Effectiveness of Low Cost Strategy in Airline Industry: Analysis

This report critically analyzes the effectiveness of low cost strategies in the airline industry, focusing on Ryanair and Emirates. The study investigates the cost strategies adopted by these airlines, including operational efficiencies, pricing models, and their impact on profitability and growth. The research employs a mixed-methods approach, incorporating both primary and secondary data, including financial statements, industry reports, and academic literature. The analysis examines the relationship between low cost strategies and the airlines' market performance, considering factors such as passenger volume, revenue, and competitive positioning. The report also addresses the challenges and limitations associated with low cost models, providing recommendations for optimizing cost structures and enhancing competitiveness within the dynamic airline industry. The findings highlight the importance of strategic cost management in achieving sustainable growth and market success.

How effective is low cost strategy in the
airline industry? A critical analysis of
Ryan air and Emirates

ACKNOWLEDGEMENT
I would like to deliver sincere thanks to my mentor who provided appropriate guideline
to me for completion of current dissertation. I would also like say thanks to my colleague and
other team members for their support in data collection. Their contribution made it possible for
me accumulate data and analyze the same in the light of research aim.
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ABSTRACT
Costing is the most important element for any organization as it determine the
profitability. It decides the profit to be derived from sales turnover of the corporation.
Implementation of low cost strategy an organization can easily cope up with changing scenario
and create competitive edge in the marketplace. The main aim of current study is to analyze the
effectiveness of low strategy. In this regards two corporations such as Emirates and Ryan air
have been considered. The objectives of study consists of different cost strategies adopted by two
organizations under study. Similarly, relationship between low cost strategy and growth of
airline industry has been considered for collecting large amount of data in the direction of aim of
the study.
In order to conduct study different tools and techniques have been used for collection and
analysis of data. Here, quantitative study has been done along with deductive approach. Also,
both primary and secondary data have been collected in the light of research aim and objectives.
In addition to this, descriptive research design has been applied in the research for presenting the
information in accurate manner. Furthermore, regression analysis has been used to analysis the
collected data so as to produce valid outcome and reach at the aim of the study.
Collected data reveals that for Emirates airline low cost strategy does not have any
impact on price of products and services. It is because low cost strategy tend to reduce operating
cost but not the prices. However, management can bring modification in the pricing structure
according the requirement. On the contrary, for Ryan air low cost strategy has direct impact on
prices of services. Here, the main motive of corporation is to offer services to all types of
corporation. Owing to this, low cost of operation as well as marketing is kept. Also, company
keep same type of plane so as to reduce extra cost of maintenance and training.
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TABLE OF CONTENTS
CHPATER 1: introduction...............................................................................................................7
1.1 Background of research.........................................................................................................7
1.2 Statement of problem.............................................................................................................9
1.3 Rationale of research............................................................................................................10
1.4 research questions................................................................................................................10
1.5 Research aim and objectives................................................................................................10
1.6 Research methodology.........................................................................................................11
1.7 Structure of research ...........................................................................................................11
CHAPTER 2: LITERATURE REVIEW.......................................................................................14
2.1 Introduction..........................................................................................................................14
2.2 Cost strategies adopted by the businesses in Airline industry.............................................14
2.3 Importance of low cost strategy for Emirates and Ryan air.................................................17
2.4 Relationship between low cost strategy and growth of Emirates and Ryan air...................20
CHAPTER 3: SCOPE OF RESEARCH .......................................................................................23
3.1 Introduction..........................................................................................................................23
3.2 Operations of the sector.......................................................................................................23
3.3 Performance of sector..........................................................................................................23
3.4 Major challenges facing the sectors.....................................................................................24
3.5 Current issues in context of the sector.................................................................................24
3.6 Justification of the choice of the firm..................................................................................25
3.7 Conclusion...........................................................................................................................25
CHAPTER 4: RESESEARCH METHODOLOGY......................................................................26
4.1 Introduction..........................................................................................................................26
4.2 Research philosophy............................................................................................................26
4.3 Research design...................................................................................................................27
4.4 Research approach ..............................................................................................................27
4.5 Data collection ....................................................................................................................28
4.6 Research methods................................................................................................................28
4.7 Ethical consideration............................................................................................................29
4.8 Sampling..............................................................................................................................29
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4.9 Data analysis........................................................................................................................30
4.10 Validity and reliability.......................................................................................................30
4.11 Conclusion.........................................................................................................................31
CHAPTER 5: DATA ANALYSIS................................................................................................32
5.1 Introduction..........................................................................................................................32
5.2 Discussion of the sample characteristics..............................................................................32
5.3 Research questions...............................................................................................................34
5.4 Conclusion...........................................................................................................................45
CHAPTER 6: CONCLUSION AND RECOMMENDATIONS...................................................46
6.1 Introduction..........................................................................................................................46
6.2 Review of research objectives.............................................................................................46
6.3 Findings and answer to the research questions....................................................................46
6.4 Recommendations................................................................................................................47
REFERENCES..............................................................................................................................51
APPENDIX: QUESTIONNAIRE.................................................................................................54
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Illustration Index
Illustration 1: Profitability of leading airline groups for 2014.........................................................8
Illustration 2: Cost strategies.........................................................................................................14
Index of Tables
Table 1: Ryanair.............................................................................................................................32
Table 2: Emirates Airline...............................................................................................................33
Table 3: Emirates...........................................................................................................................34
Table 4: Ryan air............................................................................................................................34
Table 5: Emirates...........................................................................................................................35
Table 6: Ryan air............................................................................................................................35
Table 7: Emirates...........................................................................................................................35
Table 8: Ryan air............................................................................................................................36
Table 9: Emirates...........................................................................................................................36
Table 10: Ryan air..........................................................................................................................37
Table 11: Emirates.........................................................................................................................37
Table 12: Ryan air..........................................................................................................................37
Table 13: Emirates.........................................................................................................................38
Table 14: Ryanair...........................................................................................................................38
Table 15: Emirates.........................................................................................................................39
Table 16: Ryanair...........................................................................................................................39
Table 17: Emirates.........................................................................................................................39
Table 18: Ryan air..........................................................................................................................40
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CHPATER 1: INTRODUCTION
1.1 Background of research
Costing is the most important element for any organization as it determine the
profitability. It decides the profit to be derived from sales turnover of the corporation. With
implementation of low cost strategy an organization can easily cope up with changing scenario
and create competitive edge in the marketplace. The report under investigation is based on
airline industry of of UK where case study of two corporations Emirates and Ryan air is
considered. Here, Ryan air is operating in Dublin, London Stansted airports. It provides low cost
services to large number of customers. Furthermore, Ryan air operates in 30 countries in Europe
and Morocco in Africa.
On the other hand, Emirates is the largest airline in the Middle East and has operation in
144 cities in 78 countries across six continents. Airline industry is growing sector due to
increasing demand of air travel. The airline industry is contributing to gross domestic product of
UK by £51.966 billion. This in turn account for 3.4% of UK' economy, Furthermore, aviation
industry also provides huge total 200000 job in airline, 327000 aerospace and 4330000 jobs for
airports and ground services (UK AVIATION CONTRIBUTING £52 BILLION, 2013 According
to this, Emirates announced its profitability of 1.5 billion US dollars. Furthermore, Ryana air
generated profit of 1.1 billion US dollars in the same years.
From the following corporations Emirates is the second corporation which is generating
high net profitability (Leading airline groups worldwide in 2014, based on net profit (in billion
U.S. Dollars). 2015). However, the pricing strategies of air line industry are the most prominent
aspect to increase the sales turnover and meet demand of all types of customers in an effectual
manner. At present most of the airline corporations offers services at higher prices due to
increased prices of fuel and other maintenance charges. It forces management to charge high
prices in order to recover cost. On the other hand, airline industry of UK is facing several issues
such as European debt crisis, high fuel prices and continual cost pressure.
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(Source: Leading airline groups worldwide in 2014, based on net profit (in billion U.S. Dollars),
2015)
These factors are responsible for high cost for the services that are being rendered to
customers. Owing to this, industry is also facing problem in meeting high demand of air travel.
Furthermore, the topic under investigation focuses on benefits of low cost strategy for airline
industry of UK.
1.2 Statement of problem
Cost is the particular is the most important element for a product as company incurs the
same in order to produce that product and services. It helps to recover the direct as well as
indirect expenses that have been incurred at the time of production of product. In the current era
the price of crude oil and other maintenance charges for the industry are keep on increasing.
Owing to this, management of corporations are not able to lower done the price. This in result
decreases the overall profitability. However, demand of air travel is keep on increasing along
with increasing cost of airline industry like airport cost, fuel, staff as well as in-flight services.
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Illustration 1: Profitability of leading airline groups for 2014

