The impact of long haul, low cost flights: linking Thailand to Japan and South Korea

Abstract

Purpose - Since the success of low-cost airlines in Thailand in 2014, the low-cost airline industry has expanded the market for long-haul flights. The objective of this study is to determine the impact of long-haul low-cost carriers (LHLCs) on tourism demand and aircraft movements between Thailand and two East Asian countries. Design/Methodology - The study includes the total number of air travellers (AIR) as the dependent variable and the explanatory variables are the total number of full service carrier (FSC) aircraft movements, long-haul low cost airline (LHLC) aircraft movements, inbound travellers from Japan and South Korea (ITOR), and outbound travellers from Thailand to Japan and South Korea (OTOR). Approach - To examine the long-run relationship between the variables, this study employed the pooled mean group autoregressive distributed lag model using 96 monthly data between 2012 to 2019 (8 years) of air traffic and tourism data between Thailand and Japan, and Thailand and South Korea. Findings - The results of the study conclude that LHLC airlines have been motivating demand for travel between Thailand, Japan and South Korea. LHLC airlines have attracted travellers from Japan and South Korea to Thailand and also serviced Thai travellers travelling to Japan and South Korea. The LHLC airlines have given travellers more options to choose from. The reduced airfares have made travel more affordable, which has motivated travel intentions. However, questions relating to the sustainability of the LHLC airlines' operations remain as the services have lower cost efficiency and rate of aircraft utilisation compared to the short haul business. Originality of the research - LHLC airlines are relatively new operations in the Asia-Pacific market. This study contributes to the knowledge of these airlines in the aviation industry by identifying whether they increase tourism demand in a country.