaysia Airlines andAir Asia. (b) has a crew productivity level that is triple that of Cost per ASK for Malaysia Airlines andAir Asia. Malaysia Airlines andachieves an average aircraft Source: Analysis from company reports. ARTICLE IN PRESS J.F. O’Connell, G. Williams / Journal of Air Transport Management 11 (2005) 259–272 263 utilisation rate of 13 h a day. In comparison, Malaysia 1985 of $121.4 million but has hadan average operating Airlines has hedged only 20% of its fuel requirements, margin of only 0.3% in recent years. achieves 1-h turnaroundtimes andhas an aircraft utilisation rate in the domestic market of just over 8 h a day. Air Asia has captured the growth in the domestic 3. Methodology market of 4–5% in 2003 andconsequently left Malaysia Airlines with stagnant traffic. Using a similar methodology to that adopted by Equippedwith a strong low cost formula, Air Asia is Mason (2001) and Turner (2003), data was collected in beginning to move into new intra-Asian markets, such each of the two regions from two large groups of as Thailand, by developing a franchise, under the brand passengers, one flying with a low cost carrier andthe name ‘Thai Air Asia’. It is taking a 49% shareholding in other an incumbent. Both groups were travelling to the the franchise, with the remaining shares being taken up same city destination, but not necessarily to the same by the Thai Prime Minister’s Thaksin Shinawatra’s Shin airport. There has been no previous research on Corporation, which will enable the carrier to operate by passengers’ perceptions of low cost carriers in Asia. acquiring international landing rights in what would The airlines surveyedwere Aer Lingus andRyanair otherwise be a tightly regulatedenvironment. The operating in the mature European market, andMalaysia partnership with the Thai government is having its Airlines andAir Asia operating in the recently liberal- benefits, as Sreenivasan (2003) has revealed. The current isedMalaysian domestic market. The passengers were Thai transport minister Suriya Jungrungreangkit will surveyed in the relaxed open landside public area of the remove the current minimum airfare regulations to open airport. The airports where permission was grantedto up the Thai market. The minimum airfare ruling was undertake the surveys were Cork and Shannon1 in establishedto prevent the undercutting of fares in the Ireland, and International in Malaysia. local market, with the probable intention of safeguard- Small teams of personnel were involvedin capturing the ing Thai airlines. data, as pilot studies concluded that the second page of Air Asia has also pushedforwardwith its expansion the survey was often omittedandit was important that program into Indonesia, where it is operating out of all questions were understood and fully answered. The three cities: Jakarta, andBandung. It is personnel also assistedwith language barriers andin offering tickets pricedbetween 40% and50% lower answering any issues raisedregarding the open-ended than the other domestic carriers. This growth outside questions, in which each respondent could give a the domestic Malaysian market follows a similar personal response in his or her own words. A total of strategy of Ryanair andeasyJet in Europe, which have 281 responses were collectedat the Irish airports, 52% expanded by creating hubs in different neighbouring of which comprisedRyanair passengers, and247 countries. This was achievedin the EU as a result of full responses at Kuala Lumpur International airport, deregulation of the sector, however. The tightly regu- 48% of which were from Air Asia passengers. latedinternational intra-Asian market is a major obstacle to the full-scale development of low cost carriers in the region. 4. Survey findings Malaysia Airlines, the country’s flag carrier, is over 90% ownedby the government. It carries over As expected, the low-cost carriers attracted a high 16 million passengers annually andhas extensive code number of younger people, with 24% of the Ryanair sharing agreements with 24 international airlines. The passengers surveyedand47% of Air Asia’s being in the carrier’s fleet consists of 100 aircraft of which 54% are under 24 years age group. Eighty-seven percent of this usedin the domestic andintra-Asian markets. A further age group were travelling for non-business purposes that 10 aircraft are on order, including 6 A380s. It has an included visiting friends/family and trips to/from places extensive overhaul andmaintenance facility that specia- of education. Parents mostly paid for these trips. For the lises in engine andavionics repair. The currency crisis of 25–58 year age group, which represented84% of those 1997, followedby three successive years of poor surveyed, passenger choice changed considerably in revenues anda debtof $2.6 billion forcedthe Malaysian favour of the incumbent carriers. Government to intervene andrescue the airline. It The age segregation between the carrier types is very transferredownership of 73 aircraft, leases on another clear, with the older passengers tending to prefer the 17 andliabilities of $1.8 billion to the Malaysian incumbent carriers, possibly because these offer addi- Finance Ministry (Penerbangan Malaysia Berhad tional airline products not offered by the low cost PMB). As a result, Malaysia Airlines today with nearly carriers. 22,000 employees operates on behalf of PMB. In 2002, the airline achieveda net group profit of $89 million. 1Cork andShannon Airports hada throughput of approximately Since then, the carrier has postedits best profit since 2.1 million and2.4 million passengers in 2003 respectively. ARTICLE IN PRESS 264 J.F. O’Connell, G. Williams / Journal of Air Transport Management 11 (2005) 259–272