Along with that, overheads and capital as well as leasing create barriers for airline
industry to meet high demand of industry. It is because constant increase in expenses may lower
down the profitability of that sector. Furthermore, low cost strategy is helpful to meet increasing
demand of of air travel which in turn helps organizations like Emirates and Rynair to cut the cost
of production and maintain competitive edge of the same in the marketplace.
1.3 Rationale of research
The airline industry of UK is facing barriers in meeting demand of customers due to high
cost of production. However, customers are being charged higher prices for services provided.
The current study is being done to analyze the effectiveness of low cost strategy in airline
industry. Here, emphasis has been laid on assessing the impact of low cost strategy on overall
operation of corporation. The proposed study proves to be fruitful in reducing cost of operation
of airline industry so as to meet demand of customers on right time.
In this regard, several alternative options for implementation of low strategy have been
specified which in turn build competitive edge of the firm for long run. In this context, current
report put emphasis on low cost strategy in order to reduce the expenses of airline industry and
increase overall rate of return. By implementing low cost strategy, aviation sector contribute
towards the economic development of country and ensure high growth in future time span.
1.4 research questions
The research questions for the proposed study has been formulated as follows-
 What are different cost strategies adopted by the Emirates and Ryan air in present
scenario?
 What is the importance low cost strategy for Emirates and Ryan air?
 What is the relationship between low cost strategy and growth of Emirates and Ryan air?
 What are different ways to adopt low cost strategy for businesses in Emirates and Ryan
air?
1.5 Research aim and objectives
Aim
To analyze the effectiveness of low cost strategy in the airline industry- A critical
analysis of Ryan air and Emirates.
Objectives
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 To assess the cost strategies adopted by the businesses in Airline industry.
 To identify the importance of low cost strategy for Emirates and Ryan air.
 To evaluate the relationship between low cost strategy and growth of Emirates and Ryan
air.
 To recommend different ways to adopt low cost strategy for Emirates and Ryan air.
1.6 Research methodology
The research methodology is the most significant part of study that helps to collect
relevant data and draw valid conclusion out of the same in the light of research aim and
objectives. Following points has been covered in the research methodology of proposed study-
Research philosophy
Positivism research philosophy has been applied for the current study in analyzing the
effectiveness of low cost strategy in the airline industry.
Research approach
For collection of data deductive approach has been used thereby researcher moves from
specific to general. This leads to generalize the day in accordance with specific issue that is
being faced by airline industry.
Research design
For the current topic under investigation make use of descriptive research design. It
facilitates to collect and present the data in an effectual manner.
Data collection
In order to collect data for the study, both primary as well as secondary data have been
used, it aids to gather large amount of data and derive valid conclusion from the same
Research methods
For the proposed study quantitative type of research has been used. It contribute towards
assessing the relationship between low cost strategy and growth of air line industry.
1.7 Structure of research
In order to conduct study in detail, researcher complete several chapters. It serves as steps
to conduct the research in an effectual manner. Further, current report is divided into six chapters
thereby scholar reach at the aim of the study. Following chapters are used in the current
dissertation-
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Chapter 1 -Introduction
It is the first and foremost chapter of the dissertation which provide brief overview
related to topic under study. This sector of dissertation is very important as it includes aim
objectives and research questions. Along with that, rationale behind study as well as other related
data for the corporations under study has also been provided.
Chapter 2 -Literature review
The chapter following the introduction is literature review which create strong data base
for the study. In the current study in analyzing the effectiveness of low cost strategy in the airline
industry. It is helpful in understanding the concept of low cost strategy in the airline industry.
Chapter 3 -Case study
It is the third chapter of study that contain detail related to corporations which have been
selected for the study. This provides overview regarding country, sector and related information.
For the current study the case of Emirates airline as well as Ryan air have been considered.
Chapter 4-Methodology
The chapter following case study is of research methodology that includes several tools
and techniques. It facilitates to collect data and draw valid conclusion from the same.
Furthermore, current research provide in-depth information related to research framework that
have been used. It contribute towards completing all the research activities in an effectual
manner.
Chapter 5- Data analysis
The research work is highly support by data analysis chapter as it provide evidence
related to accomplishment of research aim. At this stage all the collected information have been
analyzed in the light of research aim and objectives. Further, it helps to derive meaningful
outcome for the study.
Chapter 6- Conclusion and recommendations
It is the last chapter of dissertation wherein conclusion is proposed according the research
objectives. This chapter is completed in summarize form of data analysis. According the issues
identified in the study, recommendations are also provided. It makes readers able to understand
the concept of low cost strategy.
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CHAPTER 2: LITERATURE REVIEW
2.1 Introduction
The literature review is the most important part of dissertation which is based on
secondary research. Here, researcher includes views of different authors so as to develop deep
understanding about the topic. For the current research in analyzing the effectiveness of low cost
strategy in airline industry literature re view have been done in accordance with research aim and
objectives. This in turn researcher gain insight about the topic under investigation.
Furthermore, literature review is done for in-depth discussion related to effectiveness of
low cost strategy that aid to reach at the aim of the study. In addition to this collected data have
been critically assessed in order to produce valid outcome. Similarly, cost strategies and
important of low cost strategy have been explained in the chapter. Along with that, relationship
between low cost strategy and growth of Emirates and Ryan air have also specified.
2.2 Cost strategies adopted by the businesses in Airline industry
Cost strategies play vital role for the airline industry as it decides the proportion of profit
to be derived after rendering services to customers. According to Malighetti, Paleari and
Redondi (2009) there are different types of cost strategies are used by the corporation in
accordance with their specific objectives. Here, objectives are like increased sales turnover,
increased number of customers and high profitability as well as competitive edge. These
objectives assists management to select the appropriate strategies in order to accomplish the
same on right time. It gives upward direction to retail sector and make it possible for firm to
achieve long as well as short term objectives on right time. It can be understood with the help of
following porter's generic strategies-
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(Competitive Strategies, 2006)
The aforementioned diagram is showing different strategies are used by airline industry.
It assists management to reduce the future risk and increase overall rate of return. However, it
depend on management to select the best strategies among two. This in turn helpful to render
services and meet expectations of customers in an effectual manner. The different cost strategies
are implemented according to characteristics of market segments. The first and foremost strategy
is cost leadership. Under the generally low prices are kept for the product for a specific market
segment. This in turn increases attention of buyers and forces them to make purchase decision.
Graham and Vowles (2006) stated that, several aspects are considered while
implementing cost leadership strategy. The first and foremost aspect is optimum utilization of
limited assets in order to spread fixed cost over total number of units to be be produced. By
spreading fixed cost economies of scale can be achieved by the corporation that aid to save
additional cost. It is helpful to increase flow of production and render services to customers on
relatively low prices. At this situation organizations operating in airline sector can easily create
entry barrier for competitors as they cannot lower down cost.
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Illustration 2: Cost strategies

