TransAsia & V Air dual brand strategy collapses: TransAsia to become hybrid and V Air to shut down

Taiwan’s V Air, the LCC unit of TransAsia Airways, will end operations in Sep-2016 having carried only half a million passengers since its Dec-2014 launch. V Air was constantly the underdog to Tigerair Taiwan, although both are loss-making. V Air becomes the second notable Northeast Asian LCC to exit the market after AirAsia Japan (Mk I).

Whereas AirAsia Japan suffered from a shareholder dispute, V Air and TransAsia failed due to an unsuccessful dual brand strategy. The problem was one from the start, not a scenario that unravelled. V Air could have made decisions differently, but ultimately it hinged on TransAsia.

V Air’s collapse is not self-inflicted but rather, a failure of TransAsia. TransAsia’s decision to launch a dual brand strategy was unusual, given the small size of TransAsia and its undefined market position. Instead of the sum of the two airlines being greater than the individual parts, having two sub-scale airlines fragmented both. TransAsia operates 10 jet narrowbodies while V Air operates four. TransAsia will now restructure to pursue a hybrid business model, combining the two.

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