Group travel is particularly significant to airline carrier are travelling further to reach their departure revenues. Business travellers usually tendto travel airport. The positioning of secondary airports long singularly but leisure travellers often journey in small distances from the major cities does not seem to pose a groups. Low cost airlines carry more passengers who significant barrier to the use of low fare carriers. travel as part of a group than do the incumbent airlines, Finally, questions were askedabout the type of with almost 40% of Ryanair passengers travelling in accommodation used. There was a noticeable difference pairs and31% of Air Asia’s passengers travelling as part in the type of accommodation used by low cost airline of a group of people comprising three or more. users in Europe andthose in Asia. A total of 31% of It is only in recent years that the incumbent carriers Ryanair’s passengers stayedin hotels, while almost 49% have solddiscountedone-way tickets. This has been in of Air Asia’s passengers stayedin places such as inns, response to the provision of such fares accessible via the guesthouses, bedandbreakfast establishments, or Internet by the low cost carriers. hostels. The European travel trade has often suggested The mode of surface access and the distance travelled that passengers who travel on a low cost carrier tendto to the departing airport was also ascertained. The use the savings that were derived from the lower fares in significance of having a frequent high-speed, non-stop staying at more luxurious accommodation, such as a train service from the city centre of Kuala Lumpur to hotel. The incumbent carriers’ passengers tended to opt the airport was apparent, with one thirdof the for hotels, which generally reflects their requirement for passengers surveyedmaking use of this. In contrast, additional full service attributes, with an average of 39% there is no such service linking any Irish airport, andon of them staying in this type of accommodation. average 76% of passengers accessedtheir flights by personal car, which provides a significant income to the 4.1. Journey purpose airport authorities in parking fees. Passengers were also askedhow far they hadtravelled Table 5 shows journey purpose andas expected,the to the airport. In Malaysia, those who were using the two incumbent airlines carrieda significant proportion national flag carrier travelledan average distance of 50 of business traffic, with meetings being the primary miles to reach the airport, while Air Asia passengers reason for the trip. However, almost 29% of the travelledan average of 77 miles. The distance from Ryanair passengers surveyedwere also travelling on Kuala Lumpur to the international airport is approxi- business, which was only 8.5% less than the equivalent mately 40 miles. In Europe, the survey foundthat figure for Aer Lingus. Of significance here is the fact that Ryanair passengers travelled44% further than the Ryanair is operating to a secondary airport, which adds incumbent carrier’s passengers to reach the airport. time andinconvenience for business travellers in getting Lawton (2002) and Doganis (2001) have referredto the into central London. Some 40% of the passengers fact that European passengers flying on a low cost travelling for business purposes with Ryanair were going

Table 5 Journey purpose

Aer Lingus Ryanair SD p-valuea Malaysia Air Asia SD p-valuea

Business % % % % Meeting 24.2 17.2 0.048 0.110 14.0 5.8 0.037 0.03 Conference 5.9 6.9 0.029 0.727 7.0 0.8 0.024 0.01 Training 7.3 4.8 0.028 0.377 5.4 1.6 0.023 0.103 Trade fair 0.0 0.0 – – 2.3 0.0 0.013 0.070 Employment 0.0 0.0 – – 1.5 0.0 0.010 0.154 Total business 37.4 28.9 30.2 8.2 Non-business Sports 10.3 13.1 0.038 0.462 5.4 13.4 0.037 0.031 Shopping 0.0 0.0 – – 5.4 3.3 0.026 0.417 VFR 20.5 27.7 0.050 0.168 16.9 23.2 0.050 0.213 Weekendbreak 9.5 12.4 0.037 0.443 10.9 12.6 0.041 0.684 Holiday 14.7 12.4 0.040 0.575 10.9 15.1 0.042 0.328 Studying 6.6 5.5 0.028 0.669 16.4 22.6 0.050 0.213 Religious 0.0 0.0 – – 3.9 1.6 0.020 0.284 Total Non-business 61.6 71.1 69.8 91.8 Total 100 100 100 100

