Kun Shan University of Technology Department of Applied English

The Survival Strategies of Mainstream Airlines to Budget Airlines in Asia

Lin Dai-Yi. Lin Yu-An. Wu Chin-Chueh. Hung Hsiao-Chien. Lu Chia-Heng. Hsu Chi-Lin. Fan Sheng-Tai. Yeah Shih-Hung.

InstructorYang Chi April, 2005

:_____________________ _____________________ _____________________ _____________________ _____________________

Acknowledgement

We would like to acknowledge the contributions as follows: 1. Project instructor Yang-Chi of Kun Shan University of technology, we are very appreciate you provides us all kinds of consultation when doing this project. 2. Obliged Tainan Airport careerman Mr. Lee allow us to have a brief interview, helped us derive the project order. 3. 4. Honorable judges offering precious times listen to our presentation. Every member of our team, each of everyone learned the importance to respect the different opinions, the memorable times we gave out and shared.

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Abstract
What can you do in 24 hours? Watch 10 classical movies back to back, or just spend another day as usual? What about fly to another country? Our grandparents would have taken two months on a steamer for the same journey. Airline business and travelers has grown rapidly in the past 20 years, and the airline history changes dramatically. Most people choose to take the mainstream airlines when they go abroad in the past, but the expense on tickets are usually a burden for many people, but the rise of budget airline solved this problem. American Southwest Airline Company is the first one, and also a successful budget airline first founded in1970. It has been flying for years. Most low-cost airlines expertly mimicked American budget airlines such as Southwest and ValuJet (now AirTran). The essential elements of the business model were: a single-type fleet of planes; fast turn-rounds; use of cheap secondary airports, no frills, even how wild the seats also depends on how much we paid. Taking budget airlines are beneficial for those whom under the budget and dont need fancy facilities on the plane. In the contrary, full-service airlines provide a different experience for travelers, when money is not an issue, people may consider taking mainstream airlines. Asia now absorbs another Western trend, no-frills budget air carrier. Even the first private budget airline in China- Okay Airlines took wing on March12, 2005, ending the China government's monopoly in the civil-aviation sector. Asia, especially in China, will soon be one of the biggest markets. It is beyond all doubt that there will be a battle royal between all airline industries.

Key Words: airline industries, budget airlines, airline survival strategies.

TABLE OF CONTENT Page Acknowledgements i Abstract (Chinese) ii Abstract (English) iii Table of Contents iv List of Figures viii List of Charts xiv

CHAPTER ONE 1.1 Motivation 01 1.2 Purpose 03

INTRODUCTION 01

1.3 Limitation of the study

03

CHAPTER TWO

A REVIEW OF CHANGING ENVIRONMENT 04

2.1 Aviation Development in Asia 04 2.3 Major Changes 04 2.4 Survival in Crowded Skies 05

2.4.1 Quality Passenger Services 06 2.4.2 Outstanding Flight Services 06 2.4.3 Cultivating Leadership in Market 07 2.4.4 Prioritizing Flight Safety 2.4.5 Successful Hubs 2.4.6 Promotions 09 09 08 08

2.5 Mainstream Airlines in Asia

CHAPTER THREE

SUDDEN ARRIVALS OF BUDGET AIRLINES

12

3.1 Defining a Budget Airline 12 3.2 The origin and development 13 14

3.3 Budget airlines Secret Weapons 3.3.1 Simple fare structure 14 14

3.3.2 No extra on-board service 3.3.3 Unreserved seating 15 3.3.4 Quick Turnaround time 15

3.3.5 Staff working in multiple roles 3.3.6 Single aircraft type 15 3.3.7 Single passenger class 16 3.3.8 Direct channels 16

15

3.3.9 Ticketless system 16 3.3.10 Simple fare scheme 16

3.3.11 No out-sourcing of non-core business 17 3.3.12 Fares based on supply-and-demand principle 3.3.13 Loosen booking limit 17 3.3.14 Secondary airports 3.3.15 Low labor cost 18 17 17

3.3.16 Historical Review18 3.3.17 Southwests Legend 19 20

3.3.18 The first budget airline is Asia

3.3.19 Budget Airline in Asia: Current Situation 21 3.3.19.1 United Arab 3.3.19.2 India 22 3.3.19.3 Indonesia 22 22

3.3.19.4 Japan 24 3.3.19.5 Pakistan 24 25

3.3.19.6 Philippines 3.3.19.7 Singapore 25 3.3.19.8 Thailand 26

CHAPTER FOUR

ANALYSIS OF MAINSTREAM AND BUDGET

AIRLINES BUSINESS 28 4.1 What is SWOT Analysis 28 4.2 SWOT Analysis of mainstream airlines 29 4.3 SWOT Analysis of budget airlines 36 4.4 Conclusion 42

CHAPTER FIVE AIRLINES 43

STRATEGIES CARRIED OUT BY MAINSTREAM

5.1 The importance of marketing 43 5.2.1 The concept of the Marketing Mix 44

5.2.2 The brief definition to the 4P of marketing mix 44 5.3 Product improvement 5.3.1 Staff service 46 5.3.2 Using newest aircraft type emphasized on economy and business class 5.3.3 Airborne Internet Service 5.3.4 Elegant food provided 48 5.4 Price improvement 49 5.5 Promotion improvement 49 5.6 Place improvement (marketing channels)51 47 46 45

5.6.1 Subsidiary budget airline funded 51 5.6.2 Alliance funded 51

5.7 Self-improvement instead of vicious competition 52

CHAPTER SIX

CONCLUSION 53

REFERENCES

57

APPENDICES

63

Appendix A: Check List 63 Appendix B: Seating Plan of Boeing 747 Appendix C: Seating Plan of Airbus A330 67 68

Appendix D: Major Mainstream Airlines in Asia 69 Appendix E: Complete list of Budget Airlines in Asia 70 Appendix F: Where do cheap Asian airlines fly to 71 Appendix G: Questionnaire 72 Appendix H: Tips for obtaining cheap airline74 Appendix I: Airport security issue 77 Appendix J: Top 10 airline safety tips 79 Appendix K: Appendix K: Top 10 baggage tips 81 83

Appendix L: 10 tips for travel under increased hijack threats Appendix M: Thais Royal First Class Lounge 85

LIST OF FIGURES Chapter 3 Page 16

Figure 3.1 Boeing 737-400 (Source: http://www.boeing.com) Chapter 3 Page 16

Figure 3.2 Airbus 320 (Source: http://www.airbus.com) Chapter 3 Page 16

Figure 3.3 Cabin of JetStar Asia (Source: http://www.jetstarasia.com)

Chapter 3 Page 16

Figure 3.4 Cabin of JetStar Asia (Source: http://www.jetstarasia.com)

Chapter 4 Page 32 Meal type: Dinner - Steamed fish, vegetables steamed, rice with egg, a soft bun, garnishing for a green salad with tomatoes. Crackers and cheese.

Figure 4.1 Meal on Singapore Airlines (Source: http://www.airlinemeals.net)

Chapter 4 Page 32 Meal type: Dinner - Pork with Rice, Warm Roll, Chinese Salad, Mango Jell-O, and Fresh Fruit

Figure 4.2 Meal on China Airlines (Source: http://www.airlinemeals.net)

Chapter 4 Page 39 Meal: Bread and water

Figure 4.3 Meal on Jet Airways (Source: http://www.airlinemeals.net) Chapter 4 Page 39 Meal: Western Sandwich (Cost 80 Baht).

Figure 4.4 Meal on Air Asia (Source: http://www.airlinemeals.net) Chapter 5 Page 44

Figure 5.1 Marketing Mix (Source: http://www.netmba.com)

Chapter 5 Page 46

Figure 5.2 Stewardesses on Singapore Airline (Source: http://meowfly.myweb.hinet.net) Chapter 5 Page 46

Figure 5.3 Stewardesses on Emirates (Source: http://meowfly.myweb.hinet.net)

Chapter 5 Page 46

Figure 5.4 Stewardesses on Thai Airways International (Source: http://meowfly.myweb.hinet.net) Chapter 5 Page 46

Figure 5.5 Stewardesses on Malaysia Airline (Source: http://meowfly.myweb.hinet.net)

Chapter 5 Page 46

Figure 5.6 Airbus 340-500 (Source: http://www.airbus.com )

Chapter 5 Page 47

Figure 5.7 New Executive Economy Class (Source: http://www.airbus.com )

LIST OF CHARTS Chapter 3 Page 19

PASSENGERS IN MARKETS WITH LOW COST SERVICE (Number of total Passengers For 1988, 1993, 1998, 2003)
Passengers (000,000)

200 100 0

32.5

51.5

91.3

116.2 Passengers

1988

1992
Year

1994

1995

Chart 3.1 Number of total Passenger (Source: Federico Pena (1995), Statement of the secretary of transportation.)

Chapter 3 Page 19
PASSENGERS IN MARKETS WITH LOW COST SERVICE
(Percent of total Passengers For 1988, 1993, 1998, 2004)

Percent Total

50 0 13.7 1988 21 1992

Year

31.5 1994

38.6

% Total

1995

Chart 3.2 Percent of total Passengers (Source: Federico Pena (1995), Statement of the secretary of transportation.)

Chapter 3 Page 19
DOMESTIC PASSENGERS (Markets With Low Cost Carriers vs Other Markets For 1988, 1992, 1994, 1995) Passenger (000,000) 400 200 0 1988 1992 Year 1994 1995 Low Cost Other Total

Chart 3.3 Markets with Low Cost Carrier VS Other Markets (Source: Federico Pena (1995), Statement of the secretary of transportation.)

Chapter 3 Page 20
Market Share of Southwest airline in 2002

Other airlines, 31% Southwest airline, 69%

Southwest airline Other airlines

Chart 3.4 Market share of Southwest airline in low cost carrier (Source: Southwest Annual Report 2003 )

Questionnaire Charts (according to Appendix G)

Question 1 and 2: Sex and Age range distribution

abov age range 51-60 41-50 31-40 26-30 18-25 0 10

numbers

Total numbers 44 Female 45 Male

20

30

Chart 4.1 Breakdown of Responses to Question 1 and 2

Question 4: Which airline do you usually fly with?

Budget Airline 30% Mainstream Airline 70%

Budget Airline Mainstream Airline

Chart 4.2 Breakdown of Responses to Question 4

Question 14-1: How would you rate the budget airline in terms of service?

Excellen t 7% Good 33%

Poor 10%
Poor Fair Good Excellent

Fair 50%
Chart 4.3 Breakdown of Responses to Question 14-1

Question 14-2: How would you rate the mainstream airline in terms of service?

Excellent 11% Good 27%

Poor 7%
Poor Fair Good Excellent

Fair 55%

Chart 4.4 Breakdown of Responses to Question 14-2

Question 15-1: How would you rate the budget airline in terms of convenience?

Excellent Poor 10% 7% Good 23%

Poor Fair Good Excellent

Fair 60%
Chart 4.5 Breakdown of Responses to Question 15-1

Question 15-2: How would you rate the mainstream airline in terms of convenience?
Excellent Poor 6% 7% Good 29% Fair 58%
Poor Fair Good Excellent

Chart 4.6 Breakdown of Responses to Question 15-2

Question 16: What concerns you most when you think of choosing the airline?
Others 4% Convience 25% Money 32%
Money Service Convience Others

Service 39%

Chart 4.7 Breakdown of Responses to Question 16

CHAPTER ONE INTRODUCTION

1.1 Motivation Nowadays people fly in and out countries frequently, the times that travelers spent abound on airline tickets were gone, the rose of budget airlines changed the situation. The success of these no-frills carriers is based on pent-up demand for cheap domestic or international fares. A 2004 survey held by SKYTRAX revealed two interesting, but total opposed results about costumers favored airlines: JetBlue Airways voted the world's Best Low-Cost Airline for 2004, ahead of Virgin Blue in 2nd and Southwest Airlines 3rd. What was also surprising, is that JetBlue was also voted 2nd Best Airline for North America - against it's full service rivals - and Virgin Blue also achieved similar recognition by taking 3rd place in the Best Airline Australasia category (behind Qantas and Air New Zealand)". The growing global interest in low-cost airlines was duly recognized in the final Survey results, with Low cost point-to-point airlines have lured millions in the West, particularly business executives, and it is thought the potential in Asia is even greater. There are over 130 cities with a population above 1 million people, a rising middle class population and these factors seem favorable for the rise of budget carriers. While top 10 airlines1 of the 2004 (among 7 Asian airline companies), the 2004 top airline, Singapore Airlines, only followed by some considerable challenges by Emirates (2nd) and Cathay Pacific (3rd). This survey seems point out the implication of passengers conscious of the quality by airline.
1

TOP 10 AIRLINES 2004 ARE 1. Singapore Airlines. 2. Emirates. 3. Cathay Pacific. 4. Qantas Airways. 5. Thai Airways. 6. British Airways.7. Qatar Airways. 8. Malaysia Airlines. 9. Continental Airlines.10. ANA All Nippon Airways (Numbered 1,2,3,5,7,8,and 10 are located in Asia)

In order to be more dominating in the sky, many of the old network carriers hived their own subsidiary company and some allied. In this open market, every airline attracts consumers at all rates, APEX2, even by price cutting. In addition bilateral agreements between many airlines make it hard for newcomers to get a piece of the action. Governments in the region still control many of the major players and regulate airline consolidation and foreign investment. Most air travel observers believe that there is a place for the new airlines, particularly in secondary or short-haul routes. A slew of new low-cost airlines are attacking big incumbent network carriers, by virtue of low-ticket fare, it has attracted jillion passengers. Take airplane is not expensive anymore, but no extra services on board, passengers have to bring their food and drinks, not everyone accept this kind of flying experience. What shape the industry will take after this shakeout remains unclear, but one thing seems certain: passengers are already being offered more choices and better prices. All kinds of airline business are now sharing same problems: High fixed costs and low marginal costs, regardless of the number of tickets they sell, the profits are limited, and since September 11th 2001, the six largest network carriers have slashed costs and reduced capacity by one-fifth as they have struggled to stay financially solvent. Even before the terrorist attacks. However, budget airlines were on a roll. Since 2000 they have expanded capacity by 44%. Low-cost carriers currently have 400 orders out for new planes, whereas the old network carriers have only 150 planes on order. (Turbulent skies. The Economist print edition .2004) In order to stimulate consumption, all airlines are struggling, what can they do to draw customers attention? The answer all comes to one way: Through technology. Mainstream airlines lay stressed on their safe, wild body flight, up-market feast

ABBREVIATION FOR Advance Purchase Excursion: a system of cheap travel tickets which must be bought a particular number of days before traveling

Budget air carriers, like Southwest Airline, offering exclusive deals through free downloadable software called Ding!, provide a quicker way to notify customers about its cheapest fares, it can be found as long as log on to their company's Web site. In this congested sky, the uncertain parameters effect, such as economy, international situation, disease, potential threats, such as terrorist attack to all airlines, who can or who will survive, leaves them now groundbreaking obstacles. The research is based on those factors above, to analysis the airlines foresight and provides integration cognition.

