Comparative analysis of U-Fly and Value Alliance and global alliances

Abstract

Low-cost carriers have flourished in Asia as growing wealth encourages more people to fly for the first time. At least a dozen low-cost airlines started operating in Asia Pacific the past decade, ordering hundreds of aircraft from Airbus and Boeing. In the paper, we discuss the operational model of low-cost alliances and arguments are based on the air transport market growth predictions. The aim of our research is to analyse level of hybridisation of low-cost alliances through fleet and product analysis of U-Fly and Value Alliance. We also discuss possible linkages of low-cost alliances with global alliances, in order to find the product of low-cost airline alliances that could counterbalance the strong global alliances of traditional carriers. Analysis of the market served by U-Fly and Value Alliance will identify degree of competition between these two low-cost alliances. Subsequently, the rivalry of low-cost and global alliances is evaluated. Based on the findings, we can assume that U-Fly and Value Alliances are not pure low-cost and that they are competing to each other as they cover mostly the same share of the market. Possible ways of low-cost alliances development in the future, will conclude the paper together with the recommendation for further economic research of low-cost alliances in the airline industry.

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