ABSTRACT
This chapter examines the relevance and importance of the low-cost airlines in an increasingly globalised Malaysian economy and traces its origin and expansion. It looks at its impacts on mobility for domestic and international passengers, and explains how it has affected the incumbent national flag carrier. Globalisation has transformed the world economy into what might reasonably be called a new geo-economy. The economic system has become more integrated or globalised in many aspects, and the world is tied together into a single globalised marketplace in which the majority of the people and countries are able to partake in today's globalised economy and information networks. The chapter discusses the way in which the first low-cost airline in Malaysia achieved cost advantages greater than the incumbent full-service airlines. Air Asia began operation by introducing a fare policy attractive to passengers, just as major airlines worldwide were under pressure to cut costs in an industry with high fixed costs and low margins.
