Airline is a complex industry. It involves major capital requirements for aircraft, monitor by government regulations, restrictions and state policy, competitive reaction from other tourist transport and requiring high level of expertise to operate and manage. Airline facing increasing globalization, rising fuel prices, heavy repair & maintenance cost, raising labor costs, increasing competition and requirements for higher service levels and greater flexibility.
The acceptance of China to World Trade Organization and Beijing's winning bid for 2008 Olympics is expected to have a beneficial effect on airline industry to Hong Kong. However, loosening regulation of China's airline industry, additional flying routes, stake, merger and alliances increase the competition of Hong Kong airline business.
These significant changes in the market environment and fundamental shifts in customer demands are requiring the operator to re-focus competitive strategy. Apart from achieve low cost or differentiate it by enhancing product attributes in a way that adds value for the customer. Globalization, Airline Alliances, Frequent Flyer Programmes and Integration in tourism sector becomes a commonly adopted ways for airline operators to extend their capacity and market reach.
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