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airline deregulation


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airline deregulation

  1. 1. QUESTION • What is Airline Deregulation? • Trace the effect of Deregulation in US , EUROPE , MALAYSIA AMIDEE AZIZAN KPMC 102217
  2. 2.  Refers to government ceding control over certain aspects of the air industry to the airline corporations.  process of removing entry and price restrictions on airlines affecting, in particular, the carriers permitted to serve specific routes. United States was one of the first countries to officially deregulate airlines through the Airline Deregulation Act of 1978.
  3. 3.  Domestic commercial airline industry was extensively regulated by the Civil Aeronautics Board (CAB)  CAB governed which airlines could serve which routes, determined which airlines were certified to enter the market, and restricted mergers among airline companies. Set the fare structure for the industry  Civil Aeronautics Board (CAB), determining the routes each airline flew and overseeing the prices they charged.  Turning point was the Airline Deregulation Act, approved by Congress on October 24, 1978
  4. 4.  Lower Fares, More Travel, Frequent Flier Programs  The airlines were deregulated in stages from 1979 - 1984, and at each step of the way, the net result was cheaper fares and more people traveling.  More free market environment was defined in the Airline Deregulation Act of 1978  New airlines sprung into life  Went a bit 'wild and crazy'  scrambling to open up new routes  Airlines rapid growth
  5. 5.  Airlines set their own schedules  Benefitted enormously  Huge growth in air travel  Essential Air Service  Airlines adding new routes  Subsequent growth of regional carriers
  6. 6.  First period was the expansion of the traditional airlines, and the growth of the new 'hub and spoke' model, which filled planes and made it more convenient for people to travel to more destinations.  The second period was a counterbalancing growth in point to point services, largely by new carriers.  Third period saw the growth of regional jet services by regional carriers, filling in the 'gaps' of the major airline's schedules.  Fourth period- At present -many things that used to be included in a ticket's price now being charged extra or no longer being offered at all. At the same time, there is a reduction in airlines.
  7. 7.  Impacts of deregulation on us are profound and positive. I've grouped the most significant of them into 3 categories.  Result 1 : Airfares Dropped  Airfares today are almost three times cheaper than they were in the late 1970s  Result 2 : Air Travel Increased  Twice as many flights and three times as many people traveling, compared to the 1970s.  Airlines fly to more destinations  There is another dimension to the growth in air travel. Individual airlines could now offer service to more places. For example, American Airlines flew to only 39 destinations prior to deregulation. Now it flies to 260 different locations - six times more than before.
  8. 8.  Result 3 : Frequent Flier Programs  Acquired miles can be redeemed for free air travel; for other goods or services; or for increased benefits, such as travel class upgrades, airport lounge access or priority bookings.  Next time you earn miles on your Visa card, and next time you redeem your miles for an upgrade or a free ticket, ……………Thank Deregulation.
  9. 9.  The effects of liberalization in Europe are undoubtedly quite different in scope and magnitude than in the US.  In Europe slower growth of 4% to 6%  The most dynamic growth is centered on the Asia and Pacific region After deregulation, the airlines quickly moved to a hub-and- spoke system The hub-and-spoke model survives among the legacy carriers, but the low-cost carriers (LCCs), now 30 percent of the market, typically fly point to point. The network hubs model offers consumers more convenience for routes, but point-to-point routes have proven less costly for airlines
  10. 10.  Prices have declined steadily since deregulation  The quality of airline service can be measured in many different ways, including the number of aircraft departures, the total number of miles flown, the timeliness of service, other programs and services
  11. 11.  In Malaysia, airlines are separated into two; 1) Passenger airlines and 2) Cargo airlines  The passenger airlines in Malaysia are Air Asia, Malaysia Airline System Berhad (MAS), Firefly which is owned by MAS, Layang-Layang Aerospace which is based in Sabah to provide air services to Layang- Layang Island, Berjaya Air which is owned by Berjaya Group, Sabah Air and last but not least Hornbill Skyways which is a helicopter service that operates in the rural area of Sarawak.  There are also three cargo airlines that operate in Malaysia. They are the Athena Air services, MAS cargo and Transmile Air Services  Despite the various kinds of air operators, the airline industry in Malaysia is being monopolized by two main operators.  The first one is the Malaysia Airline System Berhad (MAS), which is Malaysia’s full service national carrier that first took the skies in 1947 under the name of Malayan Airways Limited.
  12. 12.  MAS flew nearly 50 000 passengers daily to 100 destinations worldwide  Had been awarded as the World’s Best Cabin Crew’ in 2001 until 2004 and 2009, and the ‘5 STAR Airline’ award from 2005 till 2009 by Skytrax UK.  MAS currently have 90 aircrafts for domestic and international flight. There are currently 20 Airbus and 70 Boeing.  Born of the low-cost budget airline business model and is the leading budget airline in Asia by other airline operator in Malaysia ,Air Asia  Has flown over 55 million passengers across the region and continues to create more extensive route network
  13. 13.  Increased number of routes flight frequencies and passenger growth of 24%  This is due to its low fare structure making Air Asia the number one choice as opposed to MAS  With its vision to be the largest low cost budget airline in Asia and serving the 3 billion people who are currently underserved with poor connectivity and high fares, Air Asia had also made the nation proud.  Believes in serving the best to its customers with no frills, hassle- free and low fare business concept and under its philosophy ‘Now Everyone Can Fly’  Has sparked a revolution in the airline industry  As advertising is the number one priority for marketing strategies, MAS markets will market its brand name along with its ‘Going Beyond Expectations’ philosophy while Air Asia will ensure that their ‘Now Everyone Can Fly’  Route to singapore  Before Deregulation no flight to singapore by MAS  Competition  Government policy
  14. 14.  As the deregulation start , competition between this 2 operator increasing rapidly  As for sales promotions, the two carriers will have various sales promotions throughout the year.  They also often gives the best discounted promotional prices to consumers to boost the demand for travelling amongst consumers as well as enhancing the tourism industry.  Other than that, MAS also has its own travel fair called the MAS Travel Fair to promote the sales of their airline tickets to consumer through heavily discounted prices which are highly competitive.  On the other hand, Air Asia also promotes its sales through numerous sales promotions through various discount windows where tickets could go as low as RM0.10  Other than that, MAS also promotes its growth through its loyalty programs called Enrich and Grads which allow frequent flyers to receive rewards through the point collection system. Members are able to convert their travel points to get discounts on flight tickets and receive upgrades from economy to business class on-board.  This show how competitive Airline industry has become since Airline Deregulation