1.2 Purpose Based on the motivation mentioned above, proposes of this research are: Give the research result of the changing airlines history. 1. To compare the differences between tradition airlines and budget airiness management. 2. To define SWOT and compare the analysis of the traditional airlines to that of a budget airline. 3. 4PS Marketing Mix helps generalize the possible administration policies for all airlines. 4. To dissect the survive solutions for all kinds of airline industries.

1.3 Limitation of the study 1. Due to the absent of major budget airline industry in Taiwan, comparison between local and other counties is untoward. 2. The research is not considered all airline industries profits.

CHAPTER TWO A REVIEW OF CHANGING ENVIRONMENT

In this chapter, we will discuss the mainstream air transports major historically changes and operating characteristic, also giving information about airline companies in Asia.

2.1 Aviation Development in Asia During the 1980s and 1990s, strong economic growth led to rapid increase in the demand for air travel in Asia Pacific. At the time, it was predicated that the demand for air travel in Asia Pacific would grow by 7.4 percent per annum between 1995 and 2010. Also, by the year 2014, over half of all air passenger movements would be associated with travel to, from and within the Asia Pacific (Oum, 2000). The statistics show that the market of air transport industry in Asia will be expected to still rise in the followings years.

2.2 Open skies Policy Concerning about the origin of air travel in Asia, we have to connect with the open skies policy in the U.S. which has been promoting open skies agreements with many Europe nations since 1992. Having these successful experiences with European countries, the U.S. shifted its focus on Asia in 1996 with similar strategies towards Asia countries in order to increase more benefits. During this period, the most significant change in Asia was the formation of policy to operate negotiations of open skies and go through the agreements of strategic alliances. These developments have made strong impact on the aviation industry and air carriers in the Asia, also led

governments and airline companies to face increasing competition in international airline markets. As a result of many countries relax control on foreign currency spending and travel restriction, the Asia region has recorded the highest air traffic growth rates in the world during the last twenty years. This is how the Asian air transport industry can flourish in the present economic climate.

2.3 Major Changes In the last decades, most of Asian countries have reorganized their airlines futures after government liberalizing their domestic markets, increasing the number of carriers in the market place, and privatizing national carriers. For example, Japan allowed All Nippon Airways (ANA) and some small carriers to enter the international market to compete with Japan Airlines (JAL). The Chinese government divided the Civil Aviation Administration of China (CAAC) into six trunk carriers, and allowed a large number of regional carriers to enter the market. Most of the Asia countries have attempted to develop continental super-hubs within their respective territories. All of the new large scale airports such as Hong Kong International Airport, Seouls Inchon, Shanghais Pudong, Osakas Kansai, Taipeis CKS airport, Singapores Changi Airport, are attempting to become the super-hub of the region.

2.4 Survival in Crowded Skies The airline industry is vital for the Asia Pacific economies. Since the fierce struggles flourish in the present flight market, challenging situation has become a motive power pushing to be outstanding. How to survival in this competitive world has been an important issue, aiming to become of the top class airline over the world is the main goal of most airline companies which in general categorized on the following operating characteristics.

2.4.1 Quality Passenger Services People have living in a high level life since the economic growth. How to satisfy customers expectations and create additional values for them is now an essential element of a service industry. Mostly, the airline companies would think from the customers standpoint to establish quality services. To fulfill customers satisfaction, for example, for people who use internet frequently, airline companies provides B2C service (Business to Consumer service) on the internet, such as the China Airlines first provides electronic tickets in which customers can make reservations for seats and elect special air meals on the internet; Cathay Pacific Airways offers passengers NETVIGATOR in flight to send an e-mail before touching down. For those who enjoy food, most of the airline companies prepare a variety of tastes to meet different needs, such as religious and dietary needs for diverse religious faiths. Under this great competition, in order to become outstanding from the others, providing service straight from the heart is undoubtedly, such as the Singapore Airlines is generally acknowledged as the best quality service airline company in Asia.

2.4.2 Outstanding Flight Services 1. Air traffic control service It is in order to provide safe, efficient and orderly air traffic control service in accordance with international standards and rules.

2. Flight information service It is to provide aircraft, airports and airlines with relevant domestic and international

real-time or long-term flight information.

3. Aviation weather service It is to provide current weather condition of airports, short-term weather forecast, satellite imagery and en-route weather forecast, etc.

4. Aeronautical telecommunications service It is to provide services including surface and ground-to -air communication, the former for passing flight movement, weather data and flight information; the latter for aircraft to communicate with ground handling service.

2.4.3 Cultivating Leadership in Market Acquiring efficient, high-capacity aircrafts to create an impeccable transportation flying formation seems to be an essential factor to operate an airline company. According to the data listed on each website of airline company shows that the aircrafts are based on different purposes of using and the numbers of carrying passengers. Mostly, Boeing 747 series which are known as the largest commercial jetliners are been chosen for many airline companies to serve the most popular long-haul routes. The smaller transportation such as airbus A330 is a twin-engine aircraft used for regional and medium-haul routes. Mostly, the seats of aircrafts are divided into three main classes which are based on the price level, including First Class, Business Class, and Economy Class. (see appendix B and C). In addition, the average of passenger fleets is about five to seven years and airline companies keep purchasing the modern pattern every year. All the airline companies advertised to provide more personal comfortable space and non-stop flights to be virtually any major destinations.

2.4.4 Prioritizing Flight Safety Safety is beyond all doubt the most important; Well-maintained is the first step of guarantee safety. Safety is extraordinary measures to ensure a fair competition in achieving a gradual, progressive, orderly and safeguarded liberalization of the international air transport market. Therefore, air transport industry emphasizes the flight safety and keeps in good repair. In Taiwan, EVA Air focus on flight safety has gained worldwide recognition as zero accident of using technologically advanced flight analysis equipment such as Aircraft Condition Monitoring Systems (ACMS) and Aircraft Communications Addressing & Reporting Systems (ACARS) to monitor aircraft operations, engine conditions and flight performance. So do other companies to equip new systems and

provide higher service of safety and security. In addition to the fundamental and conventional requirements of safety, on-time performance and comfortable flights will be expected to provide services that meet the individual needs of each customer in a timely manner.

2.4.5 Successful Hubs The development of air transport hubs and gateways have been competitive because of the economic benefits associated with successful hubs. All the airline companies are trying to serving multiple markets through a consolidation point and direct point to point services. For historical and political reasons, most major Asian carriers have one-hub networks centered at a home countrys airport and connect with about thirty to forty different countries. Moreover, the established hubs are always located on the traffic center of the capital city in a country where the passengers can easily start their traveling when landed. However, the anchorage for a national hub

and gateway is higher than other place, such as outskirt.

2.4.6 Promotions The international air travel companies cooperated with travel industry to provide multiple and scheduled journey for fulfilling customers choices. This kind of promotion ways consist of aircraft tickets in different class level, hotels in different price, and both short-term/ long-term touring. Passengers can make elections depending on their own needs and economical considerations.

2.5 Mainstream Airlines in Asia Since the changing of the government aviation policy in 1941, Philippine Airlines became the first Asia Airline, and followed by the air companies flourish in Asia. Nine popular airlines which have been recognized with famous logo are listed below.

Company Name

City Found Year Hong Kong 1946

Destinations 85 cities in 34 countries

Goal Service It's not just about the big picture. It's the little things we remember.

Cathay Pacific is a home-grown Hong Kong brand recognized around the world. Reputation for innovation, sound management and quality service helps to burnish Hong Kong's image overseas. Every year, we carry one million tones of cargo, making Cathay Pacific the world's sixth-largest cargo carrier by volume. Our fleet of 87 wide-body aircraft is one of the youngest and most modern in the skies. Taiwan 1959 48 cities in 22 countries Continuous improvement takes you to the spacious sky.

China Airlines has grown rapidly since it launched in 1959 with just two amphibious airplanes. Today its fleet has grown to include more than 50 Boeing and Airbus aircraft. By the year 2003, China Airlines operated 80 aircraft, the majority of them newly purchased. Meanwhile, China Airlines is expanding its routes to 50 cities in 25 countries around the world. In 1993, it became the first of Taiwan's airlines to list on

the stock exchange. China Airlines has derived its strength from the concerted effort of all of its staff. Teamwork is the key, and that is born from the synergy of every action of every employee. Taiwan 1989 33 cities in 16 countries Everyone onboard EVA feels at home. Just Relax, Your Home in the Air. Within the embrace of the Evergreen Group's corporate culture and its encouragement of Innovation, Challenge and Teamwork, EVA Air formed its own core values promoting safe and punctual flights, friendly and professional services, and innovative, efficient operations and has flourished. EVA led the airline industry in 1992 with the introduction of our remarkable Evergreen Deluxe Class, a cabin service concept that has been adapted by other carriers around the world in the years since. EVA Air listed shares on the Taiwan Over-the-Counter market in 1999 and transferred to the Tai EX market in 2001. Registered capital amounted to NT$40 billion (US$ 1.2 billion) in 2004 and capital received reached approximately NT$30 billion (US$899 million). Singapore 1947 90 cities in 40 countries Experience a whole new way to fly in comfort with the best service

Singapore Airlines has grown from a regional airline into one of the world's leading passenger and cargo carriers. Today, SIA is internationally recognised as one of the world's leading carriers. Singapore Airlines was the pioneer of inflight services such as free drinks and complimentary headsets. In January 2004, SIA's new ultra long-range A340-500 joined the fleet, and on 3 February, the Airline made aviation history when it launched the world's longest non-stop commercial flight from Singapore to Los Angeles. Japan 1951 76 cities in 30 countries Thinking and acting from the customers' standpoint

On October 2, 2002, Japan Airlines Co., Ltd. and Japan Air System Co., Ltd. started the integration of their businesses and a new JAL Group came into being. The JAL Group, which also includes JALways, Japan Asia Airways, Japan Transocean Airways, JAL Express, J-Air, Ryukyu Air Commuter, Japan Air Commuter and Hokkaido Air System, has the largest network in Japan with over 1000 domestic flights per day and over 1700 International flights per week. Korea 1969 89 cities in 33 countries Excellence in Flight Service Excellence

In 2003, KAL carried nearly 22 million passengers and in excess of 1.4 million tons of cargo to hundreds of worldwide destinations - an amazing growth of over 70 times the

number of passengers and more than 600 times the cargo carried in the airline's founding year. Korean Air's extensive route structure spans the world with one of the industry's youngest fleets. Every year, the airline makes considerable investments to modernize its fleet with the goal of using only five aircraft types by 2009. Fleet simplification and modernization eventually will reduce operating costs, improve operational efficiency and make us a stronger airline. Thailand 1960 74 cities in 34 countries The First Choice Carrier with Touches of Thai.