aThe p-value gives the probability that the observed differences in journey purpose is due to chance. ARTICLE IN PRESS J.F. O’Connell, G. Williams / Journal of Air Transport Management 11 (2005) 259–272 265 to events such as conferences andtraining courses. Paci (1994) showedthat the Asian leisure market, and These journeys wouldgenerally be consideredas being in particular, the VFR segment was steadily growing less urgent business trips. The low p-value means that andthat culturally, time spent with family andfriendsis the difference between the carriers is unlikely to be due a very important leisure activity. Air Asia’s VFR traffic to chance. represents almost a quarter of its total market, while Approximately 8% of Air Asia passengers, all of that of Malaysia Airlines fewer than 17%. This segment whom were male, were travelling for business purposes. representedthe largest number of passengers carriedon The low p-values for the Asian carriers citedabove both surveyedairlines. Studenttravel accountedfor the reflects the fact that passengers are more likely to travel secondlargest non-business market. Cross-referencing on Malaysia Airlines for meetings andconferences and indicated that most of this travel was paid for by are more likely to travel on Air Asia for sporting events parents, although the choice of airline was largely andthat these differences are statistically significant. In selected by the students. Most of these students have more mature European markets however, this trendis migratedfrom travelling on trains andbuses to Air somewhat reversed. Asia. Overall, a large proportion of Air Asia’s passen- Table 6 provides details of the sizes of companies that gers are first time flyers (Aviation Strategy, 2003a). The the business passengers surveyedwork for. It is perhaps brandperception of lower fares, large network, high not so surprising that such a high proportion of self- advertising awareness campaigns and 24 h booking via employedpeople choose the low cost carriers. A cross the Internet is certainly pushing the Malaysian low cost tabulation of self employedpassengers andprimary carrier’s non-business market. reason for choice of a low cost carrier revealedthat 91% The rivalry for domestic market share in Malaysia is of these travellers chose the carrier primarily due to the just beginning to surface. Air Asia has taken away the fare andwere not attractedby the extendedfull service annual domestic passenger market growth of 4–5% products offered by the incumbent airlines. Business from Malaysia Airlines as domestic leisure traffic was passengers travelling on incumbent airlines tendto come stagnant in 2003 for the incumbent. This may be in part from larger companies that employ over 100 people. due to the fact that Malaysia Airlines does not advertise These companies wouldgenerally have larger travel its domestic route network in the local media, in budgets andwouldadopt corporate travel policies. contrast to Air Asia, which has an aggressive media Mason (2001) states that 73% of business passengers he presence, somewhat mirroring that of Ryanair. surveyedat Heathrow hada company corporate travel Between 1993 and1999, which coveredthe establish- policy, as opposedto 55% of the travellers using a low ment andgrowth phase of Ryanair, annual VFR traffic cost carrier at Luton airport. Over one thirdof Aer from Irelandto the UK grew from around500,000 to Lingus andMalaysia Airlines business passengers work 835,000. The effect is even more revealing when for companies that employ over 1000 people, indicating considering VFR traffic from the UK to Ireland, which corporate preference for the additional airline products grew from 950,000 to 1.8 million over the same period that the full service carriers provide. (Mintel, 2000). This growth was primarily due to the The low cost carriers attractedproportionately more large secondandthirdgeneration Irish-British popula- leisure traffic, with Ryanair andAir Asia having tion living in the UK. VFR traffic constitutedthe largest respectively 10% and22% higher proportions of their segment of non-business passengers surveyed, with traffic comprising leisure users than their incumbent respectively 20.5% of Aer Lingus and27.7% of Ryanair counterparts. It was also apparent that the biggest passengers travelling for this purpose. leisure market segment comes from those passengers The secondbiggest non-business segment consistedof who regularly visit friends and family. passengers travelling for holiday and short break purposes. Both the low cost carriers sampledcarry more of this type of traffic than the incumbents. In Table 6 Europe, low cost scheduled carriers have encroached on Company sizes of the surveyedbusiness passengers the charter market. Williams (2001) argues that package Aer Lingus Ryanair Malaysia Air Asia tour charter carriers are vulnerable to low cost airlines Airlines on sectors of up to 2.5 h, given that travellers can now integrate their own flights andaccommodationinto Company size: %%%% personalisedpackage holidays via low cost carrier number of employees Self employed9.6 32.1 12.3 67.4 websites. However this is not the case in Malaysia, 1–24 11.3 26.5 8.2 20.7 where there is an absence of such charter airlines. 