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The rapid expansion of low-cost carriers (LCCs) in East and Southeast Asia has brought fierce competition to full-service carriers (FSCs). Competition in the air transport market is at an all-time high, thanks to the ongoing liberalization in air transport in the last several decades. This chapter assesses the efficiency performance of major FSCs in this region. It provides indicative evidence of the close association between FSCs' efficiency, and air transport liberalization and LCCs penetration. Singapore Airlines and Asiana are identified as the star companies in this region for their ability to achieve higher efficiency and, at the same time, report positive growth in productivity.

In recent years, the airline industry has been growing and transforming rapidly in the Asia-Pacific area. This study analyzes and benchmarks the comparative operational efficiencies of the major Asian air carriers. Data envelopment analysis model and disaggregate output efficiency measures are used to evaluate the operational efficiencies of 31 Asian airlines from 2015 to 2019. The findings suggest that nonflag carriers, low-cost carriers, and high-income regions' carriers have significantly higher levels of efficiency than flag carriers, full-service carriers, and low-income regions' carriers in overall, revenue, and passenger traffic efficiencies. The efficiencies between alliance carriers and nonalliance carriers along with those of ASEAN and non-ASEAN carriers are not significantly different.

The purpose of this study is to investigate the motivations, attitudes and intentions towards luxury dining in airplane themed restaurants (ATRs). The moderating roles of desire to fly, desire for luxury and fear of missing out (FOMO) towards attitude and intention to embark on this ATR experience are also investigated.

Data are collected through a consumer panel. A total of 315 valid responses were analysed using exploratory factor analysis, confirmatory factor analysis and multi-group moderation. To enhance ecological validity, a stimulus for the Singapore Airlines A380 Restaurant @Changi was created to ensure complete understanding of the product offering by the participants.

Three motivation factors were discovered – novelty, escape and supporting reliving. Interestingly, it was also found that the attitude towards ATR partially mediated the relationship between supportive reliving and intention towards ATRs. Disposition towards FOMO was found to moderate the effect of attitude towards ATR on intention towards ATR. Negative effect between escape motivation and attitude towards the ATR from the moderation analysis for desire for luxury and desire to fly shows that people are still hesitant to accept the ATR as a replacement to satisfy their salient needs for luxury travel.

Insights of this study demonstrate that local airlines could pivot their business through innovative offerings during the pandemic. The ATR concept can be effectively marketed by appealing to hedonistic and nationalistic needs and to avoid positioning it as an alternative for flying.

This is a novel concept introduced during the COVID-19 pandemic. Unprecedentedly, it uncovers the motivations, attitudes and intentions towards luxury dining in ATRs as a means to compensate for the pent-up desire to relive the experience of air travel.

Here we consider the various ways in which airlines integrate their business activities. The thin markets, long distances, poor infrastructure, and challenging terrain over which many airlines based in developing countries operate can make it difficult to reap the economies of scale, scope, and density that carriers in more developed nations enjoy. There also remain institutional barriers to cross border trade in airline services. As a response to this, airlines from developing regions “cooperate” in a number of ways. This may involve multinational ownership, code sharing, or joint ventures. The rationale for these actions, together with discussion of the outcomes of some of them, is considered here.

Status demotion in hierarchical loyalty programs (HLPs) has received considerable academic attention. However, existing research is relatively silent on whether HLP status demotion fosters service relationship fading by influencing demoted customers’ psychological disengagement and the likelihood of patronage reduction. Drawing on the relationship fading literature and the stimulus–organism–response framework, this study aims to examine these effects. It further investigates the moderating role of psychological ownership on the links of status demotion with psychological disengagement and the likelihood of patronage reduction.

Two studies (Studies 1 and 2) were conducted in the context of airline HLPs. Study 1 was a structured survey conducted among 213 demoted airline HLP customers in Australia, and Study 2 was an experiment conducted among 178 executive MBA students in Bangladesh. The PROCESS macro was used to test the moderated mediation model.

The results of both studies show that HLP status demotion significantly influences customers’ psychological disengagement and the likelihood of patronage reduction. The findings also reveal that psychological disengagement mediates the relationship between status demotion and the likelihood of patronage reduction. Further, customers with high (low) psychological ownership feel high (less) psychological disengagement and show high (less) likelihood of patronage reduction due to their HLP status demotion.

This study extends the existing literature on relationship marketing and HLPs by offering a better understanding of how and under what conditions status demotion elicits customers’ psychological disengagement and the likelihood of patronage reduction.

