Budget air hoses have become a tendency in air power industry over a few decennaries all over the universe, nevertheless, as a Asiatic cosmopolite city- Hong Kong has n’t hold one yet, therefore a research demand to be set up to research on its feasibleness. This undertaking proposal aims to help to carry through a research by developing a program ahead. First, the background of budget air hoses and job statement would be stated out, so a literature reappraisal would be carried out in order to happen out its research value, after that, the research
purpose and aims could be set up as a research end, last but non least, research method and undertaking program could be discussed on how, where and when to transport out this research.
2. Background/ job statement:
In the United State before 1978, all air hose rider services were regulated and controlled by the Civil Aeronautics Board ( CAB ) . Merely 10 bole air hoses were authorized to publish a “ gramps ” certification by CAB at that clip. Underneath this certification, all major scheduled air hoses ‘ path constructions and menus were controlled and ruled. For an air hose ‘s path construction, Michigans and intermediate Michigans were specified and riders transporting between Michigans were limited, a new promoted path needed to travel through a drawn-out process and hearings, even a arrest of a path service was still needed the CAB ‘s blessing. For an air hose ‘s menu, all menu monetary values were purely controlled by the CAB. ( John & A ; Clinton, 1984 )
After go throughing the Airline Deregulation Act of 1978, CAB no longer had an absolute authorization on an air hose ‘s entry, issue, paths and menus. Airlines were given freedom on puting up their ain menus within a broad scope, path applier would be submitted and passed easy without any limitation when it performed air transit decently. ( John & A ; Clinton, 1984 )
budget air hose:
In 1967, the first successful budget air hose was born and started its concern in Texas in America, it named itself as Southwest Airlines ( SWA ) . The company began when the US market was deregulated. Its successful theoretical account had been act uponing a batch of other following budget air hoses. It provides low-cost, high rate of short draw winging and this made itself maintain a most profitable air hose through old ages. ( Peter, David, Gillen, Otto and Hans, 2005 )
What is Budget Airline?
“ A low-priced bearer or low-priced air hose ( besides known as a no-frills, price reduction or budget bearer or air hose ) is an air hose that by and large has lower menus and fewer amenitiess. To do up for gross lost in reduced ticket monetary values, the air hose may bear down for supernumeraries like nutrient, precedence embarkation, place allocating, and luggage etc. ”
Today ‘s budget air hose:
Presents, the value for money is a great accent placed by travellers. They are willing to purchase cheaper tickets to merchandise off some other facet such as leg room during flight. However, to find whether a budget air hose can last and drive down the cost, it chiefly depends on authorities and major airdrome ‘s will to open up the skies. Therefore, different countries are in different instances, but every consumer loves a low monetary value ticket and somehow the developments are really similar in nature and continue in varied ways.
As in US, budget air hoses have dominated the market as travellers are monetary value driven ; in Europe, more local airdromes are needed to be opened up to allow more budget air hoses to wing in ; in Asia, there are more chances to spread out the whole market but the way is non easy, since the market is still dominated by the national flag bearers. Besides, they are besides supported by the lading concern. ( Scott Lee, 2004 )
As we can see, budget air hoses ‘ concern non merely go a tendency over the Earth, but besides conveying out more travellers and so to widen the economic system of our ain state or part, nevertheless, there is no budget air hose at all presently in Hong Kong, what are the grounds? Few old ages ago there was one time a low cost carrier- Hong Kong Oasis airway which offered “ long haul low menu ” was bankrupted after 18 months of operation, why would that go on? An Malayan budget airline- Air Asia already developed its 3rd place base in Thailand, meanwhile, there still are n’t any budget air hoses puting up in Hong Kong as a place base, why? What are the success factors for a budget air hose to develop? Is there feasibleness for a budget air hose to put up and organize a place base in Hong Kong?
3. Literature Reappraisal:
3.1.Business scheme of Budget Airline:
Markus ( 2005 ) one time said “ The concern scheme of these low cost air hoses to salvage costs is to offer
no frills, have fast turn-rounds, usage merely a single-type fleet of planes, and to wing chiefly to cheap secondary airportsaˆ¦aˆ¦aˆ¦..They besides save a immense sum of disposal costs by merely accepting recognition card payments and therefore cut downing the paperwork to a lower limit ” ( Markus, p.269, 2005 )
In other word, they minimize their cost in direction, aircraft care, crew preparation, set downing fee, parking fee, disposal work, etc. Any extra cost, they will remain in the air ticket and allow the rider wage for it. This would lift out a inquiry, would the riders in Hong Kong be willing to pay for a low cost merely to acquire to a finish or a high monetary value to purchase a good quality of service?