25–99 18.3 24.3 16.1 11.9 Short holiday breaks have become very significant 100–999 26.2 17.1 29.2 representing an important market in the leisure sector. 1000–5000 29.2 – 23.7 The two low cost carriers attractedslightly more short 5000 + 5.4 – 10.5 break travellers than the incumbents, with this sector ARTICLE IN PRESS 266 J.F. O’Connell, G. Williams / Journal of Air Transport Management 11 (2005) 259–272 accounting for an average of 12.5% of their traffic. incumbent only introducing its online booking engine in Mintel (2002) estimates that UK nationals took late January 2004, when passengers became able to 5.6 million short breaks in 2002, which represents purchase domestic tickets to a select number of around15% of all UK holidays abroad.By 2005 this destinations. This would seem to confirm the findings figure is forecast to increase to 7.2 million, accounting of Gillan andLall (2002) , as the majority of tickets for aroundone fifth of international holidays. purchasedwere via travel agents or call centres. In 2001, The low cost airlines are extending their brands to roughly 10% of the Malaysian population hadpersonal capture this short break market. Air Asia is marketing computers, but this hadincreasedto 18% by 2003, this inclusive packages on its website under ‘Go Holiday’, technology enabling the development of low cost travel offering a wide range of mini-breaks consisting of 2–3 (Thomas, 2003). Low cost airlines are forcing change nights. Ryanair also offers short break packages and through the competitive advantage of online distribu- advertises leisure activities on its website. These tion andit is predictedthat25–30% of all Asian airline packages form an important part of additional ancillary ticket sales will be online by 2005 (Ionides, 2001). revenue with the low cost airlines integrating package There are only a small number of incumbents that holidays into their core business model. These short have fully functional e-commerce websites in Asia, break packages are generally absent from both the Aer including and Cathay Pacific. Low Lingus andMalaysia Airlines websites. cost airlines are formulatedso that a large proportion of Attending sports events is the journey purpose for their sales are conducted via direct channels, such as aroundone tenth of travellers. It was apparent that over host websites. Air Asia launchedits online sales facility 80% of groups that consistedof four or more passengers via www..com in its fifth month of operation and were travelling to sporting fixtures. Sporting activities was the first airline in Asia to introduce Internet are usually considered unimportant by tour operators booking with online payments andticketless travel. By andare left to the competencies and/orskills of local May 2003, 45% of its bookings were made through the suppliers. It wouldappear therefore that there is ample Internet (Thomas, 2003). The carrier is extremely opportunity for low cost airlines to capitalise on this innovative, being the first airline worldwide to offer market. SMS booking, andis processing 2000–3000 messages per month. Additional channels include 10 sales offices 4.2. Booking methods andcall centres each equippedwith over 180 lines that take 6000 calls a day. The carrier has also been The distribution channels used by the passengers innovative in providing alternative distribution chan- surveyedare seen in Table 7. The carriers are nels, such as enabling passengers to book tickets at post significantly associatedwith methodof booking, with offices. Ryanair passengers more likely to use the website (78%) Direct bookings were made by over 64% of Air Asia’s than Aer Lingus passengers (58%). Many Aer Lingus passengers surveyed. This rises to 73.7% if the passengers useda travel agent (16%), whereas this type additional channels of office booked and family/friends of booking channel was not available to Ryanair are included. The call centre channel accounted for over passengers. There was no significant difference in the 13% of bookings. A relatively large number of tickets use of other booking methods. The contrast is even (10%) were purchased on the day of departure, which more apparent between Malaysia Airlines andAir Asia, normally represents the most expensive time to purchase with the latter’s passengers predominantly using the a ticket. Internet to book their tickets andgenerally avoiding There is a very noticeable discrepancy between the travel agents, while Malaysia Airlines passengers do the booking profiles of Malaysia Airlines passengers and opposite. Malaysia Airlines in particular stands out, as those of Air Asia. This reflects the incumbent’s inability there were no passengers that bookedonline dueto the to implement change (technology) andkeep pace with

