Thesis (M.B.A.)--University of Hong Kong, 1998. / Includes bibliographical references (leaf 108-109).

abstract: In 2004 the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Slovakia, and Slovenia joined the European Union (EU) as part of the EU's greatest enlargement to date. These countries were followed by Bulgaria and Romania in 2007. One benefit of joining the EU was the freedom for residents in the new EU member states to migrate to western European nations, notably the United Kingdom (UK). A result of this new freedom was an increased need for air travel. The intersection of the expansion of the EU with the introduction of low-cost airline service was the topic addressed in this study. Yearly traffic statistics obtained from the UK Civil Aviation Authority were used to formulate a trend line of passenger volume growth from 1990 to 2003. Through a time series regression analysis, a confidence interval was calculated that established that, beginning with the year 2004, passenger volumes exceeded the probable margin of error, despite flat population growth. Low-cost carriers responded to these market conditions through the introduction of new flights across the region. These carriers modeled themselves after Southwest Airlines, a strategy that appeared to be more effective at meeting the needs of the post-accession travel boom. The result was a dramatic rise in both passenger volumes and low-cost airline routes in an east-west direction across the continent. / Dissertation/Thesis / M.S.Tech Technology 2012

The principal aim of this thesis is to identify and analyse inovative approaches and procedures of low-cost airlines that brought air transport to a broader mass of customers. This work also explores marketing specifics of the airline industry, discusses ticket pricing and ticket distribution issues, advertising opportunities, quality and product range issues. Later, it deals with enviromental challenges facing aviation. The final section formulates recommendations that will enable further revenue increases for low-cost carriers.

The US airline industry is going through a period of consolidation through mergers between leading airlines. A number of recent mergers have been approved by the Antitrust Division of the Department of Justice (DOJ) based on the presence of Southwest Airlines in merger-affected markets. In doing so, the DOJ makes a key assumption that Southwest is unresponsive to the reduced competition when its competitors merge. We find that Southwest raised fares more in markets where Delta/Northwest and US/America-West used to operate jointly between 2005-2010. However, Southwest's fares either decreased or rose by less if facing direct or adjacent competition from a low-cost carrier (LCC). Furthermore, Southwest is now merging with AirTran Airways, its biggest LCC competitor. This implies that the DOJ should not rely on Southwest Airlines as a post-merger deterrent to fare increases. / Graduation date: 2012