The success and failure affordable luxury strategy for low-cost-carries
Abstract
A low-cost carrier (LLC) or budget airline is an airline that generally has lower fares and
fewer comforts. In order to make up for revenue lost in decreased ticket prices, the airline
usually charge for extras like food, priority boarding, seat allocating, check in baggage and
even Wi-Fi. Traditionally, LLCs are very competitive in short and medium haul flights
because of carefully managing costs, increasing ancillary revenues, and choosing routes
based on what’s attractive to fliers and not where hubs are located. In recent years, LLCs
such as AirAsia, Fly Scoot have successfully expanded to long-haul segment and together
with it – the business class experience. Low cost carrier and business class can be seen as
affordable luxury – a concept that may sound contradicting but actually work. Vietjet Air
– a fast growing LLC from Vietnam – also offers business experience – the Skyboss,
however the company has not seen much revenues generated from this particular segment
despite strong overall growth in recent years. This qualitative paper will critically examine
the business class experience offered by three LLCs – AirAsia, Fly Scoot and VietJet Air
in hope of exploring the factors that responsible for success and failure of affordable luxury
strategy.
Keywords: affordable luxury, marketing strategy, case study