Analysis of Low-Cost Carriers in Post-Soviet States

Abstract

The research paper provides an overview of low-cost carrier (LCC) development in the post-Soviet states with a focus on the aviation market in Russia. The LCC model seeks to achieve a competitive advantage through the reduction of operating costs below the traditional airline model. While much of the global community enjoys the benefits offered by LCCs, the question remains why this model has not been successful in the fifteen newly formed countries, with the exception of the Hungarian low-cost subsidiary Wizz Air Ukraine. Despite an advantageous geographic location, large population with comparable GDP per capita, and strong passenger growth forecast, airlines operating in post-Soviet regions are faced with a high level of uncertainty associated with emerging economies, namely the strength of government involvement and regulation. The research addresses strategies employed by airlines as well as the challenges and opportunities that are presented to them. The airline classifications and data were collected using the Flightglobal database. Future business strategies and government legislation reformation are discussed in order to promote the LCC business model as a successful option to compete in these markets.