Never before have network airlines been so exposed and vulnerable to low-cost carriers (LCCs). While LCCs had 26.3% of all world seats in 2013, Southeast Asia had 57.7% and South Asia 58.4% – and these figures will only increase. There are many consequences of LCCs on network airlines, including inadequately meeting the expectations of customers, so increasing dissatisfaction, and not offering sufficient value-for-money. Clearly, it is fundamentally important for Asian network airlines to respond appropriately to LCCs. This paper looks at the strategic capability of 22 of the top Asian network airlines in competing with LCCs, which is achieved by analysing questionnaire data from these airlines in terms of 37 competitive responses across six distinct response categories. It is crucial to note that this paper only concerns their capability in competing with LCCs, and it does not consider their overall strength. This paper also investigates how strategic capability varies by Asian sub-region and by airline performance, with performance examined in two respects: by perceived performance and actual performance. The results show that strategic capability varies widely, with Vietnam Airlines possessing the strongest strategic capability to compete with LCCs and SilkAir the weakest. Of others that compete heavily with LCCs, Malaysia Airlines and Garuda Indonesia have strong capabilities, while Philippine Airlines does not. However, all three need to more forcefully respond to LCCs. As a whole, network airlines within Southeast Asia have the greatest strategic capability, and Northeast Asia the weakest. There is a reasonably strong correlation between strategic capability and both actual and perceived performance, which suggests that those airlines with strong strategic capabilities should achieve strong overall performance.
Bibliographical noteNOTICE: this is the author’s version of a work that was accepted for publication in Journal of Air Transport Management. Changes resulting from the publishing process, such as peer review, editing, corrections, structural formatting, and other quality control mechanisms may not be reflected in this document. Changes may have been made to this work since it was submitted for publication. A definitive version was subsequently published in Journal of Air Transport Management [ Vol 47, (2015)]. © 2015, Elsevier. Licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International http://creativecommons.org/licenses/by-nc-nd/4.0/ .
- Competitive responses
- Competitive advantage
- Network airlines
- Low-cost carriers