Budget air hose is a tendency?
Start from the following two old ages as denoting in late May, the Singapore air hose would set up a subsidiary-a no frill, low cost air hose, utilizing broad organic structure aircrafts to function medium to hanker draw paths. Harmonizing to the company after old ages of markets of extended reappraisal and analysis, they have to acknowledge that there is a big turning demand for low menu travel. The low menu air hoses assist to excite the turning demand of travel. The company wants to establish this service to force its single-digit growing to a double-digit growing as this low menu market is turning enormously. ( Govindasamy, 2011 )
This has showed us which the depression menu air travel market
is turning and even an Asiatic state-owned conventional air hose want to fall in in to derive portion, hence there is tonss of room for more new budget air hoses to be set up and function the demand.
Budget air hose comparing with conventional air hose over the Earth:
Graham Dunn ( 2011 ) province in the air hose magazine, “ Data from four old ages of the Airline Business low-cost bearer and universe air hose ranking studies shows that while the 10 largest web bearers were extremely profitable in 2006 and 2007, seven lost money in 2008 and eight were in the red in 2009 at an operating degree. Contrast this with the top 10 lost-cost carriers- merely two lost money in 2009, three in 2008 and one apieve in 2007 and 2006. ” In this instance as we know, during the economic crisis between 2008 and 2009, we can see that the low cost bearer is on a steady growing and gain money, but the conventional air hoses are greatly affected.
In fact, the magazine besides shows that the budget air hoses are turning at a double-digit development around the USA and Europe, and there are still more room for them to lift. In South East Asia, the larger low-priced bearers already expand beneath their place market and put up more place base in other state around the part as there has been a great demand for inexpensive air travel, such as Airasia has besides set up a place base in Indonesia and Thailand beyond Malaysia. ( Graham Dunn
Therefore, even Hong Kong set up a budget air hose, there are still tonss of other rivals around the part, and can it last?
The Background and Success of Air Asia and the Asia part:
Apparently in the twenty-first century, if the more preferred human ecology and economic tendency persist, Asia would be good focused by the whole universe, in other words, more people would be willing to go in and out of Asia by plane for concern and leisure. ( Joseph, 2011 )
Air Asia now is one of the largest low cost bearers in South East Asia. It used to be built up by the Malaysia authorities from 1993 and started its ain operation as a flag conventional air hose in 1996, nevertheless, within those five old ages, it was a “ chapped air hose ” which merely have two Boeing 747, 250 staffs, four finish and a debt of $ 11 million. But in 2001, it was bought by Tune air and turned it and re-launched as a low cost bearer, so it start to go a profitable concern. In 2007, Air Asia X was set and launched as a low cost long draw bearer which flies to Europe and Australia. Currently, the whole Air Asia Group has owned 102 aircrafts, flies 150 paths and 68 finishs, it has been still go oning to spread out its fleet and market portion. In the past two twelvemonth, it has already accomplished a Double-digit capacity growing. Surely, there are some advantages that it already to the full take, such as
low-price labour, a helpful economical hub at Kuala Lumpur. ( Joseph, 2011 )
In this instance, are at that place any success factors we can larn from and utilize in Hong Kong?
The Background and failure of Oasis Hong Kong airway:
Oasis Hong Kong air hose claimed to be the first long draw low cost air hose based in Hong Kong, Reverend Raymond Lee led a starting capital of $ 100 million with several Hong Kong investors. It began its operation and launch to function riders from October 2006, but after 18 months of operation, it halted all operation and collapsed as fiscal settlement. It used to have 4 Boeing 747 and flew two paths, and three finishs: Hong Kong, Vancouver and London. During the operation period of clip, the monetary value of jet fuel has jumped from $ 600 a metric ton when Oasis started winging to a current degree of around $ 1,137 a metric ton. Besides, the company did non run as an short draw, no service model but supply a full service such as inflight repast and amusement. ( Robin, 2008 )
In this instance, a rise of jet fuel monetary value can force a company to fall, are at that place any other critical menaces which exist? Or the whole Hong Kong air power environment is non suited for an budget air hose to be?