Thai Airways International was founded in 1960 as a joint venture between Thailand's domestic carrier, Thai Airways Company (TAC) and Scandinavian Airlines System (SAS) with the Scandinavian carrier initially providing a 30% share capital of two million Baht. SAS also provided operations, managerial and marketing expertise, with training assistance aiming at building a fully independent national airline within the shortest possible time. Thai nationals, through training and experience, were gradually able to assume full managerial responsibility and the number of expatriate staff duly reduced until, in 1987, expatriates accounted for less than one percent of staff based in Thailand. Thailand 1941 32 cities in 21 countries Its about experience We will take good care of you

Philippine Airlines (PAL) began life with a noble mission: to serve as a partner in nation-building. With this in mind, PAL took to the skies on 15 March 1941, using a Beech Model 18 aircraft amid the specter of a global war. It became Asia's first airline. PAL's excellent service has won the hearts of travelers worldwide. This trademark has distinguished it from the pack and has stood guard in an environment that has grown more competitive by the day. But PAL does not sit on its laurels. Realizing that it owes its success to its loyal passengers, PAL launched a campaign called "Call for excellence" to serve its market better. Malaysia 1947 68cities in 38 countries Going beyond expectations, Luxury is in the air.

A year after the Independence of Malaya in 1957, MAL took the next step in becoming part of the new corporate scene in Malaysia. The participation of BOAC, QANTAS, the government of the Federation of Malaya, Singapore and the Territory of North Borneo launched MAL as a public limited company. By 1958, the resources that were accumulated from being a public corporation allowed MAL to acquire five more Beaver aircraft and a new Douglas DC4 Skymaster, which went on to pioneer a route to Hong Kong. This was MAL's first flight beyond Southeast Asia. Table 2.1 Mainstream Airlines in Asia

CHAPTER THREE SUDDEN ARRIVALS OF BUDGET AIRLINES

Asian aviation industries have generally offered lower fares and better service than European or American rivals, but now they are starting to catch the wave of Budget airlines, pioneered in the US and Europe, although Asia does not have an Open-Skies treaty like that in the European Union, they are generally much cheaper than American or European rivals, and there are great bargains within their own countries, especially on some domestic routes. The Asian budget airlines are sure to boom within the recently years, so in this chapter, we will discuss budget airlines from the origin and development to the operating strategies, and also list both the first budget airlines worldwide and in Asia.

3.1 Defining a budget airline Budget airlines, is so-called Low-cost airline or No-frills airline, which means the aviation industry adopts the low cost strategies in all respects of business, such as the opening of airlines, choice of secondary airport, ways of selling tickets, and on-board service. For instance, they emphasize on direct sales of tickets, especially over the Internet, wont offer complimentary meals, drinks or entertainment on the flights, or use smaller airports away from the majors to reduce their landing fees. Such a strategy will cut down the price to a lower level and then the cost they have saved will benefit the travelers, and it will help to achieve the win-win aspect. Budget airlines had changed the traditional idea of air travel, is a high level of consumption, into a speedy and economic air travel. The key problem of the budget airlines is how to tackle all kinds of measures to

reduce the cost and to be profitable with the low cost assumption. For the mainstream aviation industry, the basic unit cost standard is depending on the kilometer per seat. In general, the unit cost of the budget airlines is about fifty percent of the mainstream aviation industry or less than fifty percent. However, not all aviation industries which are offering the low price ticket will be called the low cost airline. It is confusing to distinguish from budget airlines and Low-fare Airline. They take some low price tactics to compete with budget airlines, but their cost structure still keep high level than budget airlines, and the cost structure had caused them have to divert other business earnings to maintain its regular operating. If they cant balance the income and outgoings, they will burst out the financial crisis and then announce that the company will go bankrupt. The obvious example is that the Debonair Airline in European in the late 1990. As a result of the type of the airplane is lead to the high cost structure, and Debonair is unable to make ends meet, finally it had gone bankrupt.

3.2 The origin and development Budget airlines originated from the new needs in airline market, and old airlines had been formed the monopoly of Cartel, including the fixed fee and air route. Later, America announced to remove the restrains and loosened plenty of application terms in 1978 and so did European and Australia on the year of 90s. New aviation companies were set up immediately, the fee and airline were not controlled by the government, and it depended on the market needs and power. Then, in order to cater to the more people needs, one brand-new operating model has produced, that is budget airlines. In the late of 1990 to the first of 2000, aviation industries worldwide had experienced the recession and terrorism attacking and it had caused the supply

exceeds the demand. But budget airlines are not in adversity, they seem like to be not effected by the factors at all. At present, the operating of budget airlines in European, America, and Australia are rather successful and they are looked with favor with the point-to-point travelers. The trend is even spread to Asia, including Malaysia, Singapore, and China will set up budget airlines to cater to such a trend. To confront the strong competition with budget airlines, some main aviation airlines, such as British Airways, Royal Dutch Airlines, Singapore Airlines, United Airlines, Qantas Airlines, and Thailand Airlines are joining it. According to the phenomenon, low cost operating seems like to one major way in aviation industry in the future. Not only budget airlines get a market share progressively, but also airports worldwide are raising theirs competitiveness to attract budget airlines to open their own airlines.

3.3 Budget airlines Secret Weapons The company and operating structure of budget airlines are totally different from mainstream airlines, and we list the characteristics here to help understand how to separate them. The budget airlines business design is defined by the key elements below.

3.3.1 Simple fare structure Budget airlines prefer to adopt simple fare structure, emphasize point-to-point transit, and adjust the fare with needs. It is entirely different to the mainstream airlines with offering the flexible and high fare tickets. Only supply-and-demand principle dominate the price and this makes the price attractive to frequent flyers.

3.3.2 No extra on-board service In order to archive low cost and fast turnaround time, on-board catering,

entertainment, reserved seat, more stewards and air hostess, and other complimentary services are eliminated, and replaced by optional paid-for on-board food, drink, and entertainment. And they will sell duty-exempt goods in the flight to increase income also.

3.3.3 Unreserved seating Budget airlines wont offer service for travelers to reserve the seat because it will reduce the boarding time to check the numbers and the time that ground crews have to deal with the boarding procedure. Often there is no seat allocation you just sit where you like. And they use plastic and recyclable boarding pass to save the cost. All the purpose is to simplify the procedure to turnaround fast, so there is no chance to see many people wait in line in front of the counters of budget airlines.

3.3.4 Quick Turnaround time Short flights and fast turnaround times to allow maximum utilization of planes. This makes sure the aircraft is constantly being utilized, which in turn maximizes revenues. For example, budget airline flies between Taiwan and Singapore two airlines, altogether ten hours, in a day to maximize the profit.

3.3.5 Staff working in multiple roles The employees are working in multiple roles in order to limit personnel costs. For instance, flight attendants also clean the aircraft after landing or work as gate agents to check the boarding numbers or sell meals, drinks, and duty-exempt goods after the aircraft is taking off.

3.3.6 Single aircraft type

Budget airlines are using a single type of airplane, commonly the Boeing 737-400(see Figure 3.1) and Airbus 320(see Figure 3.2). They tend to limit their aircraft types to just one or two, reduce staff training costs tremendously. This minimizes the cost of maintaining different aircrafts, and brings economies of scale when buying parts for airplane repair in large number.

3.3.7 Single passenger class As a result of low cost strategies, budget airlines wont set business class, but single economy class to have more travelers. Besides they usually narrow the seat space to contain more seating to fully use the airplane cabin. (see Figure 3.3 and 3.4)

3.3.8 Direct channels Budget airlines emphasize on direct sales of tickets, especially over the Internet. People can purchase the ticket by calling or going to the airline, or going on the exclusive website and paying the fare by credit card. Budget airlines are avoiding fees and commissions paid to travel agents and corporate booking systems, or other middle men In addition, there is a usual way to book the seat by mainstream airlines computer reservation systems (CRS), but its cost is high, budget airlines are keeping off the channel.

3.3.9 Ticketless system Travelers wont depend on the CRS, but a confirmable code from budget airlines. The operating way is to benefit both the travelers and airways because of the less paper work and the fast boarding time.

3.3.10 Simple fare scheme

There are no frequent-flyer programs (FFPs), but cheaper tickets by booking early. This is almost always the case with Budget airlines where there may only be a handful of seats available on each flight at the advertised bargain fare. That is people can obtain a real last minute bargain the general rule with airline tickets is the earlier you book the larger the saving.

3.3.11 No out-sourcing of non-core business Budget airlines are usually only operating by low cost for maintenance of airlines, for instance, the aircraft, cockpits, crews, ticket business, and marketing, but not other non-core business, such as repair, cockpit training and standby crews due to homogeneous fleet. They are to save the huge sum of maintenance facilities and training.

3.3.12 Fares based on supply-and-demand principle The price strategy of budget airlines is different from the mainstream airlines. The sooner you book, the cheaper you pay. The best price strategy there is in terms of marketing and cash management.

3.3.13 Loosen booking limit Except for the competitive ticket price, budget airlines emphasis is on non-business passengers, leisure travelers, and price-conscious business passengers to loose the use and book limit. That is travelers wont spend much money on booking the ticket.

3.3.14 Secondary airports Budget airlines are using less congested secondary airports or the corners of

major airports to avoid air traffic delays and taking advantage of lower landing and parking fees. Passengers are sent to their destinations by shuttle buses.

3.3.15 Low labor cost The labor cost of Budget Airline is usually lower than the mainstream airlines, maybe only about forty percent of them (Anon, 1997). Due to many reasons as the staffs are younger, there are no additional costs on senior staff or those retired staff.

3.3.16 Historical Review A large number of new airlines attempted to break into the airline industry immediately following domestic deregulation, but virtually all eventually met with failure or were acquired. What followed was a period dominated by large network carriers, dominance that appeared impenetrable until Southwest Airlines altered the landscape of domestic airline travel. During this period the industry experienced extensive consolidation as carriers merged or were acquired in the process of creating geographically broad hub-and-spoke network systems. This consolidation was not offset significantly by new entrant activity. Indeed, we saw virtually no new entrants for a period of several years. One consequence of this was concern by some industry observers that a small number of network airlines, perhaps as few as three, were so dominant that domestic competition was threatened. Although for some time contrary evidence had existed, in the form of Southwest Airlines, the fact that for years this carrier alone came forward to successfully challenge the large network airlines was itself a source of some concern. By the end of 1992 Southwest was still the only low cost carrier, but it had expanded to the point that its markets share reached 21 percent of domestic passenger traffic, compared with 13.7 percent four years earlier. And Southwests very low

operating costs and success wherever it operated left no doubt about its ability to continue to be competitive. As it turns out, in addition to its own direct competitive effects, Southwest had another important impact. It provided a blueprint for successfully competing with large network carriers. The linchpin to this success is low costs. While a number of new entrant carriers today have different business concepts, many of the more successful have one thing in common that allows them to compete effectively. This common dominator is very low operating costs. Since early 1993 numerous other low cost carriers began service. These carriers are expanding rapidly in number and in size. By 1994, Southwest and several low cost new entrant carriers competed in markets that accounted for 31.5 percent of domestic traffic. Only nine months later, the year ended September 30, 1995, passengers traveling in markets with low cost service accounted for 38.6 percent of total traffic. This accelerating growth rate shows no signs of slowing down. (see Chart 3.1and 3.2) The dramatic relative growth of passengers traveling in markets with low cost service does not begin to measure the full impact of low cost service, which includes both strong growth in the absolute number of passengers in low cost markets, and a decline in the absolute number of passengers traveling in markets where low cost service is not available. Indeed, the strong growth of passengers in low cost markets has resulted in an increase in total passengers despite a decline in the number of passengers in other markets. (see Chart 3.3) The decline in the number of passengers that travel in markets without low cost service is just one of several indicators that the domestic industry is under increasing competitive pressures from low cost airlines.

3.3.17 Southwests Legend

Southwest Airline was founded in 1967 and the flight operations began in 1971 for flights within Texas. Their business design were offering short-trip service, low prices, high point-to-point frequencies, high punctuality, no frills: no meals, no seat reservation, and brand image: flying is fun. In 1978, they expanded to southwest and west coast after deregulation. In 1990, they expanded to Chicago area. In 1993, they expanded to Baltimore area and takeover of Morris Air in Salt Lake City. In 1990, they expanded to East coast. In 1993, they choose routes with eye to market dominance and they had leadership in 93 of 100 top markets. In 2000, they retained low unit costs (costs per ASM): 7.66 cents in first nine months vs. 7.73 cents. After September 2001, conservative capacity adjustments compared to significant capacity reductions of competitors leads to gains in market share. The net profit of US$ 413million in 2001 is 34% lower than in 2000, but Southwest Airline is the sole profitable US airline in 2001. In 2002, Southwest Airline intended to create 4.000 new jobs. And now, Southwests success is reflected in its value performance. Southwest Airline has become the airline with the highest stock market value in US stock market. (see Chart 3.4)

3.3.18 The first budget airline is Asia The first Budget Airline in Asia, AirAsia, is based in Malaysia. Originally founded by a government-owned conglomerate DRB-Hicom, the heavily indebted airline was purchased by former Time Warner executive Tony Fernandes's company Tune Air Sdn Bhd for the symbolic sum of one ringgit on December 2nd, 2001. Fernandes proceeded to engineer a remarkable turnaround, turning a profit in 2002 and launching new routes from its hub in Kuala Lumpur International Airport at

breakneck speed, undercutting former monopoly operator Malaysia Airlines with promotional fares as low as US $2.50. In 2003, AirAsia opened a second hub at Senai Airport in Johor Bahru near Singapore and launched its first international flights to Indonesia. As of December 2004, AirAsia and its associated companies operated twenty-six Boeing 737-300 flights to Macau started in June 2004. In December 2004, AirAsia's Indonesian associated company AWAIR was relaunched with Jakarta as its hub. AirAsia also ordered 40 Airbus A320 to replace their ageing Boeing 737-300 fleet and the first Airbus A320 is expected to arrive in January 2006. AirAsias airline destinations are Brunei, Alor Star, Johor Bahru, Kuala Lumpur, Kota Bharu, Kota Kinabalu, Kuala Terengganu, Kuchimg, Labuan, Langkawi, Miri, Penang, Sandakan, Sibu, Tawau, Bangkok, Hatyai, Phuket, and Singapore. Most destinations are in South-east Asia. Although AirAsia only has being operating the business for about four year till now (2005), 1 million passengers traveled per year. AirAsia also claimed their operating cost is lower than other airways in Asia, for about a half of percent, therefore, AirAsia can offer the affordable trip for the Malaysians or other countrys citizens in South Asia.