The second aspect is to achieve low direct or indirection operation cost. It is made
possible by offering high quality of services that generally contain high margin. It can be
critically evaluated that management of airline organization need to focus on cost conscious
culture and payment of low wages as well as low rent for areas. Similarly, continuous search
need to be made in the direction of reducing cost of production. It consists of outsourcing,
controlling and minimizing other related cost like advertisement and distribution. Furthermore,
proper control is required cover the value chain functions. It can be critically evaluated that low
cost strategy depicts poor brand image of the firm.
Also,Tushman and O’Reilly (2006) asserted that airline industry can have negative
impact from low cost strategy as customers loyalty cannot be find by offering low cost product.
It is because customers can easily switch from one to another brand. It leads to create barrier in
the growth of industry. On the other hand, Francis, Humphreys, Ison and Aicken (2006) argued
that differential strategy is also effective wherein services are provided in unique and
competitors do not have idea of the same. It aids to retain customers for longer time span. The
most positive aspect for the same is related to profitability. Under this, customers become ready
to pay high prices for the products and services. However, differential strategy can be applied
only in that market segment where customers not price sensitive.
In addition to thisSaha and Theingi (2009) small companies cannot make use of
differential strategy as it create additional cost for them. For example, any organization opting
differential strategy must make high initial investment in order to provide services in unique
way. It depend on capability of firm that competitors cannot copy the style. Likewise, it is also
required for companies to have sufficient resources in order to produce product in unique
otherwise their strategy may fail to gain attraction of large number of buyers who not price
sensitive.
Piga and Bachis (2006) stated that, focus strategies are also come under low cost strategy
wherein management of airline industry put emphasis of either product quality or cost of the
same. Here, corporations take into account specific need of particular market segment in order to
meet their requirement in an effectual manner. However, it highly depend on the resources and
customers' requirement where firm is focusing. This strategy is effective alternative in order to
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earn above average return on investment. Furthermore, specific market segments need to be
considered so that services can be design accordingly.
Gittell, Cameron, Lim and Rivas (2006) explained that marketing mix is altered
accordingly to the uniqueness of services. It enables corporation to carry out all business
activities in an effectual manner. For example, new product which is slightly different from
competitors will be offered on high prices. Further, it will be distributed at the unique place
where customers can easily approached. Likewise all other activities such as promotion,
marketing is done in the same manner. Here, it is very important for management to focus on the
level of competition. Hence, focus strategy is feasible to implement in weakest competitive
areas.
Graham and Shaw (2008) argued that focusing on specific market segment and provide
services to them in the same direction prove to be effective lower down cost of production and
increase sales turnover. Thus, differential and focus strategy assists corporations to reduce the
impact of competition and increase customers loyalty. It gives certainty for future business
activities. It enables companies to ensure their long run survival with increased rate of return in
the marketplace.
2.3 Importance of low cost strategy for Emirates and Ryan air
According to Torlak, Sevkli, Sanal and Zaim (2011) a pricing strategy in which a
company offers a relatively low price to stimulate demand and gain market share. If two
companies make essentially identical products that sell at the same price in the market, the one
with the lower costs has the advantage of a higher level of profit. The low cost airline company
is able to do a number of things to maintain or increase its market share.
Goll, Johnson and Rasheed (2008) asserted that, by opting low cost strategy airline
industry can invest more in marketing, advertising, research and development so that more
customers are attracted towards there brand and there would be increase in the quality of the
product. When an airline company is applying a low cost strategy then it must have a thorough
understanding of cost. Low cost strategy helps the airline industry to resist the bargaining power
of buyers.
Hunter (2006) asserted that low cost strategy helps the airlines to establish an alternative
competitive advantage, as they are offering flights in a low rate as compare to other companies.
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Airlines companies using this strategy will typically earn low margins but achieve high sales
volumes. Low-cost providers aim their products at the broad market, making them available to as
many consumers as possible to achieve high sales volume.
According to Fu, Lijesen and Oum (2006) low cost strategy have multiple benefits for the
firm as it helps to in achieving the objectives. It consists of high sales turnover, increased
number of customers and competitive edge. Here, high sales turnover is the most prominent
aspect because when cost of production is reduced then sales turnover automatically increases to
a great extent. It has already been noticed that airline industry has to incur several kind of cost
which in turn increase prices of product. It creates hurdles in meeting expectations of customers.
Owing to this, low cost strategy is the facilitates to lower down cost of production. However, it
depends on ability of management to cope with changing scenario and increasing overall rate of
return.
Francis, Dennis, Ison and Humphreys (2007) asserted that management of companies
operating in airline industry compromise with quality of products in order to reduce the cost of
production and again competitive edge in the marketplace. It can be critically evaluated that low
cost strategy may be in effective for long run. Owing to this, it is very critical for corporation to
ensure sustainable growth in the marketplace. Furthermore, low cost is fruitful strategy to meet
high demand of product and services as company can easily cope up with changes without
having any kind of impact on the prices.
Teichert, Shehu and von Wartburg (2008) stated that low cost strategy is helpful in
attracting more customers towards the offering of corporation. It is because there are many price
sensitive buyers who want to access good quality of products and services that are being offered
at low prices. This in turn helpful to increase sales turnover. However, competitive edge is also
created by the same so as to ensure long run survival of firm. In addition to this, low cost
strategy enables management to develop new product and services in the direction of growth ans
success of corporation.
Bieger and Wittmer (2006) explained that low cost strategy is important for airline
industry to ensure sustainable development. It is because by low cost strategy make it possible to
utilize the limited natural resources in an effective manner. The optimum utilization of limited
resources helps to create distinctive image of the company in the marketplace. It leads to
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maintain consistent flow of production and increase market share of the firm. Similarly, high
market share depicts brand image which in turn attract investors towards the same. The rationale
behind attraction of investors is to produce product at lower cost and increase overall rate of
return without any kind of interruption. In addition to this, reduced cost of production is the
effective means to manage all production activities in an effectual manner.
Akan, Allen, Helms and Spralls (2006) stated that, continuous cost control is the
imperative means to give upward direction to business in the near future. It is made possible by
focusing upon quality of workforce, new technology and efficiency of the firm. This in turn
prove to b effective in saving cost and delivering good quality of services to large number of
potential buyers. It can critically evaluated that some time under-trained workers are hired with
overpaid that creates barriers in reducing cost. It generates need to put emphasis of quality of
personnel so as to speed up in the flow of production.
Dennis (2007) explained that low cost strategy develop economies of scale wherein
airline industry achieve higher productivity and generate relatively high profitability. However,
management of corporations operating in airline industry tend to purchase input at lower prices
and make their use with effective planning. This in turn helpful in decreases cost of production.
It enables management to generate high profitability and create competitive edge in the
marketplace. Furthermore, Ciliberto and Tamer (2009) asserted that low cost strategy is directly
associated with competitive edge wherein organization take into account several strategies of
competitors. It assists employees to focus on development of unique products or services in
lower prices.
According to De Neufville (2008) low cost strategy assists airline industry to maintain
productivity even in financial burden also. It has direct impact on the employee retention that
determine long run growth of the firm. However, employee motivation is also attached with low
cost strategy as the can get incentives when company incur target rate of return. Furthermore,
with the help of employees retention and high rate of return, airline industry can easily expand
itself at global level. Likewise, putting low cost for the production of services, an organization
can easily lower down the prices in comparison competitors.
Wensveen and Leick (2009) stated that curing cost of production is not an easy task
instead it generate need of training at the initial stage. Owing to this for the first time airline
17

