The Evolution of the Low-Cost Carriers in the Trans-Tasman Aviation Market

Abstract

This research examined the evolution of low-cost carriers (LCCs) in the Trans-Tasman aviation market, quantifying their impact and qualifying their influence on the market. New Zealand is Australia’s second largest tourist market, and the air routes to Australia are New Zealand’s busiest; as such, the trans-Tasman passenger traffic is of significant economic and strategic interest. This study utilized an exploratory research design and an in-depth longitudinal research approach to examine the evolution of the market and to understand the process of market development. The qualitative data was examined by document analysis. The study period was from 1995 to 2020. The low-cost carriers (LCCs) first entered the market in 1995. The case study revealed that since that time, the market has broadly had four discrete phases. The first phase was from 1995 to 2003 when the first low-cost carriers (LCCs) entered the market; the second phase saw the rapid growth in traffic following the launch of services by Pacific Blue Airlines (a subsidiary of Virgin Blue) and Jetstar Airways. An important development in the market took place in 2010, when Pacific Blue was rebranded Virgin Australia, and, as such, implemented the full-service network carrier (FSNC) business model. In 2016, AirAsia-X entered the market, utilizing fifth freedom traffic rights, to provide daily Airbus A330 services from Coolangatta to Auckland. AirAsia-X exited the market in early 2019 leaving Jetstar Airways as the sole low-cost carrier operating in the market (Phase 4).