Article Preview
TopIntroduction
Since its appearance, the low-cost carrier (LCC) model has significantly affected the aviation industry (Asahi & Murakami, 2017). The rise of low-cost (LC) airlines and the adoption of the LCC business model by airlines have contributed to an increase in general passenger traffic volume (Abda et al., 2012) as well as an extension of passenger welfare, and a lowering of average flight fares (Windle & Dresner, 1999; Abda et al., 2012). It has even been pointed out that LCCs have an impact on the tourism industry linked to the aviation industry (Castillo-Manzano et al., 2017).
Therefore, LCC has been recognized as a representative case of disruptive innovation in the aviation industry. Issues related to the LCC model have been actively addressed by aviation industry scholars and practitioners.
However, currently, it can be said that LCCs face critical challenges. Fundamentally, the aviation industry is vulnerable to external changes such as a change in the oil price, changes in the demand of global passengers, the effect of disease pandemics and terrorism attacks (Amernic & Craig, 2004; Seo, 2020). Besides, they have a low-profit margin. Besides, airlines have a similar business model and offer similar products (Seo & Itoh, 2020). Currently, even full service (FS) airlines provide slightly low flight fares, and LCCs have come to face unavoidable all-out competition with full-service carriers (FSCs) (Hunter, 2006; Rozenberg et al., 2014; Castillo-Manzano et al., 2017). Furthermore, the entry of new LC airlines has led to even more fierce competition in the aviation industry.
Even though many studies assume the LCC model is a successful disruptive innovation (e.g., Christensen & Raynor, 2003; Markides, 2006), and many studies have focused on LC airlines’ strategic and operational issues from the supply side (e.g., Windle & Dresner, 1999; Evangelho et al., 2005; Hunter, 2006; Abda et al, 2012; Asahi, R. & Murakami, 2017), empirical evaluations and attempts to find success factors in their management from the passenger side are still rare. By focusing on passengers’ voices, LC airlines can improve their service quality and competitive advantages over rivals (Liau & Tan, 2014; Sezgen et al., 2019). Also, while many previous works compare the LCC model and FSC model, it is still not clear how an LC airline can differentiate itself from its LC rivals. Strategic and operational differences between the LCC model and the FSC model have been highlighted from a theoretical perspective (e.g., Hunter, 2006; Markides, 2006; Rozenberg et al., 2014) while little attention has been given to differences among LC airlines. Considering the fierce competition among LC airlines, shedding light on differentiation among LCCs can provide important theoretical contributions. Also, as a practical measure, focusing on differentiation among LCCs is beneficial for LC airline managers’ strategic decision making and sustainable service design.
This study set the following three research questions: (i) RQ1: Is the LCC model a successful disruptive innovation from the passengers’ perspective?; (ii) RQ2: What are the factors of successful LCC service from the passengers’ perspective?; and (iii) RQ3: What are LC airlines’ differentiation points from the passengers’ perspective