Table 7 Booking profiles (%)

Website Travel agent Call centre Office booked Family/friends Purchased today Other website Statistical significance

Aer Lingus 58.1 16.2 8.1 9.6 2.2 2.9 2.9 x2 ¼ 189:66; df ¼ 6, po0:000 Ryanair 77.9 – 6.3 11.7 3.4 0.7 –

Malaysia – 50.8 18.0 14.8 8.6 7.8 – x2 ¼ 868:53; df ¼ 5, po0:000 Air Asia 64.4 3.4 13.6 1.7 7.6 9.3 – ARTICLE IN PRESS J.F. O’Connell, G. Williams / Journal of Air Transport Management 11 (2005) 259–272 267 its innovative rival. Even in countries where use of the h66 million; 70,000 on June 12th to celebrate the fact Internet is not widespread, evidence shows that passen- that it hadcarried70,000 more passengers in May than gers will seek out all the available booking channels to its low fare competitor; and27,000 on June 16th for access lower fares. having a better level of punctuality for the 27th Ninety-three percent of Ryanair passengers surveyed consecutive week than easyJet. More recently, on April bookedonline (this includes the combination of a 20th 2004, Ryanair celebratedits 80 millionth passenger number of channels, such as website, office booked with 800,000 free seats andby August 19th it reached andfamily/friends).Ryanair is now the fifth most 90 million andconsequently gave away 900,000 seats at searched website worldwide, which demonstrates the 90 pence. In 5 years’ time the carrier plans to give away strength of the low cost carrier brand.2 By contrast, 50% of its flights for free. Passengers’ perception is 16.2% of Aer Lingus passengers usedtravel agents to therefore to expect low fares from this no frills carrier. book their tickets. Commissions by the carrier to the Only passengers on flights going only to the London travel trade in the UK and Ireland have been cut to 1%; airports from Irelandwere surveyed.The average one- however in continental Europe commissions are still way fare paidby Ryanair passengers was h65 andthe between 4% and7%. In November 2001, Aer Lingus average return fare was h159. Taxes constituted h19.5 sold1% of its tickets via the Internet, but by late 2003 for Ireland–UK trips, with an additional h21.70 for the its Internet bookings hadgrown to 50%, with the carrier return journey. If these taxes were deducted, then the handling 10–12% of sales through its call centre. fares wouldequate to approximately h45 one-way and Over 58% of Aer Lingus passengers surveyedbooked approximately h117 for return journeys. The Aer Lingus online. The airline’s aggressive marketing campaign in average one-way fare paidby those surveyedwas h82 promoting a strong brandis having an effect on the way andthe average return fare was h183. The taxes in this tickets are now booked. It recently removed the case were higher as the carrier serveddifferent airports shamrock logo from a number of its aircraft and in the London area. The average one-way tax was replacedit with AerLingus.com, demonstrating its approximately h20, andthe tax on the return journey willingness to lose its trademark link with tradition was an additional h28. Again, if these taxes were andheritage in favour of an innovative andtechnolo- subtractedthen the fares wouldequate to approximately gical logo to gain competitive advantage. One of the h62 one-way and h135 for return journeys. principle reasons for the carrier’s financial reformation Table 8 shows the fare differences between the two andits challenge to Ryanair has been the shift in its Malaysian carriers surveyedon a number of routes. distribution channels. Aer Lingus benchmarked its Shortly after the government assumed6.9 billion Ring- passenger processing costs against those of Ryanair gits of Malaysia Airlines’ debt, the carrier cut fares by anddeclaredthat there was a h20 difference per 50% on 14,000 seats a week to compete more effectively passenger between the two carriers, the Internet provid- with Air Asia in the domestic market. The information ing the solution to this cost disadvantage (O’Toole and shown in Table 8 takes account of these discounted Pilling, 2003). fares. The low unit cost of Air Asia at $0.023 cents per ASK3 enables the carrier to offer such low fares. As 4.3. Fares Malaysia Airlines loses money on its domestic opera- tion, matching the low fares of Air Asia couldbe Lawton (2002) pointedout that the average fares of harmful to its financial viability, however it needs its no frills carriers were some 40–60% lower than their full domestic network to feed into the Kuala Lumpur hub. service competitors. Ryanair’s one-way fares averaged A further question relatedto how important the fare 50 Euros in 2002, with the airline having become was in actually choosing a carrier. The results are shown renownedfor stimulating markets through its low fare in Fig. 3. As expected, fare constituted the principle offerings, which has given rise to the term ‘Ryanair reason for choosing a low cost carrier. Almost 65% of effect’. Aer Lingus passengers statedthat fare hadbeen the sole Part of Ryanair’s strategy for market stimulation is influencing factor in their choice of airline, while only the issuing of free tickets. For example, in the first 6 31.5% of Malaysia Airlines passengers did so. It is months of 2003, the carrier issued100,000 free seats to evident that a significant number of passengers travel- celebrate the opening of its new base at Bergamo in ling on incumbent carriers are also influencedby factors January 2003; 66,000 free seats in May 2003 when its other than the fare paid. competitor easyJet announcedhalf yearly losses of An attempt was made to assess the cross-price elasticity of demand between incumbents and low 2The 2003 Year EndGoogle Zeitgeist survey (basedon 55 billion searches over the past year), that tracks the most popular sites, ranks cost carriers. Fig. 4 provides an indication of what Ryanair.com as the fifth most searchedfor brandacross the worldwide web. 3Air Asia has the lowest operating costs in the airline industry. ARTICLE IN PRESS 268 J.F. O’Connell, G. Williams / Journal of Air Transport Management 11 (2005) 259–272

Table 8 Fares profiles of Air Asia andMalaysia Airlines surveyedpassengers

Route Air Asia Malaysia Airlines Difference

One-way Returna One-way Return O/W Ret

Malaysian Rinngitsb % KL–Kota Bahru 89.99 179.98 158 316 75 75 KL– 249.99 499.98 437 874 75 75 KL– 99.99 179.98 262 524 162 191 KL– 269.99 448.98 437 874 62 94 KL–Langkawi 129.99 275.98 205 410 58 48 KL– 169.99 368.98 422 844 148 129 KL– 69.99 139.98 158 316 125 125

KL is Kuala Lumpur. aThe tax is already excluded from the fares. The average one-way tax is approximately 16 Ringgits, with the return tax approximately an additional 16 Ringgits. bA is worth US$0.26 cents, NatWest Bank, London, May 1st, 2004.

