The following article discusses the plan for low cost airfare provider AirAsia to focus its efforts on entering Indian and Chinese markets. As the middle class continues to grow in these markets, demand has increased for low cost airlines to provide affordable travel within the region. Middle class tourists and businessmen are fueling this demand as a result of their increased discretionary spending. Increased demand for connectivity within the region is an indicator of the business taking place in the region. As the region becomes more connected with flights, businessman can travel with ease across the region allowing for more business to take place.
Link:
http://www.2point6billion.com/news/2011/06/28/airasia-eyes-the-indian-and-chinese-markets-9632.html#more-9632
This new form of investment is similar to those American small airlines. For example, jet blue, allegiant and spirit have all the same business platform of providing cheap tickets for the middle class. I am skeptical of how the Chinese community will react to this new product. Will the Chinese community travel more? Will international companies minimize their costs by sending businessmen through these airlines?
ReplyDeleteAs Asia’s economy progresses and takes control, domestic companies will fight to be the market leader in their respective industry. This situation represents the competitiveness in Asia’s airline industry. The three carriers mentioned above are battling for the same target market and the biggest market share. Each firm has its own comparative advantages (ie Capital, Natural Resources). A stable macroeconomic, political, legal and social environment is what will lead a firm/company to be productive.
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