Entry patterns of low-cost carriers in Hong Kong and implications to the regional market

Kun Wang, Kan Wai Hong Tsui, Liping Liang, Xiaowen Fu

Research output: Journal article publicationJournal articleAcademic researchpeer-review

21 Citations (Scopus)

Abstract

This study aims to provide a better understanding of Asia's low-cost carriers (LCCs) by empirically analysing their route entry patterns in Hong Kong. Two alternative models have been tested, namely a standard probit model and a generalized least squares estimation. Consistent findings from the two models suggest that LCCs in Asia have a preference for large markets with big populations, high incomes and high traffic volume. On the other hand, the dominance of incumbent full service airlines (FSAs), fierce route competition and the lack of secondary airports are not critical to the growth of LCCs. However, government regulations and airport access are main impediment factors. Despite the adoption of long-distance low-cost models by the region's airlines, geographic distance still plays an important role in LCCs' entry decisions. For the growth of low-cost travel and associated benefits in the tourism industry and overall economy, it is important for governments in the region to liberalize aviation markets, provide sufficient airport capacity, and promote efficient allocation of airport slots.

Original languageEnglish
Pages (from-to)101-112
Number of pages12
JournalJournal of Air Transport Management
Volume64
DOIs
Publication statusPublished - 1 Sep 2017
Externally publishedYes

Keywords

  • Hong Kong
  • Low-cost carriers
  • Route entry
  • Traffic volume changes

ASJC Scopus subject areas

  • Strategy and Management
  • Law
  • Transportation
  • Management, Monitoring, Policy and Law

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