industry have to incur additional expenses so that workforce can be prepared accordingly.
Furthermore, management focuses upon specific requirement of price sensitive customers so as
produce services accordingly. It leads to satisfy their need and retain them for longer time span.
2.4 Relationship between low cost strategy and growth of Emirates and Ryan air
According to Aaker (2008) low cost strategy and growth has positive relation because
when an organization reduce cost of production then it tend to increase ratio of profitability.
Presently, it is very hard for airline industry to meet increasing demand of customers due to high
cost of production. The cost involve labour, fuel, handling and maintenance as well as landing.
Along with that, parking, overflying and operating leases. It enhances overall cost of production
thereby industry is unable to meet demand of customers. However, the problem is generating due
to constant increase in the fuel prices and high wage policies.
Belobaba, Odoni and Barnhart (2009) stated that many of the corporations are not able to
offer services even at high prices just because high cost of production. This all depend on their
ability to manage the cost and provide services to customers on prices. Owing to this, low cost
strategy is the only alternative thereby airline can ensure their long run survival with increased
rate of return in the marketplace. It depicts that implementation of low cost strategy is the
profitable deal for the many of companies as it ensure long run growth of the same.
According to Porter (2008) low cost strategy takes the organization in the direction of
growth. Here, management of companies focus on different types of cost that are to be incurred
at the time service delivery. This is helpful for firms to reduce per unit cost and meet
expectations of buyers in an effectual manner. It shows that low cost strategy make it possible to
create competitive edge and increase number of customers. These factors determine
sustainability aspect of airline industry because they can easily ensure their growth in the
marketplace. Further, low cost strategy do no have any impact on the price of product because
seller will charge the normal price but if company make effort to reduce cost then it
automatically increased overall profitability.
Malighetti, Paleari and Redondi (2009) stated that low cost strategy is the effective means
to ensure optimum utilization of limited resources. It facilitates corporations to move ahead and
create competitive edge of the firm. Furthermore, low cost strategy forces management to offer
services in lower prices and again attraction of customers in the same. However, organization
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must be able to reduce the additional expenses that generally incur on activities like selling and
distribution as well as research and development. By this way airline industry can easily focus
upon expansion activities. It can be critically evaluated that many a time companies which offer
services on lower cost cannot ensure growth.
According to Graham and Vowles (2006) the rationale behind behind slow growth even
at low cost is poor quality of product. It is because most the time management have to
compromise with quality in order to offer product in lower price. At this time, other
organizations which offer product with unique quality tend to attract more buyers. However,
there are always customers who prefer lower cost of product. This again become critical as the
customer can easily switch from one to another brand.
Saha and Theingi (2009) stated that, customers who are price sensitive, will surely move
towards those seller who provide services in lower prices. This may decreases overall rate of
return of the firm because low sales turnover. Owing to this, firms must put emphasis on
specified preferences of buyers. This in turn helpful in achieving high growth and meet
expectation of customers in an effectual manner. However, extra benefits are also given to
customers along with low cost strategy. It becomes easy for companies to cope up with changing
scenario. In addition to this, low cost is helpful even at the time when corporations are facing
from financial burden. In such types of conditions firms can provide services in low cost.
It facilitates to meet expectations of customers on right time. It leads to create
competitive edge and ensure expansion of the firm in the marketplace. However, market leaders
copy the loo-falls of low cost players. This in turn contributes towards increasing attention of
buyers. Further, Torlak, Sevkli, Sanal and Zaim (2011) asserted that low cost strategy make it
possible to ensure long run growth of airline industry. It assist corporation to meet the changing
preferences of customers and speed up in the flow of production in an effectual manner. The
foremost aspect of low cost is that organizations do not require to too much modification in the
pricing strategy. It is because reduction in cost ultimately gives benefit to the firm.
According to Hunter (2006) growth of retail industry is determined by considering
different factors such as increasing number of customers, ensuring sustainable development of
sector and meeting demand of customers in an effectual manner. All these factors are followed
by costing or low cost strategy because in each and every business activity one must include
19

