A comparative study of low-cost carriers operation in Singapore and Hong Kong

Abstract

The development of Low Cost Carrier (LCC) are significant in the 21st century, especially in Asia where the demand for air travel is also in rapid growth. LCCs offer comparatively low fares for passengers by minimising their operating costs, which are done by applying the “No Frills” principle, offering minimal to none service to passengers. The unbundling of full services offered on a traditional airline or Full Service Carrier (FSC), provided passengers the ability to choose and paid for what services they need for the flight with LCC, from checked baggage to inflight meals.

The purpose of this study is to compare the operation of LCCs in Singapore and Hong Kong, as well as to evaluate the future development of LCCs in the two territories through comparing the regulations, cost, infrastructure provision and demand. Suggestion for airports, regulatory authorities were also discussed in this study, to understand what they can do to attract LCCs to operate in their own territory. Moreover, surveys were conducted to collect passengers’ expectation and perception to LCCs in the two territory, which enabled a comparison of the LCC performance based on customer satisfaction.

Upon analysing and comparing the operating environment of Singapore Changi Airport (SCA) and Hong Kong International Airport (HKIA) for LCCs, it was found that Hong Kong has a lot to do to favour LCC operation. The current high operating cost, lacked facility and airport congestion made it unattractive for LCCs to operate into. In contrast, SCA provided a generally attractive environment for LCCs, the airport charges are lower, supported the operation of LCCs with updated infrastructures.

Nevertheless, it was found that LCC passengers in Hong Kong has a lower satisfaction towards the performance of LCCs in the territory, when compared with Singapore. This is partially contributed by the incidents occurred with the locally based LCC and the constant delay at HKIA. The lagged development of LCC in Hong Kong also denoted less population had an experience travelling with LCC, because of that, the gap between expectation and perception rises.

Through the airport expansion plans and the future development at the two airport, it is anticipated that the condition for LCCs will continue to improve in these two territories. Aviation related authorities shall also consider offering special schemes to favour the operation of LCCs, in lieu of the growing popularity of LCCs in Asia, in order to achieve a triple-win situation for the population, airport and LCCs.