3.3.19 Budget Airline in Asia: Current Situation As spring turns to summer, the low cost airline industry is really starting to boom in the countries of South, Southeast and Northeast Asia. Japan, India, Malaysia, Thailand, Singapore and Indonesia are among the front runner nations to already have airlines operating a low cost model. So we list the following guide to show where the budget airlines currently operating in each Asian country and which international

routes they fly.

3.3.19.1 United Arab Air Arabia Air Arabia is a regional low cost airline based in Sharjah in the United Arab Emirates, which has unleashed a new concept of air travel to the region focused on online booking and value for money traveling and operates a single type of aircraft, the Airbus A320, with the first flight on 28 October 2003. The destinations are Aleppo, Alexandria, Assiut, Bahrain Beirut, Colombo, Damascus, Dammam, Doha, Jeddah, Khartoum, Kuwait Muscat, Riyadh, and Sana'a.

3.3.19.2 India Air Deccan Air Deccan is a unit of Deccan Aviation Private Limited, India's largest private heli-charter company, with a modern fleet of ATR-42-320 aircraft. Formed in 1995, Deccan Aviation Private Limited has carved a niche for itself in the Indian aviation scene with its reputation for providing speedy and reliable heli-services for company charters, tourism, medical evacuation, off-shore logistics and a host of other services. The vision is to be the preferred airline of air traveler in India. The destinations are Bangalore, Belgaum, Chennai, Coimbatore, Goa, Hubli, Hyderabad, Madurai, Mangalore, Tirupati, and Viaywada.

3.3.19.3 Indonesia Citilink Get Simplicity and Fly, thats what you feel with the Citilink. It is a brand new service from Garuda Indonesia, started from on January 26th, 1949, that connects

some cities point-to-point using Boeing B737 Aircraft. Citilink primarily serves some routes that have not been served by Garuda Indonesia. The nature of the service provided by Citilink is quite different if compared with regular Garuda Indonesia Flight, because it's intended to optimize the B737 operations and to perform a low cost operation system. The result of this program could be enjoyed by end user in terms of lower Airfare. The Airline and its subsidiaries operate over 100 aircraft, carry over 10 million passengers a year and employ upwards of 25,000 people. Garuda itself operates 55 aircraft, many the latest models available, carries almost six million passengers a year and employs almost 15,000 people. The destinations are Balikpapan, Cengkareng, Denpasar, Gorontalo, Jakarta, Jogjakarta, Kendari, Makassar, Mataram, Palu, Pontianak, Semarang, Surabaya, and Tarakan.

Lion Air Lion Air was legally set up in October of 1999 and its success is owed to their efforts in catering to the mass market. They are insisting on one belief, We make people fly, to keep Lion Air at the forefront of the airline industry. Lion Air has a fleet of 24 aircrafts consisting of nineteen MD80 series and five feeder aircrafts of DHC-8-301. Lion Airs fleet of aircrafts mainly comprises of the MD8os because of its efficiency and convenience which is in keeping with Lion Air's low fare scheme. The destinations are Mataram, Ambon, Banjarmasin, Balikpapan, Batam, Jakarta, Yogyakarta, Kualalumpur, Manado, Medan, Pekanbaru, Palu, Singapore, Solo, Surabaya, Makassar, and Mataram.

Merpati

Merpati is a Budget Airline operation out of Indonesia. The Asian airline destinations are Balikpapan, Bandarlampung, Bandun, Banjarmasin, Batam, Bengkulu, Biak, Bima, Denpasar, Gorontalo, Gunung Sitoli, Jakarta, Jambi, Jaya Pura, Kendari, Kupang, Luwuk, Manado, Mataram, Maumere, Medan, Padang, Palangkaraya, Palembawng, Palu, Pekanbaru, Pontianak, Semarang, Sorong, Surabaya, Tarakan, Timika, Ujung Pandang, and Yogyakarta.

3.3.19.4 Japan Skymark Airlines Skymark Airlines is a Japanese Budget Airline, which was founded in December 1996. The Asian airline destinations are Fukuoka, Kagoshima, Aomori, Tokushima, and Tokyo.

Skynet Asia Airways Skynet Asia Airways is a Japanese Budget Airline, which was founded in July 3rd 1997, with their 5 Aircrafts, Boeing's model 737-400.The destinations are Tokyo, Miyazaki, and Kumamoto.

3.3.19.5 Pakistan Air Blue Air Blue is a new Budget Airline operating in Pakistan and starting in 2004, and Air blue's fleet of next-generation Airbus A320 aircraft will offer world-class travel to many cities within Pakistan. Led by a team with decades of experience in the industry, Air blue embodies a new era in passenger air travel. Air blue has integrated unique innovations to ensure security and affordability. Among these are complete online reservation systems, online reservation hold/in person payment at various locations,

and mobile airport check in procedures. The destinations are Islamabad, Lahore, Karachi, Peshawar, Quetta, and Nawabshah.

3.3.19.6 Philippines Air Philippines Incorporated on February 13, 1995, Air Philippines Corporation started operations on February 01, 1996 with B737-200 flights to Subic, Iloilo, and Zamboanga on a Temporary Operator's Permit issued by the Civil Aeronautics Board. Their vision is to be a preferred low cost airline in the Philippines by 2005 and in Asia by 2009. The domestic routes are Bacolod, Cebu, Cagayan de Oro, Davao, Dumaguete, General Santos, Iloilo, Laoag, Manila, Puerto Princesa, San Jose-Mindoro, Tuguegarao, Zamboanga.

Cebu Pacific Cebu Pacific Air begins its operations in the North by linking two cities, Clark and Cebu, effective October 26, 2001. Cebu Pacific is among the world lowest cost, highest customer loyalty airline operators. They believe that their fundamental advantage is the Cebu Pacific Spirit shared by their dedicated team members. The Cebu Pacific Spirit is a compelling passion to treat all customers and each other with a true heart and soul for service. The destinations are Bacolod, Butuan, Cagayan, Cebu, Clark, Davao,k Dumaguete, Iloilo, Kalibo, Manila, Puerto Princesa, Roxas, Subic, Tacloban, and Zamboanga.

3.3.19.7 Singapore

JetStar Asia JetStar Asia is a Singapore-based partnership between Qantas, local businessmen Tony Chew and FF Wong and Temasek Holdings. It is regional extension of the JetStar brand, which was launched in May 2004 by Qantas as a low cost airline in the Australian domestic market, with the new fleet of A320s and Qantas airplanes. Their bold and distinctive brand is indicative of the fresh and vibrant approach toward low cost travel in the region. The destinations are Bangkok, Shanghai, Hong Kong, Taipei, Manila, Pattaya(U-Tapao), Jakarta, and Surabaya.

Tiger Airways Tiger Airways was established in December 2003, and took to the air on September 15, 2004 with the inauguration of service between Changi International Airport and Bangkok International Airport in Thailand. Tiger Airways uses a single aircraft type for operational efficiencies to lower cost and a single-class configuration, A320 aircraft of 180 seats. The destinations are Bangkok, Hat Yai, Phuket, Chiang Mai, Hanoi, HoChi Minh City, Singapore, and Macau.

ValuAir ValuAir is the region's only value-for-money budget airline which was started in Singapore by ex-Singapore Airline workers and begun operations in May 2004 with its Airbus A320's.They offer flights between their home base in Singapore and Bangkok, Hong Kong and Jakarta. They have added Singapore-Perth flights. New destinations are expected to increase within a short time.

3.3.19.8 Thailand Bangkok Air

Bangkok Airways began its air transportation service in Thailand in 1968. Due to the rapid growth of tourism and business investment in Thailand, air transportation has become increasingly important to both the Kingdom's economy and development as a major destination that hosts several million overseas visitors each year. To fulfill the demand for increased air transportation, Bangkok Airways began its operation in 1986 as the country's first privately owned domestic airline, offering scheduled flights from Bangkok. The destinations are Bangkok, Chiang Mai, Da Nang, Guilin, Krabi, Luang Prabang, Pattaya, Phnom Penh, Phuket, Samui, Siem Reap, Singapore, Sukhothai, Trat, Xian, and Xishuangbanna.

Nok Air Nok Air, was founded in 2004, is a new low cost airline registered under Sky Asia Co., a joint venture between public and private investors. Nok Air is a truly Thai low cost airline for all travelers, offering services that are the easiest and most innovative in the travel industry, while complying with the highest international safety standard.The destinations are Chiangmai, Udon Thani, Hat Yai, Phuket, and Phitsanulok.

One-Two-Go One-Two-Go was owned by Orient Thai Airlines. It flies to seven destinations including Bangkok, Chiangmai, Hat Yai, Krabi, Surat Tharni, Chiang Rai, and Phuket.

CHAPTER FOUR ANALYSIS OF MAINSTREAM AND BUDGET AIRLINES BUSINESS

SWOT Analysis is an important tool in business analysis. For this reason, we use this framework to analyze airline industry. SWOT stands for strength, weakness, opportunity and threat. It is widely used in MBA programs in business schools. In addition, it is widely used in realistic business settings, especially in big companies.

4.1 What is SWOT Analysis? SWOT analysis is a tool for analyzing an organization and its environment. It is usually the first stage of planning and helps marketers to focus on key issues. Once key issues have been identified, they incorporate into marketing objectives. It can be used in conjunction with other tools for audit and analysis. SWOT analysis can be simply understood as the examination of an organization's internal strengths and weaknesses, opportunities, and threats from competitors. It is a general tool designed to be used in the preliminary stages of decision-making and as a precursor to strategic planning in various kinds of applications (Johnson et al., 1989; Bartol et al., 1991). To be more specific, the strength and weakness are internal factors. Opportunity and threats are external factors. For example:

A new, innovative product or service The specialist marketing expertise of your company Unique location of your business operations Unique quality processes and procedures

Strength

Any other aspect of your business that adds value to your product or service.

Lack of marketing expertise for start-ups Undifferentiated products or services (i.e. in relation to your competitors)

Weakness

Bad location of your business Poor quality goods or services Damaged reputation

A developing market, such as the Internet Mergers, joint ventures or strategic alliances Moving into new market segments that offer improved profits A new international market A market vacated by an ineffective competitor

Opportunity

A new competitor in your home market Price wars with competitors A competitor has a new, innovative product or service Competitors have superior access to channels of distribution Taxation is introduced on your product or service

Threat

Table 4.1 The factors of SWOT

4.2 SWOT Analysis of mainstream airlines

 Strength Weakness Opportunity

Growing excellent flight attendants Serving the best-high quality service Receiving the best benefit Planning perfect routes Preparing foods is key factors Being the air ticket price has become a disadvantage Developing of the flight path planning Servicing in flights Being every mainstream airline company is big company Figuring out more beneficial promotional Being budget airline- taking the cheaper airplane more Being very convenient to take airplane from Taiwan to Korea

Threat

Being these people who want to save time use better Rising of the budget airline industry The opening of the Northern/Central/Southern Second Highway Coming soon of the High-Speed Rail Making the change that some other people have no All commodities are rising, including fuel

Table 4.2 SWOT Analysis of mainstream airlines

The following additional details on the mainstream SWOT: Strength All growing excellent flight attendants have a good reputation in famous the

mainstream airlines company, and each one have to nonsked year-end review, be good to stay, not good to eliminate because excellent, and good flight attendants will serve the best-high quality service. Their smiles, actions, services, and attitude will affect mainstream airline companys exist. Every month that each company wants to the employee receives the benefit; letting them work loose, have no pressure. And have to invite each elite of professional to take theirs planes. In route planning, route is a very important part to airline, because the place that flies to want most is customers wants most. Times are quick and on time and customers like more. Each airline has to valid marketing policy, and it is important to strengthen in the food and hygiene particularly. In flights most important of its quality are comfortable, clean, and can eat the delicious meals. Each one has to the rules turn the air kitchen of the perfect profession, and the taste of creating by oneself and the principle of the first and in first out, the food certainly is fresh most at any one time, the customers all can enjoy the most palatable meal. Foods are key factors in the mainstream airlines as customers like to eat and will compare the food provided among different airlines. Balance between qualities and costs are also important.