financial resources. Thus, cost is directly associated with growth of airline industry. It can be
critically evaluated that in favorable situation companies can get difficulties in retention of
customers. It is because even by offering good quality of products and services in lower cost, the
price sensitive customers cannot be retained.
Teichert, Shehu and von Wartburg (2008) stated that, low cost strategy also prove to be
ineffective when customers are not price sensitive and demand for high quality products. In this
situations, firm need to put extra efforts in order to maintain service quality and attract more
customers. It can be critically evaluated that such kind of circumstances create uncertainty for
the airline industry. It shows that low cost strategy have both positive and negative aspect which
must be considered by the firms. Otherwise it can hamper future business performance to a great
extent.
De Neufville (2008) asserted that, managing growth of airline industry highly depends on
the ability of management to reduce burden of production and meeting the expectations of
customers in the competitive marketplace. It forces corporations to address all the issues which
can be faced while implementing low cost strategy. It is because there is always critical aspect
that low cost strategy create can easily switch customers from one to another brand.
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CHAPTER 3: SCOPE OF RESEARCH
3.1 Introduction
It is the most imperative chapter of dissertation which provides overview about industry
under study. It assists researcher to incorporate all important information related to corporation.
It clarify overall scenario to readers. Further, this chapter lays emphasis on performance of both
corporations such as Emirates and Ryan Air. Furthermore, current issues which are being faced
by air industry have also been specified. In addition to this, major challenges facing by the
sectors are explained.
3.2 Operations of the sector
The operation of aviation industry requires consumption of natural resources like fuel and
other related raw material. During resession the demand of air travel had been decreased to a
great extent. However, low entry barriers and allowance to foreign equity facilitates to speed up
in the flow of production by keep on providing good quality of services to large number of
passengers. Similarly, rise in income levels and demographic profile push up the demand for air
travel which in turn boost the performance of industry (Emirates, 2015).
It consists of civil aviation, air transport and generation aviation. Along with that,
military aviation is also included in the operation of aviation industry. Further, aviation industry
of Dubai is also out performing with updated technology and effective cost strategies. This in
turn helpful to meet requirement of passengers in an effectual manner. Here, Emirates will be the
first corporation to introduce Smart-Landing and Smart-Runway Safety. It ease to ensure safe
traveling of number of customers and reduces chances of accidents of runway incursions and
excursions.
3.3 Performance of sector
The performance of both aviation industry depend upon specific areas. Here, Emirates
airline operates in Middle East where positive growth persist even at challenging situations in the
market. However, oil prices keep on increasing which create barriers in growth and success of
aviation industry. It is one of the biggest employers in Middle East which employs near about
62000 employees across all its 50 business units. Further Emirates is owned by government of
Dubai. Owing to this corporation is provided proper finance during expansion and launch of
21

services indifferent form. This is the reason the company is generating relatively high
profitability.
Ryan air has become global industry giant. Recently, corporation generated lower
profitability. Still it is performing up to the mark. It has several modern network which is helpful
in satisfying need of different types of buyers. Further, main competitors of Ryan air are British
Airways, Wizz Air and SkyEurope and EasyJet. However, company offers services at low cost.
Also the marketing cost for the services is also kept very low which in turn reduces cost of
production. It facilitates to attract large number of buyers. It can be critically evaluated that
buyer for any other services opt. Apart from this Ryan air just has one type of air plane which in
turn create different kind of image in the mind of price sensitive customers (Ryanair, 2015).
3.4 Major challenges facing the sectors
There are several kind of challenges faced by the aviation industry that create hurdles in
maintaining smooth flow of production and providing good quality of services. It consists of
several issues like high cost of labour and raw material as well as increasing demand of services.
Owing to this, corporation need to incur high cost of production which in turn decreases overall
profitability to a great extent. Here, high cost of fuel is the main constraint thereby companies
face problem while meeting demand of different types of customers. Further, in present era
employee dissatisfaction is becoming poor trend which generate need of modification in the
work scenario (Leading airline groups worldwide in 2014, based on net profit (in billion U.S.
Dollars), 2015).
However, due to employee dissatisfaction corporations face problem in providing
services. On the other hand, it is not possible for aviation industry to offer high return to
employees or labour due to increase in additional cost. This in turn forces management to pay
relatively low wages to labour. Furthermore, there are several uncontrollable factors such as
external environment which create difficulties in managing all business activities. These factors
are political, economical and technological.
3.5 Current issues in context of the sector
There are several issues faced by aviation industry which consists of safety, sustainability
and environmental issues. Here safety is the main issues wherein most of customers feel fear
while accessing air travel services. It is because accidents do happens due to environmental
22

