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Factors Influencing Consumer Preferences While Choosing between Budget Airlines

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Document pages: 53 pages

Abstract: According to experts, the airline industry lost foothold ever since it got into a price war and relinquished its monopolistic position. And yet, it was in this scenario that budget airlines emerged. Budget airlines are an innovative business model which competes chiefly on price. They jostle with each other to provide the lowest fares by keeping their operating costs to the bare minimum. There are many ways by which airlines cut costs. Some of them are fast turnaround times leading to maximum utilization of the aircraft, using a single type of aircraft for easy maintenance, using secondary airports which have reduced landing fees, online booking of tickets saving on ticket printing costs and agent commissions, less personnel per flight, use of budget terminals which have lower costs and have least frills which allows faster boarding and deplaning, doing away with or charging for frills such as seat covers, pillows, food, entertainment, newspapers, magazines, baggage and even drinking water. Budget airlines have been an instant hit ever since Southwest airlines introduced the concept in 1973. Currently, budget airlines are thriving. A bigger part of the revenues of budget airlines are coming from ancillary sources. This also helps them keep the ticket fare competitive. They own a third of the market share in the airline industry. They have forced high end carriers such as British Airways and Qantas to ‘dress down’ and become leaner in order to stay in the market. With the entry of a number of new players in the market especially in Singapore and with rising fuel costs, budget airlines would not be able to compete on price alone for long. They have to find ways to differentiate themselves in order to stay ahead. This research intends to find out the predominant factors other than price which a consumer considers while choosing between budget airlines. Some of the factors which are being considered are Scheduling, Punctuality, Baggage capacity, Customer Service, Ease of booking tickets, Rescheduling and refund policy, Quality of food available in-flight, In-flight entertainment, Premium services such as priority boarding, seating, Ground handling services, Seating and general in-flight cleanliness etc. However, the research is not limited to these factors alone. Both primary and secondary research has been carried out. The secondary research mainly concentrates on the business model of budget airlines particularly those of the 6 budget airline based or operating out of Singapore. The airlines are Air Asia, Jetstar, Tiger Airways, Cebu Pacific, Lion Air and Air India Express. Primary research consists of questionnaire survey. The sample consists of 60 respondents. Statistical techniques have been applied to the primary data and corroborated with secondary data to gauge the important factors that influence customer’s choice of budget airline, the most preferred and the least preferred airline in Singapore and the strong points and areas of improvement of each of these airlines.

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