100% Question posed to low-cost carrier passengers 90% 50% 80% 45% Ryanair (n = 122) 70% 40% Air Asia (n = 90) 60% No 35% 50% Yes 40% 30% 30% 25% 20% 20% 10% 15% 0% Aer Lingus Ryanair Malaysia Air Asia 10% Airlines

over to incumbent if it reduced its fares 5% Percentage of passengers who would switch Fig. 3. Was the carrier selectedsolely dueto its fare? 0% 10% 20% 30% Not Switch Fare Reduction of Incumbent proportion of a low cost carrier’s passengers would Fig. 4. Fare sensitivity of low cost airline passengers. switch over to an incumbent if the full service provider reduced its fares respectively by 10%, 20% and 30%. The results show that if Aer Lingus andMalaysia Airlines were to reduce their fares by 10%, then 6.1% on Although low cost airlines are relatively new to Asia, average of Ryanair’s andAir Asia’s passengers would they have already developed very strong low fare brands switch over to them. A further reduction to 20% would through strong advertising and clever use of the media. persuade 19.6% of Ryanair’s passengers and 14.4% of The wide perception of people in Malaysia, when Air Asia’s passengers to switch over to the respective acknowledging Air Asia, is that it represents low fares. incumbent carrier. Gilbert et al. (2001) argue that branding is becoming A significant aim of the survey was to findthe fare increasingly important as a means of product and levels at which a large number of passengers travelling service differentiation, and that the low cost airlines are on a low cost carrier wouldbe willing to switch over to building brand recognition to compete in such a an incumbent airline. If the incumbent airlines reduced competitive environment. their fares by 30%, then 45.9% of Ryanair’s passengers Fig. 5 provides an indication of what proportion of an and39.4% of Air Asia’s passengers wouldbe prepared incumbent carrier’s passengers wouldswitch over to low to switch. There are a significant proportion of cost airlines if it raisedits fares by respectively 10%, passengers however who wouldnot transfer to any 20% and 30%. This information provides an indication other carrier. The data show that 40.6% of Air Asia’s of the amount of fare flexibility that incumbent airlines passengers and28% of Ryanair’s passengers would have andidentifies the point at which passengers would remain loyal. This is due to a combination of factors, begin to shift their custom to low cost carriers. Given such as brand development, fares, flight schedule, incumbents offer the benefit of full service, including simplifiedwebsite, package holidays,etc. interlining, serving primary airports, , ARTICLE IN PRESS J.F. O’Connell, G. Williams / Journal of Air Transport Management 11 (2005) 259–272 269

Question posed to incumbent passengers 4.4. Airline connections 55% 50% Aer Lingus (n=133) Fig. 6 shows the percentage of connecting traffic for 45% Malaysia Airlines (n=123) both groups of carriers. A big feature of a full service 40% carrier is the ability to interline traffic at its hub airport. 35% As expected, there is a strong interline requirement for 30% both flag carriers that operate hub andspoke networks. 25% 20% Slightly over 42% of Aer Lingus passengers surveyed 15% were interlining, as comparedto 36.7% of those of 10% Malaysia Airlines. This reflects an incumbent’s ability 5% to leverage ‘network benefits’ andthus attract a