issues and unfavorable conditions. However, updated technologies make it possible to forecast
the condition and then provide services to passengers. Similarly, noise, pollution, resources use
and climate changes as well as other related risks.
Further, management of environmental issue is the typical task for global aviation due to
climate change and gaseous emissions. However, innovative air traffic management initiatives
has been taken for the corporations in order to reduce the impact of aviation industry on
environment. In addition to this, ENSURE project was also launched in 2009 that aids to provide
clear routes for airlines. Furthermore, new techniques are used to fly airline without any kind of
hurdles and it also help to reduce aircraft fuel and CO2 emissions.
3.6 Justification of the choice of the firm
The rationale behind selection of aviation of industry is to analyze the effectiveness of
low cost strategy. Here, main emphasis has been laid on airline industry because demand of air
travel is keep on increasing with increasing level of income as well as demographic profile.
However, the cost of fuel and labor is also increasing. Owing to this, industry is not able ensure
sustainable growth. Thus, it is effective to focus upon airline industry so management can adopt
low cost strategy in order to increase overall rate of return and meet requirement of passengers in
an effectual manner. Therefore, proposed study is helpful for airline industry to cope up with
changing scenario effectively.
3.7 Conclusion
The aforementioned information depicts that aviation industry is outperforming in the
marketplace. However, cost constraint create barriers for management to cope up with changing
scenario. Owing to this, it is important to adopt low cost strategy that aid to reduce cost of
production and speed up in the flow of production.
23

CHAPTER 4: RESESEARCH METHODOLOGY
4.1 Introduction
Research methodology is the structural process wherein data are collected through
different sources. It assists scholars to collect database and draw valid conclusion for the study
accordingly. Research methodology plays vital role in achieve aim of the dissertation as it
consists different tools and techniques which help to collect and analyze data in an effectual
manner. For the current dissertation in analyzing the effectiveness of low cost strategy different
tools and techniques have been used. These are specified as follows-
4.2 Research philosophy
Research philosophy is the important part of research methodology. It is based on certain
shared assumptions, practices and values thereby researcher prepare perception
regarding particular research topic. With the help of research philosophy deep understanding is
developed among researcher (Bhattacharyya, 2009). There are different types of research
philosophy
are used such as positivism, interpretivism and realism. Here, interpretivism philosophy is used
for qualitative research wherein data are collected from socially constructed environment. It
facilitates to collect data without any kind of interpretation. On the other hand, realism
philosophy is based on beliefs that really exist in the environment. Further, realism philosophy
assists scholar to define reaction of individual towards the real situations.
In addition to this, positivism philosophy is used in natural science where critical base is
provided for the study. Further, general sources are used to collected facts and figures which are
relevant to research issue. Similarly, positivism philosophy is used to collect data from natural
environment where no any kind of changes are made. It shows that for the current dissertation in
analyzing the effectiveness of low cost strategy positivism philosophy has been applied
(Crowther and Lancaster, 2012). Also, it enables researcher to draw valid conclusion from the
collected data and produce suggestions in the same direction. However, the scholar play key role
in the positive philosophy so as to analyze and evaluate the collected data in the light of research
aim and objectives.
24

4.3 Research design
Research design serves as the blue print for the study that facilitates to present the
findings of the research in an effectual manner. It is helpful for reader in understanding the scope
of study and valid outcome of the same. There are different types of research designs are used
such as exploratory, explanatory and descriptive. Here, exploratory research is effective where
the main aim of study is to develop new idea. It is used for that kind of study where the
researcher want to explore the new insight from the selected research topic. On the other hand,
explanatory research is used for that kind of research issue where problem has not been
identified yet (Fiegen, 2010).
This assists scholars to understand the problem thoroughly and interpret the alternative
options to resolve the same. In addition to this descriptive research design is used to define the
characteristics of population being studied. It helps to present the outcome of the study in an
effectual manner and derive the valid conclusion from the same (Jackson, 2010). It shows that
for the current research descriptive research design has been applied. Furthermore descriptive
research design is helpful in developing several alternative solutions so as to reach at the aim of
the study.
4.4 Research approach
The research approach is the most important part of research methodology that helps
sho9alr to collect database for the study. The approach is helpful in developing the knowledge
about the topic under investigation. There are two types of research approaches are used such as
deductive and inductive (Kuada, 2012). However, the selection of approach is based on research
type. Further, inductive approach is used in qualitative type of research that help to collect large
amount of data. Further, by making use of inductive approach researcher move towards general
to specific. On the other hand, deductive approach is used for quantitative type of research.
Under this, scholar move from specific to general so as to collect large amount of data
and produce the alternative solutions in the same direction. It depicts that for the current
dissertation in analyzing the effectiveness of low cost strategy, deductive approach has been
used. Here research put emphasis on generalizing the collected data in order to produce valid
outcome (Kumar, 2010). Similarly, at first focus has been laid on low cost strategy in airline
25

industry so as to analyze its effectiveness for long run growth. This helps to develop alternative
solution for the specified research issues and reach at the aim of the study.
4.5 Data collection
Data collection is the most important part of research methodology that help to identify
different sources through which data can be collected. There are two kind of data such as
primary and secondary which are collected through different means. Under this, primary data are
collected by researcher at first hand in accordance with purpose of study. On the other hand
secondary data are already available (Loshin, 2010). However, scholar access the secondary data
in accordance with research aim and objectives. It depicts that for the present study both primary
and secondary data have been selected. This in turn prove to be effective to provide suggestion in
the direction of aim of the topic under investigation.
For collecting primary data questionnaire has been which consists of close ended
questions. It assists research to have direct or indirect interaction with respondents in order to
gather data according to requirement. Furthermore, different secondary sources like journals,
books and other published material have been used (Ihantola and Kihn, 2011). It is the effective
means to create strong data base for the study in order to derive valid conclusion. In addition to
this, collection of primary and secondary data consume high time as collected data need to be
processed in the light of research aim and objectives.
4.6 Research methods
Research method or type of research method is the imperative means to select the tools
and techniques for the research. Basically two types of research methods are used such as
qualitative and quantitative. Here, qualitative method of research is that wherein research
generally analyze the data in accordance with qualitative techniques. Further, in qualitative
research data are collected through use of interpreitvism philosophy as the main emphasis is laid
on social aspect. On the other hand, quantitative research is that where researcher observe or
analyze the collected data through different statistical technique (Franklin, 2012).
It depicts that for the present study in analyzing the effectiveness of low cost strategy
quantitative type of research method has been used. This helps to analyze the relationship of low
cost strategy on the growth of airline industry (Grafton, Lillis and Mahama, 2011). Similarly,
26