In the first two decades of the twenty-first century, low-cost carriers grew rapidly in many low- and middle-income economies. In this chapter, we examine the geography and network structure of low-cost carriers in such economies across Asia in 2018. We use these analyses to explore the relationship between budget airlines and economic development. Levels of disposable income and infrastructure adequacy help to account for the significance of low-cost airlines in some middle-income economies. And in turn, these airlines by fostering higher levels of accessibility and personal mobility may help catalyze faster development. However, the environmental externalities associated with aviation, especially atmospheric emissions, raise concerns about the sustainability of this mode. We assess these concerns and focus in particular on the development of low-cost carriers fleets in Asia. We ask whether the acquisition of more fuel-efficient aircraft will ameliorate aviation's environmental impact.

The expected learning outcomes are to understand the complexities involved in the integration of two carriers with different business strategies and approaches, the merger of two brands with distinct personas and identities and the confluence of two different cultures; figure out the strategic options in front of the Tata Group and how it can deal with various macro- and micro-level business challenges, defy the financial hiccups and manoeuvre the operational complexities to accomplish mission Vihaan.AI; and develop a pragmatic approach to macro and micro business environmental scanning for making strategic business decisions.

In November 2022, Tata Group, the salt to software conglomerate, announced the merger of Air India (AI) and Vistara. This would lead to the formation of the full-service airline under the brand name “Air India”. The obvious reason behind this was the higher recognition, salience and recall of the brand AI as compared with Vistara in the global market. The Tata Group envisaged the brand AI to be a significant international aviation player with the heritage, persona and ethos of the brand Vistara in the renewed manifestation of AI. To realise these goals, Tata Group laid down an ambitious plan called “Vihaan.AI”, which was aimed at capturing a domestic market share of 30% by 2027.

This case study can be taught as part of undergraduate- and postgraduate-level management programmes.

Teaching notes are available for educators only.

CSS 11: Strategy.

The case study highlights two strategic angles – that of the business unit (business strategy, profitability, market leadership. organizational culture, operational turnaround, industry structure and competitive dynamics) and the owner (returns, repositioning strategy and funding plan). By the end of this case study, students would be able to understand the changing competitive forces of a dynamic industry; analyse the circumstances leading to a change in the control of a firm from the state to the private sector; understand the logic of acquiring a perennially loss-making firm operating in a volatile environment without a unique strategy; identify a firm’s strategic and operational choices for financial turnaround, return to profitability and regaining market leadership; and learn about the actual strategic realities and choices confronting a troubled business organization in a difficult industry.

When the Tata Group took over Air India on 27 January 2022 from the state that had ownership for 68 years, Air India was under a long spell of poor performance, bleeding losses and unmanageable levels of debt. Unsatisfactory customer service, management issues and competition were the key reasons. Therefore, a crucial question facing the group’s Chairman N. Chandrasekaran was what workable strategy he could use to reposition Air India and make it profitable again so as to recover the $7.5bn of estimated investment involved in the acquisition and turnaround.

This case study is intended for undergraduate and graduate executive education levels in business administration and management and allied subjects, particularly for courses in strategic management, marketing, financial management, turnaround and transformation, mergers and acquisitions and organizational change.

Teaching notes are available for educators only.

CSS 11: Strategy.

Business success and pricing are very closely intertwined. This study aims to explain how businesses can improve their profitability by relying on creative pricing strategies that managers across industries can adopt.

This study uses research from related fields and a detailed analysis of the airline industry to deconstruct its success and identify innovative pricing practices that have helped salvage it.

Based on our analysis, the authors propose several strategies that can help companies control their pricing and leverage it to increase profitability. These include decommoditizing, segmenting the market (up and down), scrutinizing customer behavior, offering versioning and ancillary services, actively promoting these add-ons and using dynamic pricing.

This study takes an unusual approach and look at the airline industry – literally a textbook example of an oligopoly. The authors argue that if companies in an oligopoly – with undifferentiated services – can dig themselves out of the depths of nonexistent profits by using innovative pricing, it should be much simpler for companies in other industries that offer easier differentiation.

Health risks associated with coronavirus disease 2019 (COVID-19) have severely affected the financial stability of airline companies globally. Recapturing financial stability following this crisis depends heavily on these companies’ ability to attain efficient and productive operations. This study uses several empirical approaches to examine key factors contributing to carriers sustaining high productivity prior to, during and after a major recession. Findings suggest, regardless of economic conditions, that social distancing which requires airline companies in the Asia Pacific region to fly with a significant percentage of unfilled seats weakens the performance of those companies. Furthermore, efficient operations do not guarantee the avoidance of productivity declines, especially during a recession.