cost carrier due to the fare increase by incumbent 0% high proportion of passengers who wish to connect Percentage of passengers who would switch over to a low 10% 20% 30% Not Switch seamlessly. Fare Increase of Incumbent Low cost airlines operate mostly on a point-to-point Fig. 5. Fare sensitivity of incumbent airline passengers. basis only. These carriers emphasise that they will not be responsible if passengers fail to make their connections, even if the onwardjourney is with the same carrier. The risk of failing to make a connection involves the frequent flyer mileage, etc., some passengers are clearly traveller purchasing another ticket. Data from the willing to pay more for these features. surveys indicate that passengers are willing to accept The data show that fare increases of 10% and 20% that risk. A total of 17.2% of Ryanair’s passengers wouldpersuadeapproximately 5% and14.8% of the questionedwere transferring to other carriers at London incumbents’ passengers to switch to low cost carriers, Stansted. Ryanair’s creation of traffic bases across with the differences between the two carriers not being Europe has provided the opportunity for passengers to statistically significant at the 10% confidence level. If the interline using a point-to-point network. Air Asia’s incumbents however, raisedtheir fares by 30%, then transfer traffic was only 5.8%, which is not surprising as 42.8% of Aer Lingus’s passengers and48.7% of it was only formedin December 2001. Malaysia Airlines passengers wouldswitch. Another Fig. 7 identifies the principle airlines to which the notedobservation is that at a 5% statistical confidence interlining passengers surveyedwere transferring. It is level, an average of 34.3% of the incumbents’ passengers apparent that the incumbent carriers have a significant would remain loyal, possibly due to the wide range of proportion of their traffic transferring to alliance or products/facilities offered. code-sharing partners. Aer Lingus had 55.3% of its It is clear that low cost carriers offer a strong connecting passengers questionedtransferring to the substitute to the full service airline product. Not Oneworldalliance, of which the majority were transfer- surprisingly, this has important implications for market- ring to British Airways. By contrast, 72% of Ryanair’s ing and advertising—branding, customer loyalty and passengers surveyedwho were making connections satisfaction shouldbe carefully consideredby every continuedtheir journeys from Stanstedon other airline. Interestingly, the results of the survey show that Ryanair flights, while around20% connectedwith cross-price elasticity is not constant. This defies the easyJet services. Ryanair operates 130 daily depar- usual assumption made in various econometric models tures out of London Stansted and accounts for 52% of constant cross-price elasticity andshows the im- of the airports capacity, thus providing numerous portance of absolute fare levels in determining customer choice. Finally, to complete the discussion, income effects 50% should be considered. Although the survey has not been designed to quantify explicitly any income effect, it is 40% evident that consumer income does play an important role, as less wealthy consumers are more price-conscious 30% andhence more susceptible to a switch between airlines as a result of changes in fares. Having saidthis, dynamic 20% effects are highly important; air travel does not have the glamour of the past any more andthe low cost carriers 10% have managed to develop brands of their own. There- fore, when airport location andtotal travelling time are 0% Aer Lingus Ryanair Malaysia Airlines Air Asia similar, low cost carriers may also become the preferred choice of more wealthy customers. Fig. 6. Percentage of connecting traffic. ARTICLE IN PRESS 270 J.F. O’Connell, G. Williams / Journal of Air Transport Management 11 (2005) 259–272

Airline Connections for Aer Lingus and Ryanair particular airline. A study undertaken by Proussaloglou 100% andKoppleman (1995) on the demand for air carrier services concluded that carrier selection was based on a 80% Other combination of factors that included the airline’s market easyJet presence, schedule convenience, low fares, on time 60% Ryanair performance, reliability andthe availability of frequent flier programs. Fig. 8 provides confirmation of their 40% Other Virgin results, with the evidence from this survey that Connecting Traffic passengers choose a full service carrier for a variety of 20% Alliance reasons, including: service reliability, service quality, 0% flight schedules, fares, connections, frequent flyer Aer Lingus Ryanair programs, comfort, safety andcompany policy. Passen- gers questionedchose an incumbent carrier to benefit Airline Connections for Malaysia Airlines and Air Asia from the wide range of services available and the 100% high reliability associatedwith this type of airline. Service reliability was one of the top reasons for 80% Air Asia choosing an incumbent airline. Over 20% of Aer Lingus Malaysia Airlines 60% passengers and18.7% of Malaysia Airlines passengers Other questionedselectedthis as their principle reason for 40% Air Asia carrier choice.

Connecting Traffic Fig. 9 shows that the low cost airlines’ passengers 20% Code Sharing questionedhada very differentprinciple reason for Partners carrier selection. The majority repliedthat fare was by 0% Malaysia Airlines Air Asia far the most important factor in choosing to fly on a low cost airline, with flight schedules coming a distant Fig. 7. Percentage of traffic transferring to other carriers. second. Turner (2003) also showedthat passengers travelling on a low cost carrier selectedfare as their principle reason for carrier choice, while passengers permutations of connections andample opportunity for passengers to transfer to other destinations. Malaysia Airlines is not part of an alliance, but 68.5% 25% Aer Lingus (n=132) of its connecting passengers surveyedwere transferring 20% to other code-share flights. Only 6.6% of Malaysia 15% Airlines passengers questionedconnectedwith Air Asia 10% at Kuala Lumpur. Very few of Air Asia passengers Responses surveyedwere transferring: four were connecting to a 5% Malaysia Airlines long haul service, while the remaining three were transferring to Air Asia flights. As the market 0% s begins to mature and Air Asia develops additional hubs, Fare FFP ous Quality Safety Comfort there will be a greater opportunity for passengers to Reliability Connection Miscellan transfer to other flights. The perception is evident in the Flight Schedule Asian market that passengers can use a combination of 20% carrier types to reach their destinations, and that Malaysia Airlines (n=128) interlining via a low cost carrier network is certainly a 15% workable option. 10%

