Low-cost airlines consolidation as a feature of air transpoet globalization
- 1. The Ural Branch of Russian Academy of Sciences
- 2. JSC "Sintez"
Description
The increased industry consolidation resulting in the formation of new highly organized forms of cooperation is referred as one of the main features of air transport globalization at the present stage. Consolidation allows carriers to overcome the excessive competition and to strengthen their market position. It also helps them to optimize the route network and organizational structure of the company. This article includes the analysis of the dynam-ics of global air passenger traffic by low-cost carriers in the period 2003–2015. An aggressive struggle for passengers in-creases competition in a low-cost environment while contributing to the consolidation process. In 2015 low-cost airlines provided 27.1 % of global passenger air traffic. In absolute terms, the volume of traffic increased by 5 times from 197 mil-lion passengers in 2003 to 1100 million passengers in 2015. Those figures have significantly surpassed the dynamics of global passenger air traffic (from 1.7 billion passengers in 2003 to 3.5 billion passengers in 2015). The highest share of low-cost carriers is noticed in Southeast Asia. In 2015 due to the high level of competition a decreased was observed for the first time 15 years prompting the creation of the first budget airline alliances. U-FLY and Value Alliances which were founded in the beginning of 2016 represent the mechanism for competition with leading Asian independent low-cost groups. The main objective of joining the alliance for the participants is to in-crease their brand awareness in the Asia-Pacific region and to expand the distribution network. The benefits of airlines economic integration within alliances and long-haul low-cost subsidiaries enhance the competitiveness of low-cost carries under conditions of high global aviation market volatility. We assume the emergence of similar business unions in other geographical segments of the international passenger air transportation market.
Notes
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