Business Model Management of Low-Cost Carriers: in a Search for Impact-Factors of Performance (Case of AirAsia Group Airlines)

Abstract

The study is aimed at analyzing how social and economic development indicators, global and regional economic indices are influencing low-cost carriers (LCC), AirAsia Group Berhad (AAGB) in particular. It is crucial not only to define the impact-factors but to embed them in a management framework for further decision-making. Passenger traffic is the main indicator of LCC performance, unlike the Full-Service Network Carriers (FNSC) that taking advantage of both passengers and freights. However, both categories depending on the macroenvironment and business environment dynamics, and KPIs should be reconsidered to face the current global challenges. The global GDP, GDP per capita are commonly used to access the economic and social development trends, the passenger numbers per annum, unemployment rate, and else are used to understand the status of operations in LLC performance management. This study deals with several overlapped categories of research, such as low-cost carriers business model, impact-factors of air transport development, global trends in several industries. The research methodology is a combination of comparative analysis, correlation analysis, regression analysis, and forecasting, using secondary data from annual reports and quaternary financial reports. The comparative analysis gave us an understanding of the general performance trend of the group and subsidiaries. One of the study components is the correlation analysis that revealed the most correlated factors for the economic development of AAGB, such as global GDP, regional GDP, regional GDP per capita, population growth. The global and regional dimensions were presented in the research to reveal what affects airline performance the most. Global GDP is the most correlated indicator for the global and regional development within AAGB, and the regional GDP per capita comes the second by its significance. The population size has a great influence on performance indicators (globally and regionally), and if this indicator is taken into account for forecasting the potential growth is expected in the next five years. These findings enable to design of the business-model of LLC more accurate in accordance with the forecast analysis towards innovative cost decisions. Keywords: business model, management, KPI, performance management, Low-Cost Carrier, airline, AirAsia group, passenger traffic.