derived outcome prove to be effective in providing suggestions for the corporation which are
operating in airline industry.
4.7 Ethical consideration
Ethical consideration is the the most important part of research methodology which
maintain the accuracy level and ethics in the dissertation in an effectual manner. Following
ethical consideration are there in the current research-
 Ethics is maintain while collecting secondary data because research accessed to authentic
sources. However, some of the sites were restricted to use but prior permission have been
taken for many of those sites. It facilitates to include all relevant information in the
research (McGrath and O'Toole, 2012).
 The topic under investigation consists of work done by various research scholars in the
same field. Here, ethical norms have been applied by rephrasing the others work and
citing the same properly. This aids to incorporate all the important data in the study so as
to reach at the aim of the study in an effectual manner.
 Furthermore, for collecting primary data, respondents have not been forced to provide the
information. Instead they have been provided information related to purpose of
conducting the study. Also, information provided by them has been kept with
confidentiality. In addition to this, data provided by them has been destroyed after
completion of study so as to protect their right (Flick, 2011).
4.8 Sampling
Sampling is the another prominent aspect of research methodology as it provide evidence
regarding fulfillment of research aim and objectives. Sampling refers to small individual unit of
overall population being studied. It represent overall population of the study that aids to collect
large amount of data. There are different types of sampling methods are used such as
probabilistic and non-probabilistic sampling. In probabilistic sampling all respondents have
equal chance to get selected in the sample where non-probabilistic sampling does not give equal
chance for all participants (Krishnaswamy, Sivakumar and Mathirajan, 2009).
For the present topic under investigation non-probabilistic sampling has been used as the
selected respondents are small in number. Here, managers working in airline industry are
considered as the population but ten of them have been selected from Emirates airline and Ryan
27

air. However, purposive sampling has been used in order collect data from selected respondents.
The rationale behind selecting the purposive sampling is to collect data from highly experienced
managers. It facilitates to derive valid conclusion for the chosen organizations (Modell and
Humphrey, 2008). Thus, selected sample size and type both help to produce valid outcome for
the study. It is helpful in provide right suggestions for the management of both airline
corporations.
4.9 Data analysis
Data analysis is the most important chapter of dissertation that provide evidence that aim
of the research has been fulfilled. Under this collected data are analyzed in the light of research
aim and objectives so as to derive valid conclusion. There are two types of data analysis
techniques have been used such as qualitative and quantitative (Johnson and Christensen, 2010).
Qualitative data analysis techniques consists thematic analysis wherein analysis of collected data
are done in accordance with themes. It facilitates researcher to describe the collected data in an
effectual manner. On the other hand, quantitative data analysis techniques is that wherein
different types of techniques are used such as regression, correlation and other statistical tools.
Similarly, statistical tools are used in the quantitative research that aid to reach at the aim of the
study
As the present research is of quantitative type so quantitative type of data analysis has
been used. Owing to this, statistical tools has been used for analyzing the collected primary data
that aid to draw valid conclusion (Saunders, 2003). Furthermore, secondary data have been
analyzed through ratio analysis and other related methods in order to assess financial
performance of both airlines which are considered in the study. In addition to this, statistical
tools have been used for the analyzing the primary data which are collected through managers of
airline industry.
4.10 Validity and reliability
Validity and reliability is the most prominent aspect of the study. It assists scholar to
collect and analyze the data in an effectual manner so as to complete overall research report with
ethical manner. In the present dissertation in analyzing the effectiveness of low cost strategy for
airline industry validity and reliability have been maintained. Here, validity has been maintained
through inclusion of relevant methods in the study (Johnson and Christensen, 2008). It is helpful
28

in achieving aim of the study and development several alternative suggestions for the airline
industry. Further, the present research has been done by keeping in mind research questions and
objectives of dissertation.
Reliability is the another imperative aspect which shows consistency of collected data. It
helps to reduce the inconsistencies by inclusion of accurate facts and figures related to airline
industry. In addition to this, authentic and reliable sources have been approached while
collecting both primary as well as secondary data. Thus, both reliability and validity have been
followed in the dissertation which leads to produce valid outcome for the topic under
investigation.
4.11 Conclusion
According to the aforementioned description of several tools and techniques available in
the research, best suited techniques have been selected for the study. It is helpful in collecting
large amount of information and using the same in order to provide suggestions for airline
industry. It can also be said that, selected tools are effective in order to draw valid conclusion for
the study and clarify among readers the use of several techniques in research. In addition to this,
selected methods like statistical tools and ratio analysis are the imperative way to analyze the
performance of corporations in the marketplace so as to assess the future performance of the
same.
29

CHAPTER 5: DATA ANALYSIS
5.1 Introduction
The data analysis chapter is the most important part of dissertation that consists of detail
analysis of collected data. It facilitates to reach at the aim of the study and produce valid
outcome from the same. Further, quantitative method has been used while analyzing the
collected data in the light of research questions. It aids to determine the impact of low cost
strategy on growth of airline industry. Apart from this, DA( data analysis) is helpful to provide
suggestions for the management of corporation.
5.2 Discussion of the sample characteristics
The sample selected for the current study is helpful in gathering large amount of
information related to airline industry. Here, managers from Emirates and Ryan air have been
approached in order to collect appropriate data. In this regards total ten respondents have been
selected who are experiences and have enough knowledge regarding aviation industry. Further,
all the selected managers represent the population very well. Thus, selected respondents have
thorough knowledge regarding different cost strategies and they are able to take appropriate
decision in the same areas. Here, aviation industry has been selected and from which two
organization have been considered. The financial performance of both organization have been
assessed with the help of ratio analysis. According to following tables, financial performance of
Ryan air is relatively better than Emirates. Furthermore, current performance of both
corporations has been improved to a great extent.
Table 1: Ryanair
Ratios Formula 2015 2014
Profitability ratios
Operating profit 1042.9 658.6
Net profit 866.7 522.8
Net Sales 5654 5036.7
Operating Profit Ratio
(Operating Profit/ Net Sales)
*100 18.45 13.08
Net Profit Ratio (Net Profit/ Net Sales) *100 15.33 10.38
Liquidity ratios
Current Assets 5742 3444.3
Current Liabilities 3346 2274
Closing Stock 2.1 2.5
30