Weakness The air ticket price has become a disadvantage for many major airlines. The high cost during every flight has pushed businessmen search for bargains. Many factors lead to high cost and high ticket price. Especially, the personnel aspect, and the colleagues, and work of each section, and to the travelers interaction. There is a little,

the small problem to will examine immediately. Developing of the flight path planning is arranged well: route, times, speed. Selling price method if is suitable for customers: price, net, promotion. Servicing in flights is if perfect or polite: service, quality, sanitation, food, clerk, seat, comfort, and entertainment. Services usually cannot be seen, felt, and heard of smelled before they are purchased. It is important that the providers of service can gain possible consumers confidence. All that happy travelers wish for is getting the best service. Whatever flight attendant, service, sanitation, food is the most important thing for Hospitality Industry. (see Figure 4.1 and 4.2) China's first private airline of this era launched its maiden flight on Saturday, March 12, 2005, Page 11, taking off from the eastern city of Tianjin for Kunming in the southwest. The launch of Okay Airways Co comes amid a revolution in China's airline industry as regulators try to build up modern carriers capable of competing with bigger, established foreign rivals. Because every mainstream airline company is big company in every country, there are many competitive in airline industry. Investors own okay from Beijing and the southern financial center of Shenzhen, according to the state newspaper of China Daily. China began easing restrictions on private investment in airlines.

Opportunity Recently budget airline has been rising. We will usually figure out more beneficial promotional ways and create some activity hadnt done previously or promotional projects. The mainstream airlines can tackle this by smart ways, not just compete in price. Airfare in budget airline, Jet Star Asia from Taipei to Singapore is cheaper $3000

than the mainstream airlines, Eva Air and China Air now. So every passenger wants to take the cheaper airplane, the project is that if you buy tickets in promotion period, you can get another special gifts or coupon in the airline promotional activity. There are many preferences, especially in Evergreen Airline and Far Eastern Airline in New Year or spring vacation. The old customers can upgrade for the VIP card again, letting the customer enjoying the most top-class service, and this is the new chance. Recently Taiwanese seek for Korean destination, so Korean is famous for its sights, and food. Many travelers like to go there, and the route to Korean is added. From Taiwan to Korea is opened. For that, it is very convenient to take airplane from Taiwan to Korea. Mandarin Airlines is scheduled to begin offering regular chartered flight services from Chingchuankang (CCK) International Airport in Taichung to Seoul on October 5, 2004, corporate sources said on September 29, 2004. This service will facilitate trips to South Korea by passengers from central Taiwan, who will no longer have to head first to Kaohsiung or Taoyuan. Opened as an international airport on March 5, Chingchuankang (CCK) Airport has been ignored by most international air carriers because it is not ready to accommodate the types of aircraft commonly used on international routes. The service will also help attract Korean tourists to Taiwan and make Taichung the first stop of their Taiwan tours. Make customers can arrive the destination and customers have much satisfaction. Because these people who want to save time use better.

Threat New airlines pose serious threat the mainstream airlines for many often big in

size and the rising of the budget airline industry, so the loss of the airfare mainstream airlines. Budget airfare is so cheap, so many traveler transfer to purchase cheap tickets. Therefore the mainstream airlines are threatened by budget airline. The mainstream airlines must use more promotional activity. Although it is very cheap, its quality is not good. Uncertainties in domestic market also pose serious threats to airlines. The opening of the Northern/Central/Southern Second Highway and will be coming soon of the High-Speed Rail. These transportations would threaten the mainstream airlines owing to travelers have already chosen to take more quick transportations. In the future taking the High-Speed Rail is only 90 minutes from Taipei to Kaohsiung. It is very convenient to take this. So the time of taking the High-Speed Rail is not far away than airplanes. These transportations will threaten the mainstream airlines; the airline will be subjected to these factors. Wisdom is needed to combat newly arrivals. Make the change that some other people have no: ticket, price, service, dining, convenience, and equipment, promote sales. If it's particular, unusual, and interesting, these promotions will attract more travelers, also will not be threatened by exterior, this is the great environment to change the threat recently. Recently all commodities are rising, so fuel is, too. For example, Evergreen Airline takes this rising policy. Recently because of international crude oil, the oil price soars; influencing the airline buys the oil cost very huge, the fuel cost that adds significantly for the reflection. Because airplanes take long distance, there is much fuel in it. Its more expensive than before. Shares ended slightly lower on April 4th, 2005 as the latest increase in oil prices damped demand for stocks. The local bourse also tracked weaker regional stocks and Wall Street's decline Friday. The TAIEX closed down 8.82 points, or about 0.2 percent,

at 6,019.93. Decliners outnumbered advancers 501 to 368 with 139 unchanged. Rising oil prices sparked investor concerns over increasing inflationary pressure, which may force central banks around the world to hike interest rates more aggressively than previously thought, analysts said. Airline shares fell on April 4th, 2005 on increasing fuel costs. Eva falls -China Airlines dropped 1.5 percent to NT$16.95. Eva Airways Corp fell 1.4 percent to NT$14.35. Technology stocks were weak, led by selling in foundry stocks. Analysts said the 1.4 percent fall in the Philadelphia Semiconductor Index on April 1st, 2005 pressured local chipmakers. Taiwan Semiconductor Manufacturing Co slid 0.8 percent to NT$52.20 and United Microelectronics Corpfell 0.8 percent to NT$19. Chang Hwa down -Chang Hwa Commercial Bank fell 3.1 percent to NT$17.45 after it denied a Chinese-language newspaper report that Shinsei Bank Ltd of Japan is close to buying a stake in its operations. Overseas investors have been invited to buy a 22 percent stake in the bank as part of government efforts to improve the state-controlled lender's competitiveness and to modernize its operations. Sino Pac Holdings Co, a Taipei-based lender, rose 3.8 percent to NT$18 after Taishin Financial Holdings Co, the nation's second-largest credit-card issuer, offered to pay Sino Pac NT$23.50 for each of its shares, a 35 percent premium over Sino Pacs closing price of NT$17.35 on April 1. Evergreen Airline reported to Civil Aeronautics Administration, Ministry of Transportation & Communications. From July 1st, 2004, Taiwanese region collected the passenger transportation fuel surcharge. Fuel surcharge must threaten the mainstream airlines industry. Hearing flight crews talking about airline safety sounds like a clich. But it is undeniable that no one cares about safety issues more than they do -- because they

make a living out of doing so. We don't know how long it will take to restore people's confidence in us, but airlines will keep improving flight safety. We can't afford to let the tiny mistake destroy our hard-won achievements.

4.3 SWOT Analysis of budget airlines

Strength Weakness Opportunity

Much cheaper than mainstream airlines Simple ticket price structure Operating only one type of aircraft Saving time Saving the human recourse cost Tickets must be booked online No services for passengers who wheelchairs No free meals and drinks Stereotype of bad equipment Inventing more convenient booking system Changing the capacity Providing point-to-point service Low wages Increasing income by advertisement expenses and commission

 Threat

Providing higher services with minimalist cost Shortage of airplane Oil hike Unpredictable disaster factors

Table 4.3 SWOT Analysis of budget airlines

The following additional details on the budget SWOT: Strength Budget airlines in Asia have an advantage in that the continent has almost no interregional highways and no high-speed international rail. There is a lot of sea in between. Air travel is the only way to develop interconnectivity in Asia. In order to decrease distribution costs, the budget airlines have their ways to save the costs, for example, the booking system. The budget airlines have their own direct channels to sell tickets without a wholesaler or a ticket agent. With the advent of the Internet, many airlines are beginning to sell tickets from their Web Sites. A recent market study shows that if the airline industry had auctioned off last minute unsold seats over the Internet, total additional revenues could have exceeded $5.7 billion. And the budget airlines tend to adopt simple ticket price structure. The price structure of budget airlines is lower than mainstream airlines. It offers one-way tickets or return tickets for flexible using. Besides that, it also can change the price anytime to adapt to the needs of off-season and high season. In addition to creating lower cost facilities specifically for low-cost airlines a strategy that Singapore Changi Airport is implementing airports will begin to unbundled their services and the resulting charges so that airlines can select and pay only for those services that are required. This unbundled treatment of airport services

can reduce costs to airlines, identify unwanted airport services which can then be eliminated, and reward airlines for more efficient use of airport facilities. To keep costs of equipment down, the budget airlines industry usually operates only one type of aircraft, the Boeing 737-300 or A320, instead of different types of airplanes thus employees, spares, equipment could be replaced each other to make the training, repair be more unanimous. The reason of these aircraft are preferred is the A320 from Airbus due to its low operating cost and fuel consumption. A second choice is the B 737 ext Generation from Boeing. They can save the cost of consuming energy of changing flight and also can take the mass customers to many different destinations within 3 hours. And these aircrafts are smaller than usual, thus it can lands and takes off in the secondary airports, does not need to land and take off in the primary airports because the airport landing fees at major centers remain very high. An idiom said time is money. So the budget airlines dont have seat reservation, free seating to simplify the process, thus is rarely to see lots of customers line up in front of the counter of budget airline companies. And it is also in order to turn a plane as soon as possible. It can save about 20 minutes than the mainstream airlines because the longer the waiting time at a gate, the more it costs an airline. The more daily operations at a gate, fewer gates are needed and infrastructure costs are reduced. And the airport agencies will try to cooperate with them to provide good service. Regarding to the human resources, every scheduled flight only has 3 flight attends after the airplane lands, two of the flight attends have to clean the cabin and one collects the flight tickets for the passengers of next flight. The aircraft commanders have to clean the cabin if that is necessary. Thus they dont hire cleaners and extra workers. Besides that, as the Virgin Blue an example, there are only 3 persons to take care of the flight tickets but the average of the mainstream airlines are 50 to 60 persons.

Weakness The promotional fare must be booked online because agents are hard to find. For greater capacity, budget airlines provide only economy cabin seat (no business class) and narrow seating. In addiction, no services are provided for passengers who need connecting flights or wheelchairs. And the budget airlines do not provide frequent-flier program, in- flight meals and drinks.(see Figure 4.3 and 4.4) The service of budget airlines is simplified in order to be low cost and turning planes fast. They provide no meals, drinks and snacks for free. No seat reservation and free seating. So it only flies to destinations around Asia within four hours. The budget airlines use price as a market position. Customers may artificially relate low priced tickets with poor quality flight equipment and search for more expensive tickets that are associated with better and safer airline equipment.

Opportunity Usually the budget airlines sell tickets from their Web Sites in order to save the costs and the promotional fare must be booked online. But now Air Asia of Malaysia works with Singapore Post Office in order to let the customers buy the tickets in the post office. So the customers not only can book on line, but also book the tickets through phones or send messages from cell phones. And there is one more good way is provided to let customers to buy tickets more convenient. Basically, the smaller the airplane is, the small legroom is. But the Valuairs A320 aircraft is big different from others. It has a capacity for 162 passengers; offer passengers fixed seating and a fixed feature legroom of 32 inches- a full four inches more than what a typical budget airline offers. Valuairs assigned seating will also include three price categories: one for children, a discounted fare with terms and

conditions, and a standard fare with no restrictions. Valuair will offer passengers a dimple meal and baggage allowance of up to 20kg each. This kind of service and comfortable environment can attract more customers. As the budget airlines put together a structure of service on demand they imagine and invent the better strategy. Moving a consignment from A to B is the rock bottom easiest structure within motor freight trucking. International gateways is lacking of affordable secondary airport and the focus of the new airports on their role. The demand is there. Thus, the budget airlines choose the short haul, point-to-point service between midsize cities and secondary airports as its primary market focus to decrease the costs. The point to point service means if you are making a journey that involves a change of plane, you will have to check your luggage in for each leg of journey. In addition, with some airlines, if your firs leg is late you will not be transferred onto another plane if you miss the second. So it is wise if the passengers would check with each airline their policy on missed connections. It can insure against missing low cost connections with airlines. There are few secondary airports in major centers. For example, the Singapores Chani airport, where budget airlines now account for 7% of traffic from almost nothing at the beginning of 2004, is building a terminal just for these no-frills airlines. Non-business passengers, leisure traffic price-conscious business passengers, are in consideration of low airline fare. And, the raise of budget airlines all offer low wages and pay less airport fees. For instance, the wages of budget airlines flight attends are lower then the mainstream airlines about 60%, it could save lots of costs. Although the budget airlines do not provide meals, drinks and snacks, it is actually another way to earn money. There are advertisements of various products in side the cabin and outside the fuselage which is in order to get the advertisement expenses to increase the income; the flight attends even can have commission for

selling food and drinks on the airplanes. This profit will encourage the flight attends willing of selling products. After the 911 terrorism, the costs of the security and insurance of the mainstream airlines are rising sharply. This situation provides an opportunity of development for the budget airlines. And the latest investigation showed that there are 60% Asian travelers, which include workers, students, teachers and many businessmen, are willing to take the budget airlines to their destinations. Today, one of every seven domestic passengers is flying because of the increased competitiveness resulting from low fare service. The low fare stimulated demand has very positive implications for the airline industry labor force, and promotes substantial economic growth to the benefit of consumers, local communities, travel related industries, and the aerospace industry.

