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MarketShare releases consumer research on the Impact of Low Cost Carriers

Travel News Asia 16 September 2004

MarketShare, an independent Asia-Pacific market research firm, released findings Wednesday of a recent consumer survey of ongoing observations on low cost carriers (LCCs) in Singapore.

Marketshares research reveals that 68% of respondents will travel more often due to the launch of Low Cost Carriers while 81% are planning to travel twice or more within a year up from 41% previously. This is significant because it shows that the leisure travel market is full of potential and that it makes sense for new LCCs such as Tiger Airways, Jetstar, AirAsia and Valuair to operate in Singapore said Anthony Venus, Executive Director, MarketShare.

Marketshare found the most popular destinations that consumers will travel to with Low Cost Carriers are Bangkok (63%), followed by Hong Kong (48%), Kuala Lumpur (44%), and Phuket (43%).

In fact, for Low Cost Carriers to attract travellers, the price must be significantly cheaper. 34% of respondents would consider travelling by LCCs if the airfare is 30% to 40% cheaper. A further 17% of respondents will travel on low cost airlines is the price is up to 30% cheaper. However, for 49% of respondents the price has to be cheaper by over 40% for them to travel on a low cost airline. This is a pointer for LCCs as to what price and cost structure they ought to maintain he further added. However, with tickets being given away at $0.49 cents and $1 on the Singapore-Bangkok route, Venus warned the market must move towards a model not driven purely on price discounts and price wars alone, but a sustainable low cost model that targets various segments of consumers based on destination, recreation, and unique interest preferences.

Low-cost carriers will also open up a market for budget hotels, and have some impact on the high-end hotel market. Marketshares survey indicated that 9% of Singaporeans will spend more on hotels, 39% will spend less, and 52% will budget the same amount on accommodation.

On the money people save from taking a low cost carrier, Marketshare found that 62% intend to spend some of the savings on shopping during the trip, 38% will save the money and put it towards their next trip (traveling more frequently), while 37% will spend it on food and beverages during the trip.

ZUJI Singapore's General Manager Christina Siaw added that: "The research findings re-enforce the consumer behavior we're experiencing on ZUJI. Singaporeans are looking for, and buying, great-deal travel online. ZUJI Singapore's launch of Tiger Airways packages to Bangkok earlier this week saw demand spike to record highs, and at its peak, our site traffic - in terms of unique visitors - was 10 times normal volume".

The research on the impact of low cost carriers coincides with the launch of Marketshares Asia Pacific Travel Research Advisory Service, a monthly subscription-based research programme covering key industry trends, consumer research and changing business dynamics in the Asia Pacific travel industry. Speakers at the launch included Mr. Stelios Haji-Ionannou, founder and chairman of easyGroup and Mr. Scott Blume, CEO, ZUJI.

Ali Mirza, Executive Director of Marketshare says Marketshares service is being launched in response to demand from over 30 clients across the travel industry, who recently participated in our E-Commerce and consumer studies across Asia. The industry is changing at a rapid pace, and real-time research is required for companies to strategize in order to gain market share.

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