Emerging Market Entry: The Case of the Low-Cost Airlines in Ukraine and other CIS Countries

Krasnova, Olena (2008) Emerging Market Entry: The Case of the Low-Cost Airlines in Ukraine and other CIS Countries. [Dissertation (University of Nottingham only)] (Unpublished)

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In the last two decades a new form of air transport has emerged and quickly proliferated in Europe - Low Cost Carriers (LCC). Major players in this new sector such as RyanAir and Easy Jet have grown from marginal charter-like air transport providers into larges European carriers with passenger volumes approaching 50 million travelers per year. The business model utilized was not new, being copied from a highly successful US carrier SouthWest. The main idea is to offer a "no frills" service at a cost of about 50% of what traditional air carriers would offer on a similar route. This results in significant increases in passenger volumes, attracting travelers who were earlier unable to afford air transport. High passenger volumes imply significant cash flows, which, as practice shows, results in profits often larger than those of traditional carriers with their high operating costs.

European Low Cost Carriers have created a dense network covering most of Western and some of Eastern European countries, and are expected to continue to grow. This dissertation analyzes if expansion of major European LCC's into emerging economies of CIS countries (Belarus, Russia, Ukraine) is feasible/worthwhile. Our analysis shows that from these three countries only Ukraine provides an interesting economic opportunity. Existing market barriers for LCC entry are not high, and are expected to disappear when Ukraine soon becomes a full member of the Single European Sky agreement. Based on the existing traffic data, we estimate immediately possible LCC passenger volumes to/from Ukraine to be approximately 1.4 million travelers per year, with healthy growth prospects. Flight cost estimates show that low-cost routes to Ukraine can be profitable. Our analysis of the route selection processes utilized by the major LCC players shows that it is Easy Jet that is most likely to be attracted (as well as benefit) from market entry to Ukraine. We also discuss a potential impact on Ukrainian national carriers.

Item Type: Dissertation (University of Nottingham only)
Keywords: LCC, Emerging Market Entry, developing countries
Depositing User: EP, Services
Date Deposited: 11 Sep 2008
Last Modified: 13 May 2016 10:40
URI: http://eprints.nottingham.ac.uk/id/eprint/21871

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