Low-Cost Airlines Industry Overview

• Malaysian carriers collectively enjoy a very strong share of their international market (approximately 70%). 
• Low-cost airline revenue is estimated to grow at a CAGR of CAGR 7.1 % during 2020 - 2023.
• The estimated market volume of low-cost airlines is US$2,733 million by 2023.

Low-Cost Airlines Industry Growth Drivers

The growth of the low-cost airlines market is credited to the rise in economic activity within Malaysia. The constant surge in the travel, travel & tourism industry has led to the significant growth of low-cost airlines. Tourists across the world now prefer to travel in low-cost service carriers. Travelers are looking out for non-stop travel and carriers that have frequent service.

Yet another major reason for the growth of low-cost airlines is the increase in purchasing power of middle-class households in Malaysia, especially in the developing regions.  A high level of urbanization has led to changes in the lifestyle of the middle-class groups that has led to a drastic preference of consumers toward low-cost service providers.

Further to all the above reasons, another major growth driver of low-cost airlines in Malaysia is the high internet penetration across Malaysia.  In 2017, 80 percent of the Malaysian population was using the internet. In 2023, this figure is projected to grow to 86 percent. 

Low-Cost Airlines: Discover the Key Drivers of Customer Experience

Understanding customer experience is most important for marketers as they get to know the expectations of the customers. It helps to understand what makes a consumer buy a product. It is important to assess the kind of products liked by consumers so that they can release them to the market. Marketers can understand the likes and dislikes of consumers and design base their marketing efforts based on the drivers of customer experience.

For example, consumer buying behavior is studied by consumer researchers and their aim is to know why women buy moisturizers (to reduce skin problems), the most preferred brand (Olay, L’Oréal), how often do they apply them (twice a day, thrice a day), where do the women prefer to buy it (supermarkets, online) and how many times do they buy it (weekly, monthly).

Understanding customer experience is essential for a company to find success for its current products as well as for new product launches. Every consumer has a different thought process and attitude towards buying a particular product. If a company fails to understand the reaction of a consumer towards a product, there are high chances of product failure.

Through a detailed analysis of 40,981 online consumer conversations, Clootrack has listed down the top 4 drivers of customer experience in low-cost airlines:

1. Quality of the Airline Service

Customer conversations reveal that airline service quality affects the adoption of particular airlines by customers. Consumers are put off when there is a shortage of pilots which can lead to the cancellation of flight routes. Customers are expecting the best on-time arrival rate with flights maintaining the schedule.  Other areas where customers expected high quality were the meals, hygiene, and multimedia entertainment.

In Malaysia, customers are asking for options to reserve their seats online, either at the time of booking or when they perform online check-in. Consumers are looking forward to full-service airlines that can offer passengers comforts such as checked baggage, blankets and pillows, recliner seats, and more legroom. The user conversations suggest clearly that those low-cost airlines should maintain service quality as it tops the chart of adoption of airlines.

2. Size of the Seats

Many times, consumers feel that it’s not worth foregoing a comfortable seat in exchange for any offers or discounts. They give high prominence to the seats that are like business class seats with very good legroom. Consumers feel that one or two extra inches of seat pitch (distance from one row to the next) can make a huge difference in comfort and productivity. Consumers are now adding seat preference as one of their main search criteria along with date and destination while choosing the seats. SeatGuru.com can come in handy to find information about the seats where you can select a flight and browse airlines and their seat maps.

3. Demand for Flat Seats

As per market research, 67 percent of consumer feels it’s important to have seats that fully recline. When it comes to booking a flight, it is not just about the destination and food, and customer service. A lot of it depends on the seats. Consumers are asking for seats that can be fully converted into beds. Consumers who are mostly on long-haul flights can immediately hit the ground running, instead of spending the next day recovering from a sleepless flight on seats that did not offer flatbeds. Flatbeds can fully recline and come to a horizontal position giving the customers the most comfortable sleep. Furthermore, consumers like to see airlines give them privacy and space, which reminds the passenger of the comforts of home.