4.5. Principal reasons for carrier selection Responses 5% A total of 43.8% of the two incumbents’ passengers questionedstatedthat they hadlookedat other carriers’ 0% offerings prior to booking their flights. By contrast, Fare FFP Quality Safety Service Comfort Reliability 65.2% of the low cost carriers’ passengers surveyed Connections Miscellanous statedthat they hadnot consideredother carriers’ Flight Schedule Company Policy services prior to booking their flights. Fig. 8. Question posedto passengers to determinetheir most An important element of this research was to establish important reasons for choosing an incumbent airline over a low cost the principle reason why each passenger hadselecteda carrier. ARTICLE IN PRESS J.F. O’Connell, G. Williams / Journal of Air Transport Management 11 (2005) 259–272 271

90% Asian economy, where strict bilaterals act to constrain 80% such network developments. Ryanair (n=144) 70% The survey has revealedthat while there are differences between passengers travelling on a low cost 60% carrier andthose on a full service airline, there appears 50% to be no difference in the attitude and perception of 40% passengers from two very different continents. It would Responses 30% seem that the success of Air Asia in Malaysia, which was

20% basedon the Ryanair modelandwhich in turn was modelled on Southwest in the US, can be successfully 10% replicatedin any part of the worldas passengers’ 0% opinions andexpectations appear consistent. Fare Flight Reliability Connections Miscellanous Schedule There is a strong bias towards young people taking

90% low cost carriers andit will be interesting to observe if these travellers migrate towards incumbents when they 80% Air Asia (n=115) have more disposable income in the future. It is clear 70% that passengers travelling on low cost carriers place 60% great importance on price andappear to arrange their itineraries using the least expensive airfares. Sixty-five 50% percent of those passengers travelling on a low cost 40%

Responses carrier surveyeddidnotlook at any other carrier when 30% booking their travel. It wouldappear therefore that the brandreputation of low fare airlines has become 20% embedded into the minds of consumers. 10% In contrast, passengers using full service airlines are 0% concernedabout price but will tolerate a higher fare to Fare Flight Internet Holiday Miscellanous gain an advantage through the additional airline Schedule Package products offered by full service carriers. Historically, Fig. 9. Question posedto passengers to determinetheir most incumbents have been incapable of matching the fares of important reasons for choosing a low cost carrier over an incumbent no-frills airlines because they were burdened with airline. inefficient operating practices. Low cost carriers are now dominating the leisure markets and are encroaching on business segments. There is significant business traffic travelling on an incumbent carrier indicated flight for Ryanair especially from the self-employedand timings. Ryanair has given away 20% of its flights for employees of small-medium sized enterprises; however free in 2003, leading passengers to expect very cheap large corporations still favour the incumbents, strongly tickets from the carrier. A total of 5.2% of Air Asia’s indicating that corporate deals appear to work. passengers identified the ability to book via the Internet Travellers are willing to connect through secondary as their most important reason for choice of carrier, airports andto accept no frills in exchange for low fares. with a further 4.3% citing the holiday package offered Incumbents are retaining their complex andwiderange by the airline on their website. of airline products as a counteractive strategy for higher The evidence presented in Figs. 8 and9 confirms the fares. However, this research clearly indicates that this principle differences in passengers’ perceptions between works only for a specific number of travellers. The way incumbent andlow cost airlines. Passengers are selecting forwardfor incumbents is to reinvent themselves by low cost carriers primarily because of their low fares, adopting those elements of the low cost model that are while passengers selecting full service airlines opt for pertinent to their requirements. The data ascertained them in part because of the additional product services from the survey provides evidence that if incumbents they provide. couldreducetheir fares by 30%, it wouldstimulate a significant number of passengers (over 40%) to switch from low cost carriers. It is clear that cross-price 5. Concluding comments elasticities are far from constant, with small percentage changes in fare producing little effect while price Two contrasting markets have been examinedin this changes above 20% result in large shifts in demand. paper; the first, a mature Europe, where liberal skies It is apparent that passengers travelling on incum- have allowedlow cost carriers to establish traffic hubs bents place strong emphasis on reliability, quality, flight across international boundaries, and the second, an schedules, connections, frequent flyer programmes and ARTICLE IN PRESS 272 J.F. O’Connell, G. Williams / Journal of Air Transport Management 11 (2005) 259–272 comfort, while travellers taking low cost carriers focus Gillan, D., Lall, A., 2002. The economics of the Internet, the new almost exclusively on fare. The surveys overall indicate economy andopportunities for airports. Journal of Air Transport that the ideal scenario for passengers, would be to have Management 8, 49–62. 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