Threat As the point is mentioned above, the budget airlines use price as a market position. Customers may artificially relate low priced tickets with poor quality flight equipment. Thus, in order to have passengers confidences, the budget airlines could be forced to shed its minimalist cost structure by providing higher services such as tickets and baggage transfer. On the other hand, price is not the key to everything. People, some not focusing on price-sensitive clients, still have emotions, which can be stronger than price motivation because the pricing is not the key to medium- to long-term success. The new budget airlines starting up in Asia are facing an unexpected problem; a shortage of available airplanes. And the shortage is also pushing up leasing costs a t a time when airlines are already hurt by record high fuel prices. Lease rates have increased between 10% and 15% since the start of the 2004. Valuair, Tiger and Jetstar

Asia have selected Airbus. Air Asia is still to choose between new Boeing and Airbus planes for its expansion. Over the last six months, the situation has gone from one of oversupply for these 100 to 150 seat aircraft to one where there are very few available for lease. Current rentals for new A320 aircraft range between US$250,000 and US$350,000 a month depending on the length o the lease. The fear of an oil hike remains. And what if the unpredictable factors, like 911, the war in Iraq and the SARS strike happen again? During the sensitive time, the travelers usually choose to stay in their own countries to insure their security. Do the budget airlines can pass the difficulty with low incomes?

4.4 Conclusion In a word, the mainstream airline is a mutual competition with the budget airline. If the mainstream airline will win the budget airline, it having more creative principle of managements and promoting sales the project because the price creates the market as the masses wealth rising pretty fast in Asias booming economies. The mainstream airlines will need to adopt a new business model in order to better control prices and retain market share over the budget airlines. Although some aspects of the air cargo market notably price/demand elasticity --are not the same as for the passenger market, a solid business model can be built using budget airline principles and continuing to use new technology to drive change as soon as the benefit case exists. Whatever the mainstream airline or the budget airline, they all will bring people happier, more convenient, and faster and more comfortable transportations.

CHAPTER FIVE STRATEGIES CARRIED OUT BY MAINSTREAM AIRLINES

5.1 The importance of marketing From the chapter four, we learned that the biggest difference between budget carriers and mainstream airlines is their radically different way of working. In spite of budget airlines offer simple service with no provision for transfers and no frills such as lounges and free food and drink, their low price ticket will bring mainstream airlines into cut-throat competition. To cope with the impacts bought by the budget airlines, the Asian mainstream airlines will adopt some strategies in aspect of different concerns. The experiences of the west countries, as reported by the experts, show us that the own market will lost because of the ignorant of the developing market of the budget airlines. To the mainstream airlines, the explicit implications given by the target airlines should be the re-evaluation on market needs; on the new management; and on the future planning including the effort on the cost control. In this chapter, we mainly used the concrete strategies in consideration of the vast clients. These strategies will implement mainly based on the quality. The quality, no doubt, refers to the improvement of the air security, the aircraft equipment, and the service of the employees, and the various foods. According to last chapter, we learned that quality is the most important weapon held on the mainstream airlines. Air travel quality is a careful combination of many different product and staff service attributes. We do not care airlines on the basis of route network, fare deals, frequent flyer program or other commercial factors - we care the "actual" standards of product and service they deliver to customers, in both visible and invisible. Meanwhile, we take advantage of the idea Marketing Mix to classify them into the understandable and

organized topics. We believe that the marketing rule applied could effectively catch up the impact brought by budget airlines.

5.2.1 The concept of the Marketing Mix A marketing mix is a set of marketing tools that a company used to direct its marketing objectives in the target market. (see Figure 5.1) The major marketing management decisions can be classified in one of the following four categories: product, price, place, and promotion. Some commentators will increase the mix to the 'five P, to include people. Others will increase the mix to 'Seven P, to include physical evidence (such as uniforms, facilities, or livery) and process (i.e. the whole customer experience e.g. a visit the Disney World). The term was coined by Neil H. Borden in his article 'The Concept of the Marketing Mix' in 1965.

5.2.2 The brief definition to the 4P of marketing mix Moving away from the jargon, the 4P of marketing mix simply mean:

Product- what is it and what does it do? The product is the physical product or service offered to the consumer. Product decisions aspects such as quality, brand, appearance, functionality, and service.

Price- how much does it cost for customers? Pricing decisions should take into account profit margins and the probable pricing response of competitors. Pricing includes not only the list price, but also discounts, financing, and other options such as leasing.

Place (marketing channels) - how do you get it to your customers?

Place decisions are those associated with channels of distribution that serve as the means for getting the product to the target customers. The place system performs transactional, logistical, and facilitating functions. It includes market coverage, channel member selection, logistics, and levels of service.

Promotion- how do you tell potential customers that the product/service is available? Promotion decisions are those related to communicating and selling to potential consumers. Promotion decisions involve advertising, public relations, and media types.

From table 5.1, as follow, the ingredients of the 4P are clearly listed to make further understanding of the Marketing Mix concept.

Summary of marketing mix ingredients Product Price Place Locations Logistics Market coverage Channel members Service levels Promotion Advertising Media Public relations

Functionality Discounts Appearance Quality Brand Service Allowances Discounts Financing Leasing options

Table 5.1 Summary of marketing mix ingredients

5.3 Product improvement The product is the most important aspect of the marketing mix. Products have both tangible and intangible benefits. Tangible benefits include benefits which can be measured such as the high-tech equipments of an aircraft. Intangible benefits are

benefits that cannot be measured such as the enjoyment the customer will get from the product. It is important that the product is changed as necessary to bring it up to date and prevent it from being overtaken by competitors. In the product category, we focus on the service, functionality, and quality. We believe that the mainstream airlines will step forward if they aim at these improvements based on the marketing mix.

5.3.1 Staff service It is a key to decide whether the clients will be re-take the plane at the moment they contact with the company employee. The clients might contact with the employees through phone call, internet, and the front desk. The training course, therefore, located on an important procedure before the employee working on his/her duty. In addition, we considered that it would be better if the air-attendant uniform could differentiate to different country origins. It would help the passengers around the world knowing each other through the ethnic clothing. (see Figure 5.2, 5.3, 5.4, and 5.5) Also, cabin crew can consult with doctors in case of a medical problem, preventing an unnecessary and extremely landing is a case of indigestion is mistaken for a heart attack.

5.3.2 Using newest aircraft type emphasized on economy and business class What a wonderful dream it is if we had the semi-first class enjoy as we just pay the economy or business ticket. Most airlines is planning to purchase the powerful aircraft type, which designed and emphasized on the economy and business class, to satisfy the vast consumers needs. Singapore airline (SIA), the well-known airline in the field of aviation, has unveiled the newest aircraft type to join its fleet - the ultra long-range Airbus 340-500. (see figure 5.6) The aircraft will feature just 181 seats in a spacious two-class configuration comprising Raffles (business) Class and a new

Executive Economy Class. This new SIA class of travel will offer 117 Executive Economy Class seats in a 2-3-2 configuration, with a seat pitch of 37" and a seat-back incline of 8". (see figure 5.7) It will also feature a seat width of 20", a leather adjustable headrest, an innovative leg rest and foot rest, and a 9" personal video monitor for in-flight entertainment. In addition, SIA has introduced AC power supply outlets in the Executive Economy cabin. The Business Class cabin will feature 64 of SIA's renowned lie-flat SpaceBeds in a 2-2-2 seat layout, with a larger seat pitch of 64". The SpaceBed offers a bed width of 26" and a bed length of 78", as well as an adjustable headrest, leg rest and lumbar support. The 10.4" personal video monitor will enable customers to enjoy SIA's comprehensive in-flight entertainment system in style. All seats will also be equipped with SIA's renowned in-flight entertainment system, KrisWorld, which offers over 200 entertainment options including movies, television features, music stations, CD selections, and games. This is available on the latest Matsushita System 3000 AVOD (audio video on demand) platform that enables passengers to pause, fast forward or rewind any audio or video program at will. In addition, Executive Economy Class will offer an area where customers can help themselves to an array of snacks and drinks.

5.3.3 Airborne Internet Service Most of people are tired of watching in-flight movies. Frequent travelers who cannot stand being separated from e-mail or the Internet will soon be able to access both from their seats when top regional airlines offer high-speed wireless connectivity on long-haul flights. We expect the services to be popular particularly among businessmen who have long requested such in-flight services, a spokesman for Japan

Airlines said in Tokyo. The service is, made possible by a global network of satellites, ground stations and special antennas fitted to the aircraft. Secure corporate network communications will be available, while individuals can opt to be billed by their telephone or Internet service providers (ISP) back home if the firms have arrangements with Connexion by Boeing. The most promising markets in Asia are Singapore, Japan, South Korea, China, Malaysia and Thailand. This is not only for the people in first class, but all the passengers will use it.

5.3.4 Elegant food provided To compete with the budget airline, mainstream airlines provide more exquisite and various meals for their customers. (see Figure 4.1 and 4.2)They offer more health and nutritious food. The food always with high protein, low fat and low cholesterol which makes their customers eat health and safe. Usually, they change their meals for a regular time prevents some customers who take their plane often but have the same meals. The mainstream airlines now even provide the same meal which customers only can have before in the first-class cabin, but now customers can have in economy class. For instance, Singapore Airline has specially commissioned an international panel of chefs to offer great dishes from around the world. Their talents will ensure that customer enjoy high standards of in-flight cuisine, complemented by an equally illustrious selection of wine chosen by their wine consultants. In addition, for passengers with special dietary requirements due to medical or religious reasons, they offer a wide selection of special meals that will meet customers needs. And also customers can also make a special meal request when they purchase tickets online through their website.

5.4 Price improvement

It is very important that the reasonable price is charged for a product. If the price is too high, consumers will avoid the product as they will believe it to be too expensive yet if the product is priced too low they may believe that there is something wrong with the product for it to be so cheap. Also if the mainstream airlines charge too low a price, it may not cover its costs. There are many different pricing strategies that mainstream airlines can use to decide on a price for their product including market and psychological pricing methods. The most threaten part of mainstream airlines have to face is the low price tickets of budget airline. The major of budget airline is providing low price tickets to attract more customers. However, the mainstream airlines to combat with low price they gradually reduce their ticket price. For customers, when they buy around the same price point, brand is become an issue. In equal price, most passengers might like to choose the mainstream airlines due to they can provide good service, meals, bigger aircraft and more entertainment facilities on the plane. Price, however, makes the market mess in Asia aviation industry. In different time, the budget airlines change their ticket price such as holidays or vacations. Their price will go up but lower than traditional airlines. For mainstream airlines, they should adjust the ticket price to competitive with budget airlines which is a hard task for them.

5.5 Promotion improvement Once the product has been made and the price set, it is important that potential customers are told about the product. Promotion can also be used for reassuring the consumer that the product is of good quality and persuading them to purchase the product. Sometimes, airline companies cooperate with travel agencies. Mostly the leading role is airline companies, which provide sale strategies. Travel agency is

responsible for sales and marketing analysis. It does not mean the travel agency provides fewer resources because the airline companies control the seat. Their cooperation activities are group traveling, travel ticket promotion, and special scenic spots traveling. Through the cooperation, both of them can earn lots of profits. There is another way to obtain profits. Some airline companies cooperate with the travel websites instead of travel agencies. The advantage of this is that it makes customers can buy tickets quickly and they also provide discount for customers regularly. Nowadays, people prefer buying tickets on the travel website than buying tickets form travel agency. The airlines involved say the Asia exchange will have both business-to-consumer (B2C) and business-to-business (B2B) elements and offer a variety of travel services including air travel, hotel bookings, car rentals and land tours. The B2C portion of the exchange will act primarily as an online travel agency, according to the airlines. In contrast to existing online agencies, the new exchange will cater to market-specific needs of the Asia region. The companies say that tailoring the site to the region is important given its mix of cultures and languages. The exchange is also slated to offer consumers information about travel planning with detailed customization of their preferences. The B2B portion of the project will allow travel agents to implement private-label versions of the site for the benefit of their clients. Industry analysts have observed that consumers are becoming increasingly comfortable with -- as well as dependent on -- the Internet for travel purchases. The Cambridge, Massachusetts-based research firm Forrester Research estimates that more than $29 billion in travel services will be sold via the Internet by 2003, nearly four times last year's sales. The airlines said that they welcome participation from other airlines and travel content providers operating within the Asia region. The companies also said that they have engaged the Giga Information Group to assist in the development of the exchange, and are in discussions with various

technology providers and global distribution systems (GDS).

5.6 Place improvement (marketing channels) Place decides where the product is to be sold. In terms of the mainstream airlines, it, no doubt, is necessary need more channels to sell their seat. We list the two points in consideration of the strategy to face against the budget airlines wings flying toward the Asians sky to minimize the destruction caused by budget airlines.

5.6.1 Subsidiary budget airline funded Some mainstream airlines combat with budget airlines to set up their subsidiary companies. These subsidiary companies only fly short distance and their air line are only focus on minor cities. The purpose of these subsidiary companies is restrained other budget airline rising. For example, Singapore airline has their subsidiary companySilkAir. When the airline first took to the skies, its focus was on serving an exotic array of holiday destinations around the region such as Pattaya, Phuket, Hatyai, Kuantan and Tioman. As the carrier matured, regional business destinations such as Jakarta, Phnom Penh and Yangon were added to its network, thereby broadening the airline's appeal beyond the holiday maker to include the business travelers.

5.6.2 Alliance funded Besides, several airlines companies combine as an alliance now is a tendency. Recently, the major six airlines, American airlines, Air France, British Airways, Continental Airlines, Delta Air Lines and United Airlines combine as an alliance and funded a company. Also, The Star Alliance network was established in 1997 by founding members Air Canada, Lufthansa, Scandinavian Airlines, Thai Airways International and United. Members now include Air New Zealand, ANA, Asiana

Airlines, Austrian, bmi, Lot Polish Airlines, Singapore Airlines, Spanair, TAP Portugal, US Airways and VARIG. The operation of the company is by the Internet and handles much business together. For instance, purchasing airframes and engines, purchasing fuel, and maintain of equipments. The advantage of the company can reduce the cost of every airline. On the other hand, taking any of airline companies of the alliance, customers can attain benefits. Customers can earn miles for which they can have discount in ticket next time. Also, they are access to airlines lounges and prior to departure. Providing such good service is nothing but to appeal more passengers and give a fight back to budget airlines.

5.7 Self-improvement instead of vicious competition The rising of budget airlines is a threat for mainstream airlines and they want to be a part of the aviation market. With challenge from budget airlines, the mainstream airlines want to maintain their advantages and also they are consist to make up strategies to confront. For mainstream airlines revolution is necessary which make progress in their company. As long as they do the right thing on right way, they not only can increase their turnover but restrain the growing of the budget airlines. On the other hand, competition is a good thing. Aviation industry will continue to improve their service, aircraft, and company brand. In the competition, the winner is the customers. They are benefit from the changing of airlines. Only the best airlines will be chosen by customers no matter are mainstream airlines or budget airlines.

CHAPTER SIX CONCLUSION

In the conclusion we were like to analyze the conflict between mainstream airlines and budget airlines. For mainstream airlines, they are trying to keep their own customers and make strategies to manage changing environment. Some problems exists is terrorism assassination, after 911 attack the customers are still afraid of, and the customer are keep decreasing so airline companies have to made some strategies, reduce employee numbers, close some money-losing air routes. For budget airlines they are trying to attract customers via lower ticket fee, but the problem existed is their marketing strategies. They have to absorb the customers habit trying to convince customers to believe lower price is not equal to bad service after they could own royal customer members than perhaps hold their business and extend to a stable market environment. Competition among airlines is always for customers. Customers now have more opinions. What if customer want to have better service they can pay more, in other hand, or just want have a cheaper transportation choosing budget airlines is either a good deal. The analysis of competition, we are glad to see it happened; it should be a positive situation for all of parties. Air industry is a big part of hospitality industry; Return to the foundation, in hospitality industry, the only one goal is customer first. So everything they do is to catch more customers to purchase their service. At a point of view for hospitality industry, have four characteristic.

1st, have no entity (intangible) The products of the service trade have invisible characteristics; the making of the

products is formed by experience, workflow and performance. The administrator, staff member and customer have different suggestions on the content of the products and assessment way, the products of manufacturing industry are difficult to relatively fix the price; the customer is unable to clear that grasp the value of the cost and service, the law can't offer the protection of the distribution relatively either.

2nd, the products are heterogeneous (heterogeneous) Services that not merely different service providers offer are different; the service quality that the same service provider offers in different occasions also has a difference. Is it standardizing service trade products to want, require human interaction, technical ability and make a mistake frequency take the same undoubtedly? When products and heterogeneous phenomenon of service are obvious, may service and customer expectation appear a drop, cause the customer to be unwilling to use the same product or the service again later on. If can't reach the customer's request in this product or the service, unable to use, the manpower and materials originally put into must become invalid . Because the customer's demand and invested degree are different, the service provider exposed to the customer directly must have good interpersonal relationships ability to deal with, and is fully authorized in order to take the elastic measure. Staff member's unanimity of asserting for serving quality and content that make, and manage the goal of reaching through setting up the standard, training, but the employee turnover rate of service trade is relatively high, it is relatively difficult to reach to make this project mark.

3rd, undivided and instantaneously (simultaneous/inseparability) The production of the products of service trade is closely related to consumption, there is demands consumed first and then have a motive of making the products. And

this kind of characteristic will form some peculiar situations, for example, the customer is unable to assess in advance , may cause and expect that the difference of the state results in being discontented with afterwards , and customer's behavior and environment have influence on the quality of serving , the factors , such as equipment and manpower ,etc. may limit the elasticity of providing service (for example unable to serve too many customers at the same time), so the service provider is unable to totally master service quality , unable serving at that time and revising the mistake and flaw. In addition, because lack and serve the intermediary, so the service provider must be interacted directly with the customer, so the service provider is unable to obtain relevant information of the market.

4th, unable to keep (perishable) The manufacturing industry can store the products made in advance by way of ' the stock , but the products of service trade are unable to make in advance , in order to increase stocks. So, it must be perfect that what the service trade clicks for serving while offering is planned and produced in advance and can control . For example, if the airline has not sold all seats in the plane before taking off, the seat in the plane left unused is wasting, it is unable to store in advance, and it is unable to keep selling again to the next flight. Due to these characteristics, air industry is a kind of labors intensive industry, and a kind of industry with intensive fund too. But why still many airlines want to involve in the price war. Because investors still have an optimistic view of the prospect of the aviation industry , especially as the aviation authorities in whole world and investment expert all think that the growth of the making a leap forward type will appear within the following ten years on the aviation market of the Asian-Pacific area. The point is to gain the customer from increasing number of tourism. In other words,

tourism pushes forward the airlines transportation so hard. It is a positive interaction making airlines, tourism, and customer a good connection. So Also it is hard to say which mainstream airlines or budget airlines are more competitively or not. These are factors both main stream airlines and budget airlines must to reach, it can help airlines focus on their customers in a much more meaningful way. The benefits of such solutions are: 1. 2. 3. 4. 5. 6. Greater customer satisfaction Enhanced loyalty Maximized yield on each passenger More successful customer acquisitions Increased operating profit Increased shareholder value

In short, the result is a solution that maximizes passenger revenue on every flight and, at the same time, continuously builds a strong and lasting relationship with each customer. At the end, the price war between mainstream airlines and budget airlines will get into a market balance; it is absolutely not a malignant competition. Finally, customer will be the only winner.

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APPENDICES In writing this project, we have considered the practical application of the airport locations in Asia, the airport security, banned items, baggage, and air travel hijack threaten issues. These issues are closely related to the aviation industry to let all passengers know. We clearly categorized them into appendix from A to M in order as follows. Appendix A: Check List

With the budget phenomenon just hitting Asia, these couple years, air industry raise a price war. The raising of budget airlines absolutely through the aviation industry into a keen competition we have ever seen. In this chapter we have collected some information for us choosing a suitable flight service.

Considered factors in choosing an airline. Safety and security 1. Customer would consider the security of airport, and the crisis management of airport and airlines companies. 2. Maintenance and security check of airplanes. Preflight inspection, the maintenance after flying, do it really perfectly, will bring absolute security to the customer to fly each time.

Price 1. In the price factor, the airline puts out the price tactics and lets passengers to choose, even carry on promoting with an alliance or the different family property.

Marketing and propaganda Propagate the respect in aviation marketing, and the media propagates and relates to the customer relatives and friends' comment. Because media's propaganda and relatives and friends' comment will be to influence consumers and choose one of the factors taken the airline directly, among them with relatives and friends' comment, influence consumers' choices more. Like this, even if the propaganda of the airline on the media is positive, but consumers' comments on this family airline of relatives and friends are negative, and then consumers might be choose the one their family taken. Thereupon, considering the factor will increase too.

Quality of service 1. Preflight service Arrangement when the bus takes the passenger to the airport by hotel, to place an order of parking slot of airport, boarding, and the affirmation of the seat in the plane, to avoid the repeated problem of seat.

2.

In-flight service The comfort on the plane, it is the comfortableness of the seat to be primary. Can

be divided into the length, width of seat and seat type? Feeling of the normal space that the height and width of the wide body plane make the passenger stay. As to, it will make small plane because of it makes passenger crowded, and will make passenger who afraid of flight, feel getting worse in impression this. A. Smoking and non-smoking area were separated on the plane; Quantity, size of the lavatory; and the food and beverage service can be in accordance with the range , selecting size of possibility (vegetarian diet or Jew food ) of the meal and applicable room service of the meal time.

B. Amusement equipment on the plane, include newspaper, magazine, choose through earphone different program (music, news, sports, etc.) captain comment of landing and movies. C. Steward make private contact on behalf of company and passenger, it's really beneficial for company to develop potential customer. 3. After-flight service Include transfer, transit, and any renting, selling service.

Customer complain Modern customers take flight as transportation is become higher and higher, but will unavoidably meet the situation unsatisfied while consuming. The customer pay attentions to how the complain service work. Relatively, dealing with the attitude of paying attention to the airline company too

Customer rights and interests Even airline companies take effort on making benefit. Its needed to notice further damaged of customers own rights and interests. For example, some airline companies over-sold ticket, modern customer could fight for rights through fierce means when their own rights and interests are damaged. Compatriots quality of the life is promoted day by day. The request for demand-satisfaction trends toward the diversification. Satisfactory system of customer constant is used by enterprises. The competition of the international airline is the fierceness like this. Airline companies must innovate constantly in order to lead market service quality and new trend of the product. Recruit, train outstanding worker at the production line actively at the same time, and promote the staff's working satisfaction. In order to take over every link of service quality and can deal with the

customer incident of complaining in time in an all-round way; and strengthen the corporate image, create high social satisfaction. By means of Above-mentioned interaction and combination can create the interests of market.

Appendix B: Seating Plan of Boeing 747

Boeing 747

Seating Plan of Boeing 747

Appendix C: Seating Plan of Airbus A330

Airbus A330

Seating Plan of Airbus A330

Appendix D: Major Mainstream Airlines in Asia Major Mainstream Airlines in Asia Company Name City Hong Kong Japan Korea Malaysia Singapore Taiwan Taiwan Thailand Thailand Website http://www.cathaypacific.com/ http://www.jal.com/en/ http://www.koreanair.com/na_home.jsp http://www.malaysiaairlines.com/ http://www.singaporeair.com/ http://www.china-airlines.com/en/index.htm http://www.evaair.com/html/b2c/english/ http://www.thaiair.com/ http://www.philippineair.com/

Appendix E: Complete list of Budget Airlines in Asia

Air Asia (Malaysia) http://www.airasia.com Air Arabia (United Arabia) http://www.airarabia.com/contactus.html Air Deccan (India) http://www.airdeccan.net/airdeccan/home.asp Citilink (Indonesia) http://www.ga-citilink.com/ Lion Air (Indonesia) http://www.lionair.co.id/default_i.asp Skymark Airlines (Japan) http://www.skymark.co.jp/ Skynet Asia Airways (Japan) http://www.skynetasia.co.jp/en/index.html Air Blue (Pakistan) http://www.airblue.com.pk/index.asp Air Philippines (Philippines) http://www.airphils.com/ Cebu Pacific (Philippines) http://www.cebupacificair.com/ JetStar Asia (Singapore) http://www.jetstarasia.com/ Tiger Airways (Singapore) http://www.tigerairways.com/ ValuAir (Singapore) http://www.valuair.com.sg/ Bangkok Air (Thailand) http://www.bangkokair.com/en/ Nok Air (Thailand) http://www.nokair.com/ One-Two-Go (Thailand) https://secure.abatravel.net/ort/en_index.php

Appendix F: Where do cheap Asian airlines fly to?

The cheap airlines are including schedule, charter, budget, and low fare airlines, and we make the list to help you decide the airline quickly by choosing a destination or departure country from the map below. All the airlines are listed under the countries in which they are based.

Appendix G: Questionnaire We would be grateful if you could assist our service development activity by completing our questionnaire which will provide useful information to us.

1. Sex: ___ Male

___ Female

2. Age range: ___ 18-25

___ 26-30

___ 31-40

___ 41-50

__51-60

3. Occupation: _______________ 4. Which airline do you usually fly with? ___ Budget Airline ___ Mainstream Airline

5. If you are not currently using air service from the other type of airline, what would induce you to do so? ______________________________________________________ 6. How many times you take airplanes per year? ___ 1~3 ___ 4~8 ____ ___ above 9

7. Preferred airlines: _________________________________________________

8. Any airline you will not fly on? __________________________________

__

9. When is the last time you go abroad? _____________________

________

10. What is the purpose of your trip? ___ Leisure

___ Business

11. Which airline did you take? ___________________________

____________

12. Service class: ___ First

___ Business

___ Coach

13. Departure from: _______________ to: _ _________ ____

Airport severed: ______________ __ __ Airport severed: ___________________

14. How would you rate the airline in terms of service? ___ Poor ___ Fair ___ Good ___ Excellent 15. How would you rate the airline in terms of convenience? ___ Poor ___ Fair ___ Good ___ Excellent 16. What concerns you most when you think of choosing the airline? ___ Money ___ Service ___ Convenience ___ Others ________ Thank you very much for taking the time to answer these questions.