4. Punctuality of Airlines

According to a survey report, the most punctual airline in the world is the Latin American airline Copa Airlines with 89.79% of flights on time. With a high rate of competition in the aviation industry, one factor that can set apart one airline from the other is the on-time performance of the flights.  Consumers are rating an airline as the best, based on their punctuality. Consumers do not wish to spend hours drifting around in a duty-free shop just because of a delayed flight. Airlines have to take care of computer glitches, airline rush hours, aircraft maintenance, and conveyor belts that could lead to a larger delay.

Brand Equity – Low-Cost Airlines

Consumer perception, which is a combination of knowledge and experience, towards a brand and its products, builds brand equity. The perception that a consumer segment holds towards a brand directly results in either positive or negative effects. Customer perception or consumer perception plays a major role in buying behavior. Hence companies are going the extra mile to create a pleasant and happy customer experience for their customers. Companies are ready to spend money and effort to influence customer perception and drive profitable consumer behavior.

Brand equity is an indicator of the company’s strength and performance, specifically in the public markets. In simple terms, brand Equity is the loyalty, perception, and awareness of a customer towards a brand. Brand equity can be created over a period of time by offering products that give a memorable experience, excellent quality, and highly reliable products to its customers. 

In this report, we have presented the relative significance of each driver in the form of a graph that can be used to compare the degree of importance consumers attach to various factors. Download the detailed report for free to get to know the brand names in the below chart. The detailed report also covers the list of features that delight users and several other interesting insights. 

Low-Cost Airlines: Top 4 Emerging Trends 

As more and more people choose to fly, airlines have gone the extra mile to enhance the passenger’s experience, loyalty, and satisfaction by offering low-cost flights, a variety of entertainment, better seats, better connectivity, and much more facilities. 

The air travel experience starts from the time the consumer starts to search for flights and goes beyond the landing. Factors such as higher competition and rising consumer demands are changing the way airlines do business.  The emerging trends in this industry are pushing airlines to prepare itself to embrace the latest developments in the industry.

Here are 4 trends that are driving the airlines story in the future?

1. Through Check-in

Through check-in happens when your boarding passes and baggage tags are issued on check-in itself, up to your final destination. Consumers prefer to have airlines that are upgraded to give passengers a comfortable journey. Consumers traveling want to save time and the hassle of checking their baggage as they end up wasting time collecting their bag and re-checking it. Consumers might as well prefer to book flights that take care of through check-in.

2. Bid And Buy For Services And Upgrades

Many airlines offer a way to compete for unsold premium cabin space by bidding for it. The bidding process offers people who have already booked tickets to bid for an upgrade. When a bid is successful, most airlines give the consumers certain perks and benefits of the upgraded class such as lounge access and extra baggage allowance.

Consumers want to see airlines offer more of such bids for upgrades that allow them to move from economy to premium.

3. Better Loyalty Management

Loyalty programs encourage customers to fly their favorite airline that otherwise might not be their best choice for a trip. Airline customers like to accumulate miles for which they go an extra way to book tickets with a particular airline. Some airlines are offering onboard programs such as redemption choices, for example, a glass of champagne for 500 points or Wi-Fi access for 1,000 points. Consumers are considering loyalty programs as one of their main criteria for booking with airlines.

4. Bundled Airport Facility Offers

A complete passenger experience including airlines and airport service performance is very critical and emerging as an important trend. The airport facility offers should include additional facilities and improvements to enhance passenger safety, security, and cargo movement. Airline lounges should provide facilities such as hot showers, food and beverage, and a place to rest or do work without any additional charge.

Detailed Report

Do you want to know the positive words that consumers are using in their online conversations about low-cost airlines? Learn more about the factors that delight customers, brand-wise positive and negative keywords, and much more. Download the pdf version of the complete report for free.  Enter your email at the end of this report and we’ll send it to you for FREE.