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A Study on the Low Cost Carriers of Japan and
Taiwan
Abstract
In addition to the recent intensification of competition among various airlines worldwide, increased supply, fuel prices, human resources costs, and exchange rate losses in the airline industry, as well as the prevalence of low cost carrier (LCC) companies, have worsened the already-struggling conventional airline industry. On the other hand, the prevalence of LCCs have elevated the selectivity of passengers exponentially, and the airline industry is no longer monopolized by conventional airlines, thereby actuating the entire airline market.
Since the founding and successful management of the first LCC, Southwest Airlines, in 1967, numerous countries countries in Europe and the Americas have followed this trend and established LCC companies. Asia subsequently followed suit and gradually entered the LCC industry. However, because of Asia’s late entrance into the LCC industry, it shows considerable room for improvement and manifests substantial potential. Among Asian countries, the interaction between Japan and Taiwan has always been close-knit. In this context, the researchers of the presented study analyzed past literature and relevant data to explore the development of the LCC industries in Taiwan and Japan.
The findings of the present study indicated that although Taiwan and Japan only began to establish LCC after the deregulation of aviation policies, Japan had already formally entered the LCC industry in 1998. By contrast, Taiwan only entered the LCC market in 2014, rendering Taiwan a comparatively late contender. The research employed a segmentation, targeting, and positioning (STP) model to determine the industrial models of LCCs. Furthermore, an analysis on marketing mix (4P) and market positioning clearly indicated that the LCC companies of Japan and Taiwan were distributed in the bottom-left quadrant, which represented low quality, low cost, and fierce competition. In future, if the LCCs in Taiwan and Japan
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can develop towards the high-quality and low-cost quadrant, then, with nocompetition, they would not be required to engage in price competition to beat their competitors, thereby possibly creating more benefits for the companies. Keywords: LCC industry, Japanese LCC, Taiwanese LCC
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