___

Appendix H: Tips for obtaining cheap airline

1. Scheduled, Charter or Budget airlines

Flight prices can vary enormously due to the laws of supply and demand so we recommend searching for scheduled, charter and budget airlines to find the best airfares available. Never assume that a budget or charter flight will offer the best value.

2. Book Early
While we have all heard of people obtaining a real last minute bargain the general rule with airline tickets is the earlier you book the larger the saving. This is almost always the case with low cost airlines where there may only be a handful of seats available on each flight at the advertised bargain fare. 3. Be Flexible

If possible try to travel on a Tuesday or Wednesday as these are normally the least busy days for airlines. If you need to fly on other days try adjusting your departure time as an early or late departure can often make a major difference to cost. 4. Stay over a Saturday

Fly midweek and stay at least one Saturday to take advantage of leisure rate fares. 5. Indirect Flights

Non stop flights are the most convenient and therefore the most popular. If you are prepared to make a connecting flight on route you will often make a large saving although your travel time will of course increase. Make sure the connecting flight is with the same airline to avoid problems with missed flights if you experience delays. 6. Low Cost Carriers

Although it can offer great deals but make sure you check the return price including all taxes and charges which are often not included in the advertised price. Also

ensure you are flying from or to a suitable airport. The low cost carriers often fly into small airports which may be a considerable distance from your destination. 7. Charter Flights

If you are traveling to a popular holiday destination it is worth checking the charter flight prices. These are the flights used by package holiday companies and can offer large savings. To take advantage of a charter flight you normally have to be away for 7, 14 or 21 nights so they are not normally suitable for business travel or weekend breaks. Although they normally represent excellent value for money you may find a scheduled fare cheaper so it is well worth checking both charter and scheduled flights. 8. Dont always book direct with the airline

If you book directly with the airline you will normally pay the full published fare, although they do sometimes have special offers. Online flight reservation specialists negotiate special rates with the airlines due to the volume of business they do and pass discounts on to the traveler. With the budget airlines you will normally have to book direct with the airline. 9. Check Total Cost

We have known that UK law states that prices must include taxes, fees and charges. Although the majority of websites comply with the law not all do so check for any hidden extras. 10. Book Online To encourage online bookings which are most cost effective for the airlines almost all now offer discounts when you make your reservation online rather than by phone or through a high street travel agent. 11. Pay by Credit Card Due to the low margins on airline tickets most companies make a surcharge when

you pay by credit card to cover their costs. This is typically between 1% and 4% of the total cost but can be avoided by using your credit card. 12. Food and Drinks If using a low cost airline remembers you will have to budget for any onboard drinks and food as these are not normally complimentary. 13. Departure Airport Try to fly from the most convenient airport from your home or business. Any savings made by departing from a different airport can be quickly eroded by travel costs and possibly an overnight hotel stay pre and post departure.

Appendix I: Airport security issue

The unprecedented event of 11 September 2001 has made security an extremely high priority in the U.S. and elsewhere around the world. Although there has been an increase in the level of security at many airports, the advice on this page should provide an overview of what to expect when you are traveling through many of the world's airports.

General Security Guidelines

Carry-On Baggage: Air travelers are limited to one carry-on bag and one personal item (such as a purse or briefcase) on all flights.

Allow extra time: The heightened measures require more time to properly screen travelers. Travelers should contact their airline to find out how early they should arrive at the airport.

Take public transportation to the airport if possible. Parking and curbside access is likely to be controlled and limited.

Curbside check-in is available on an airline-by-airline basis. Travelers should contact their airline to see if it is in place at their airport.

Check-in:

A government-issued ID (federal, state, or local) is required. Travelers may be asked to show this ID at subsequent points, such as at the gate, along with their boarding passes.

Automated check-in kiosks are available for airlines that have appropriate security measures in place. Travelers interested in this option should check with their airline.

E-ticket travelers should check with their airline to make sure they have proper documentation. Written confirmation, such as a letter from the airline acknowledging the reservation, may be required.

Screener checkpoints: Only ticketed passengers are allowed beyond the screener checkpoints, except for those with specific medical or parental needs.

Each traveler will be limited to one carry-on bag and one personal bag (i.e., purse or briefcase).

All electronic items, such as laptops and cell phones, may be subjected to additional screening. Be prepared to remove your laptop from its travel case so that both can be X-rayed separately.

Limit the amount of jewelry or other metal objects that you wear.

Travelers should remove all metal objects prior to passing through the metal detectors in order to facilitate the screening process.

Appendix J: Top 10 airline safety tips

There have been a variety of changes in the air travel all around the world. 1. Fly on Nonstop Routings Most accidents occur during the takeoff, climb, descent, and landing phase of flight so flying nonstop would reduce exposure to these most accident prone phases of flight. 2. Choose Larger Aircraft Currently, aircraft with more than 30 passenger seats were all designed and certified under the strictest regulations. Also, in the unlikely event of a serious accident, larger aircraft provide a better opportunity for passenger survival. 3. Pay Attention to the Preflight Briefing Although the information seems repetitious, the locations of the closest emergency exits may be different depending on the aircraft that you fly on and seat you are in. 4. Keep the Overhead Storage Bin Free of Heavy Articles Overhead storage bins may not be able to hold very heavy objects during turbulence, so if you or another passenger have trouble lifting an article into the bin, have it stored elsewhere. 5. Keep Your Seat Belt Fastened While You are Seated Keeping the belt on when you are seated provides that extra protection you might need if the plane hits unexpected turbulence. 6. Listen to the Flight Attendants The primary reason flight attendants are on an aircraft is for safety, so if one of them asks you to do something like fasten your seat belts, do it first and ask questions later.

7.

Don't Bring Any Hazardous Material There are rather long lists of hazardous materials that are not allowed, but

common sense should tell you that you shouldn't bring gasoline, corrosives, poisonous gases, and other such items on the aircraft unless they were allowed by the airline and shipped in a proper container. 8. Let the Flight Attendant Pour Your Hot Drinks Flight attendants are trained to handle hot drinks like coffee or tea in a crowded aisle on a moving aircraft, so allow them to pour the drink and hand it too you. 9. Don't Drink Too Much The atmosphere in an airliner cabin is pressurized to about the same altitude as Denver, so any alcohol you consume will affect you more strongly than at sea level. Moderation is a good policy at any altitude. 10. Keep Your Wits About You In the unlikely event that you are involved in an emergency situation such as a precautionary emergency evacuation, follow the directions of the flight attendants and flight crew and exit the aircraft as quickly as possible.

Appendix K: Top 10 baggage tips

The following advice should help you avoid many of the common problems that passengers have with carry-on or checked luggage. 1. Travel with only carry-on luggage By using only carry-on luggage, you do not risk having checked luggage lost or stolen. 2. Do not put heavy items in the overhead storage bins. While the weight limit for carry-on items is generally about 40 lbs. (18.2 kg.), even a much lighter bag may cause severe injury if it falls out of the bin. 3. Put your contact information inside and outside every bag. Put your name and contact address on the outside of every bag. Also, put the same information plus a copy of your itinerary inside every bag. This will make it easier for the airline to reunite you if you are seperated from your luggage. You should also do this with your carry-on luggage in case you are forced to check that bag at the last minute. 4. Customize the look of your bag to make it easy to identify. Because there may be many bags with a similar design on a flight, customize the bag to make it easy to spot on a baggage carousel. This will also help prevent another passenger from taking your bag by mistake. 5. Keep valuable items with you. Do not back valuable items in checked luggage. Money, laptop computers, electronic files, and other items of high importance should be kept in a carry-on bag, preferably one that is small enough to stow under a seat. The airline may insist on checking larger carry-on bags if the overhead bins become filled. 6. Make sure that the airline tag on your checked luggage is for the correct

destination. Every piece of checked luggage should have a three-letter airport identifier that should match your destination airport. If you are unsure of the three-letter code, ask the ticket agent or skycap. 7. Make sure that you keep the stub from your checked luggage. This stub is a critical document that will be needed if your luggage is lost by the airline or if you are trying to prove that you own a piece of luggage. 8. Immediately report the loss of checked luggage. If your checked bag does not arrive at your destination, immediately report this problem to the baggage agent on duty or to any other available representative from your airline. 9. Prepare to deal with a lost bag. Pack so that you can continue your trip with the loss on one of your bags. Distribute key items like business suits or underwear so that you can carry on with your business until you either get the bag back or replace the lost articles. If you are carrying essential items or information for a business meeting, either carry a backup set of information or have that backup information sent ahead of time. 10. Don't pack hazardous goods. There are quite a number of items or materials, some of them not so obvious, that may pose a risk if taken on an aircraft.

Appendix L: 10 tips for travel under increased hijack threats

In the wake of September 11, and the very real threat of military actions directed at the air transportation system, all air travelers should be prepared to take reasonable actions to ensure their safety. 1. Be Aware of Your Surroundings

The next time you are in an airport or on an aircraft, take notice of your surroundings, especially of activities or situations that do not appear to be normal. 2. Report Unusual Activity

If seeing of anything in the airport or on an aircraft that looks out of place or otherwise inappropriate such as unusual behavior or potential security violations, inform either a law enforcement representative or someone in authority. 3. Make No Assumptions About the Who May Pose a Threat

If someone is intent on perpetrating violent acts against the air transport system, that person can be of any age, gender, or nationality. You should not assume that any particular type of person is likely to do harm simply because of outward appearances. 4. Stay Away from Suspicious Circumstances

If you encounter a potential hazard in the airport, move away from the situation before contacting someone in authority. If necessary, warn others in the vicinity. Examples of potential hazards include unaccompanied packages, suspicious behavior, or an unusual commotion. 5. Keep Your Seat Belt Fastened While You are Seated

Keeping the belt on when you are seated provides that extra protection you might need if the plane hits unexpected turbulence of if the aircraft is put through unusual maneuvers.

6.

Listen to the Flight Attendants

The primary reason flight attendants are on an aircraft is for safety, so if there is any kind of emergency or potential emergency situation, look to the flight attendants for guidance. 7. Become Familiar with Your Aircraft

When you are first seated, review the written safety instructions, count the number of rows to the nearest exits (toward the front or the back of the plane), and check to see if there are seatback telephones available. 8. Remember the Basic Rules for Wireless Devices

Do not use these devices for routine communications until the passenger doors are opened at the end of the flight. Rules vary around the world, so check with your airline if you are not sure. 9. Have a Plan for the Emergency Use of a Wireless Device

In the event of an in-flight emergency, you should take stock of the situation before using any communications device, including the aircraft's seatback telephones. If the situation calls for it, use your cell phone or other personal wireless device to contact someone who can help. In the U.S., this includes the FBI at 1-866-483-5137. If you are a flight attendant or other airline employee, contact an appropriate office or department at the airline. 10. Work as a team Work As A Team If the situation on the aircraft has the potential for danger, it is usually better to share information with crew members and the other passengers and to work together. Individual action, either during a normal emergency or during a hijack or other deliberate threat to the aircraft, is usually much less effective than a coordinated group action.

Appendix M: Thais Royal First Class Lounge

According to the Skytrax 2004/5 league recently ranked 1st in the world, the THAI Airways International Public Company Limiteds Royal First Class Lounge for combined quality of product and service. Ironically, THAI will only be using the facility for the next 12 months, as the planned opening of the new international airport in Bangkok will see the airline opening newer and further improved facilities. Mr. Kanok Abhiradee, THAIs President, said that THAIs Royal First Class Lounge has a contemporary Thai design with modern facilities and is equipped with exclusive OTOP (One Tambon, One Product) products to provide more delightful services to premium passengers. Peter Miller of Skytrax said "The airport experience is now one of the most critical elements of today's air travel enjoyment, and in First class, passenger expectations are at their highest. Customers prepared to pay these fare levels want the best quality of service - from start to finish or their journey" Thai Airways was commended for the high quality of furnishing and lounge ambience. Staff service is efficient but not intrusive. Washrooms are beautifully presented with an extensive choice of L'Occitane amenities - in lounge catering offers an array of cold buffet food as well as hot dishes prepared to passenger requests. THAIs Royal First Class Lounge provides a variety of facilities including a

private room to entertainment facilities, shower rooms with exclusive toiletries, lavatories, Thai mainstream massage service, Internet on LCD monitors, local and international phone service, and portable DVD. There are a number of airlines claiming to offer high revenue passengers an exclusive or unique experience in the airport environment, although in some cases it is based on the re-working of an existing theme, An important element of the Skytrax rating agenda assesses the national image and characteristics that an airline portrays throughout its lounge facilities. Identity and branding is increasingly important for today's airlines, but we are not evaluating simply from the presence of corporate logos and branding, said Miller. "The lounge is an opportunity to project the image and feeling of a country creating a unique atmosphere, so that although you are actually passing time in a large concrete, utilitarian building, you feel as if you are closer to the real character of the country or culture" added Skytrax. That experience is not going to be judged purely on the "shopping list" of available lounge facilities, but the way in which they are delivered. As with all walks of life, it is the "feel-good" factor which determines satisfaction, and that is dependent on the quality and character of the service itself.