Disadvantages and advantages of budget air hoses:
For going with budget air hose, there are besides some disadvantages that you may desire to take history for, such as you
may merely hold a limited repast with likely peanuts at all for the whole flight, you may non take your ain place, they have less flexibleness which you ca n’t call off your flight or acquire a refund, any excess checked bags will be charged, they frequently land on distant airdromes with no coach connexion and they are normally booked through cyberspace. ( Shewanda, 2011 )
However, there are besides some advantages you may desire to see, such as the menu with budget air hose is comparatively little which you can salvage the money for other things, they frequently fly to more locations and smaller metropoliss that you may involvement, and as money are saved, therefore more travels will be encouraged and more people can afford it.
( Jennifer, 2011 )
Therefore, when the Hong Kong clients compare the advantages and disadvantages of budget air hoses, will they still choose budget air hose? What is the low menu travel market like in Hong Kong?
Challenges and Background of the local dominant air hose in Hong Kong:
The company began in 1946. It was found by two world-war 2 pilots. They foremost flew to transport rider to Manila, Bangkok, Singapore and Shanghai. However in 1948, some of the portions was bought by a UK company, Butterfield & A ; Swire ( today known as the Swire Group ) which took a 45 % portion. Therefore John Kidston Swire took the leading work ; Butterfield & A ; Swire became entirely responsible for the direction
of the air hose. And so it has been spread outing through clip. In 1998, the Cathay City was built, and in 2006, the firedrake air was bought to be involved in Cathay Pacific Group. Right now it owns 128 aircrafts and has ordered more than 100 aircrafts. Its path has covered more than 150 finishs in 41 states. It ranks as the universe ‘s 2nd most profitable air hose by net net income and the 7th largest air hose in the universe by operating net income. Its staffs ‘ figure is 19,850 worldwide. ( From Cathay Pacific ‘s Website )
In this instance, its clients do non merely include leisure and concern travellers but besides the regional people. If a budget air hose was being set up, this air hose would be the biggest local rival.
Potential low cost bearer that will be set in Hong Kong:
There will be two possible budget air hoses puting up in Hong Kong- the Hong Kong express and the Jetstar subordinate. The Hong Kong Express will transform to a low cost bearer in Jul-2012 or Aug-2012, runing under its new low-priced theoretical account to metropoliss in mainland China, South Korea, Japan and Southeast Asia. As a Foreign budget airline- Jetstar is besides looking frontward to set uping a subordinate in Hong Kong, it may seek to co-operate with Hong Kong Airline. ( CAPA, 2011 )
This instance has showed us that many companies are interested in developing a low cost bearer in Hong Kong, hence in other words, there is
feasibleness for Hong Kong to put up an low cost bearer.
Through analysing all the informations collected to find whether it is possible to put up an budget air hose in Hong Kong or non.
To research the background information and concern theoretical account of budget air hose
To research the operation, cost construction, scheme of low cost bearer in Asia
To transport out a instance survey: the success narrative of Airasia and the failure narrative of Oasis
To put up a study to inquire about Hong Kong frequent circular ‘s outlooks on budget air hose ‘s services
To cipher all operating cost and disbursal to run this concern
To compare the monetary value of winging with an bing conventional air hose with a conjectural budget air hose to happen out the feasibleness
6. Research method:
For this research, I will utilize the inductive method attack, because my purpose is explore the feasibleness to put up an successful budget air hose which could last for a long clip in Hong Kong through detecting assortment of informations such as budget air hose concern theoretical account, cost construction, authorities policy and so to analyse and happen out the replies for it. And I will choose the study scheme for deriving Hong Kong people ‘s sentiment of service they wish to add in without any extra cost for a budget air hose service in order to cipher the operating cost of an conjectural budget air hose and so to put up the
best monetary value of a menu to equalise the cost. Then I will pick the memo-method as my alone informations aggregation method, and carry out the cross-sectional survey as the informations would give me the consequence. For informations aggregation, I will utilize questionnaire and the interview.
For the Questionnaire, I plan to interview 50 people, they are largely concern travellers and leisure travellers, I will near them through my friends who are frequent circulars.
For single interview, I hope that I can do an assignment with some of the staffs who work as an air hose comptroller and inside the airdrome authorization, and derive fiscal information of running an air hose company.
7. Undertaking Plan:
I would wish to pass half a twelvemonth to finish my undertaking. Here is my work breakdown construction: