Airlines to change operating models

Airlines companies across the Asia-Pacific region will experience a remarkable change in their operating models, as the line between low-cost and full-service carriers is being blurred, a report said.

Traditional network carriers have unbundled their pricing to give passengers lower fares, while budget airlines are embracing alternative approaches to their full-service models, to drive growth while maintaining premium brand images, said Glenn Darwin, director at AlixPartners, in its report on Asia aerospace and the defense industry outlook.

The latest examples are budget airlines Spring Airlines Co Ltd and China Eastern Airlines Corp Ltd. Spring Airlines started offering business class seats in September 2011 on a trial basis, as an attempt to attract more business passengers with high quality and reasonable prices, according to Li Lihua, director of AlixPartners.

Likewise, China Eastern decided to bring low-fare flights to the Chinese market by establishing Jetstar Hong Kong, a joint venture with Qantas Airways, in 2012.

"Faced with severe competition, passengers airlines are no longer competing just on price and schedules. They have to differentiate themselves by providing innovative products and service offerings, as well as efficient marketing strategies," the report said.