Budget Airlines Pricing Strategies
Pricing Analysis Report AIRASIA BUDGET AIRLINE I. Executive summary
Budget airline industry
Singaporean airlines industry grew by 10.3% in 2007 to reach a value of S$6.5 billion, growing by more than 10% up to now. Noticeably, low-cost carriers have been the industry’s success story over the past decade. It has won huge number of passengers, stealing full-service market share and forcing full-service airline such as
SIA to run its own low-cost options such as Scoot and Tiger airways. Expansion plans for budget airlines has focused on offering long-haul for low fare, opening a new frontier in the fiercely competitive aviation market.
Customers
Asia’s growing middle class has increased a significant demand in more and cheaper flights. The number of yearly passengers traveling on budget airlines passed 10 million for the first time in 2011. These passengers are mainly economical travelers in their twenties and thirties with extremely high price-consciousness.
Competition
Air-Asia, Jetstar Asia, Tiger Airlines, Lion-air and youngest entrant Scoot are the key players in budget airline industry in Singapore.
AIRASIA
Airasia has been the most successful budget airline in Asia with profit doubling in year ended 2012 due to the increase in number of seats sold and higher average airfare. This implies that Airasia well managed to price its product to optimally accommodate its different customers at different time.
II. Price to benefit:
Price-Benefit Map
We shall discuss AirAsia’s pricing strategy using a round-trip flight from Singapore to Bangkok from 5-8 March as our test case. As leisure travellers, our preferred flights would be those with flight times which allow us to maximize our time spent at the destination. In this case, the Singapore-Bangkok flight would be in the early morning and the Bangkok-Singapore flight in the late evening.
As all budget carriers offer similar add-on benefits with similar pricing
Budget airline industry
Singaporean airlines industry grew by 10.3% in 2007 to reach a value of S$6.5 billion, growing by more than 10% up to now. Noticeably, low-cost carriers have been the industry’s success story over the past decade. It has won huge number of passengers, stealing full-service market share and forcing full-service airline such as
SIA to run its own low-cost options such as Scoot and Tiger airways. Expansion plans for budget airlines has focused on offering long-haul for low fare, opening a new frontier in the fiercely competitive aviation market.
Customers
Asia’s growing middle class has increased a significant demand in more and cheaper flights. The number of yearly passengers traveling on budget airlines passed 10 million for the first time in 2011. These passengers are mainly economical travelers in their twenties and thirties with extremely high price-consciousness.
Competition
Air-Asia, Jetstar Asia, Tiger Airlines, Lion-air and youngest entrant Scoot are the key players in budget airline industry in Singapore.
AIRASIA
Airasia has been the most successful budget airline in Asia with profit doubling in year ended 2012 due to the increase in number of seats sold and higher average airfare. This implies that Airasia well managed to price its product to optimally accommodate its different customers at different time.
II. Price to benefit:
Price-Benefit Map
We shall discuss AirAsia’s pricing strategy using a round-trip flight from Singapore to Bangkok from 5-8 March as our test case. As leisure travellers, our preferred flights would be those with flight times which allow us to maximize our time spent at the destination. In this case, the Singapore-Bangkok flight would be in the early morning and the Bangkok-Singapore flight in the late evening.
As all budget carriers offer similar add-on benefits with similar pricing