Current Ratio
Current Assets / current
Liabilities 1.72 1.51
Quick Ratio
(Cu. Assets - Cl. Stock)/Cu.
Liabilities 1.72 1.51
Efficiency Ratios
Net Sales 5654 5036.7
Total Assets 12185.4 8812.1
Total Assets Turnover Ratio Net Sales/ Total Assets 0.46 0.57
Gearing ratios
Debt 4032 2615
Equity 4035 3285
Debt Equity Ratio Debt/ Equity 1.00 0.80
Table 2: Emirates Airline
Ratios Formula 2015 2014
Profitability ratios
Operating profit 5893 4260
Net profit 4728 3417
Net Sales 86728 80717
Operating Profit Ratio
(Operating Profit/ Net Sales)
*100 6.79 5.28
Net Profit Ratio (Net Profit/ Net Sales) *100 5.45 4.23
Liquidity ratios
Current Assets 27735 27354
Current Liabilities 34481 32428
Closing Stock 1919 1706
Current Ratio
Current Assets / current
Liabilities 0.80 0.84
Quick Ratio
(Cu. Assets - Cl. Stock)/Cu.
Liabilities 0.75 0.79
Effciency Ratios
Net Sales 86728 80717
Total Assets 111362 101604
Total Assets Turnover
Ratio Net Sales/ Total Assets 0.78 0.79
Cost of goods sold 82926 78376
Inventory 1919 1706
Inventory Turnover ratio COGS/Inventory 43.21 45.94
Gearing ratios
Debt 42426 10068
Equity 28286 25471
Debt Equity Ratio Debt/ Equity 1.50 0.40
31

5.3 Research questions
The collected data have been analyzed in the light of research questions. The research
questions have been specified as follows. It proves to be effective in producing valid outcome
and developing effective suggestions in the same direction-
 What are different cost strategies adopted by the Emirates and Ryan air in present
scenario?
 What is the importance low cost strategy for Emirates and Ryan air?
 What is the relationship between low cost strategy and growth of Emirates and Ryan air? What are different ways to adopt low cost strategy for businesses in Emirates and Ryan
air?
Analysis of collected data
Objective 1:Cost strategies adopted by the businesses in Airline industry
High cost strategy and luxurious services
Table 3: Emirates
Do you think that high cost strategy aids to provide luxurious services to
passengers?
Frequency Percent Valid Percent Cumulative
Percent
Valid Yes 5 11.6 100.0 100.0
Missing System 38 88.4
Total 43 100.0
Table 4: Ryan air
Do you think that high cost strategy aids to provide luxurious services to
passengers?
Frequency Percent Valid Percent Cumulative
Percent
Valid Yes 2 40.0 40.0 40.0
No 3 60.0 60.0 100.0
Total 5 100.0 100.0
According to the aforementioned table, Emirates hotel has high cost in order to provide
luxurious services. The managers stated that without incurring high cost corporation cannot
32

provide good quality of services. On the other hand, 40% managers of Ryan air agree that by
adopting high cost strategy corporation can provide good quality of services. However, 60%
participants do not agree with same.
Effect of low cost strategy on prices of services
Table 5: Emirates
To what extent do you think that low cost strategy affect prices of services?
Frequency Percent Valid Percent Cumulative
Percent
Valid Highly effective 1 2.3 20.0 20.0
Effective 1 2.3 20.0 40.0
Neutral 2 4.7 40.0 80.0
Least effective 1 2.3 20.0 100.0
Total 5 11.6 100.0
Missing System 38 88.4
Total 43 100.0
Table 6: Ryan air
To what extent do you think that low cost strategy affect prices of services?
Frequency Percent Valid Percent Cumulative
Percent
Valid Highly effective 2 40.0 40.0 40.0
Effective 2 40.0 40.0 80.0
Least effective 1 20.0 20.0 100.0
Total 5 100.0 100.0
According to the above table, majority of respondents are neutral towards effective of
low cost strategy on prices of services. Similarly, managers of Ryan air consider that low cost
strategy affect prices to a great extent. It is because due to low cost strategy, corporation put low
prices for the services that aid to satisfy need of customers in an effectual manner.
Importance of low cost strategy for Emirates and Ryan air
Table 7: Emirates
Do you agree that low cost strategy assists organization to get economies of scale?
Frequency Percent Valid Percent Cumulative Percent
Valid Strongly disagree 1 2.3 20.0 20.0
33

Disagree 1 2.3 20.0 40.0
Agree 1 2.3 20.0 60.0
Strongly agree 2 4.7 40.0 100.0
Total 5 11.6 100.0
Missing System 38 88.4
Total 43 100.0
Table 8: Ryan air
Do you agree that low cost strategy assists organization to get economies of
scale?
Frequency Percent Valid Percent Cumulative
Percent
Valid Disagree 1 20.0 20.0 20.0
Neutral 1 20.0 20.0 40.0
Agree 2 40.0 40.0 80.0
Strongly agree 1 20.0 20.0 100.0
Total 5 100.0 100.0
As per the collection of data, it has been found 40% managers of Emirates agree that low
cost strategy helps to get economies of scale whereas total 60% participants of Ryan air also
agree with the same. It shows that low cost strategy is helpful in getting economies of scale for
both airlines.
Low cost strategy and profitability
Table 9: Emirates
Do you agree that low cost strategy aids to increase profitability of airline industry?
Frequency Percent Valid Percent Cumulative
Percent
Valid Strongly disagree 1 2.3 20.0 20.0
Disagree 2 4.7 40.0 60.0
Neutral 1 2.3 20.0 80.0
Strongly agree 1 2.3 20.0 100.0
Total 5 11.6 100.0
Missing System 38 88.4
Total 43 100.0
34

Table 10: Ryan air
Do you agree that low cost strategy aids to increase profitability of airline
industry?
Frequency Percent Valid Percent Cumulative
Percent
Valid Disagree 1 20.0 20.0 20.0
Neutral 1 20.0 20.0 40.0
Agree 1 20.0 20.0 60.0
Strongly agree 2 40.0 40.0 100.0
Total 5 100.0 100.0
The collected primary data reveals that, majority of respondents from Emirates do not
agree with connection between low cost strategy and profitability. Further, 60% managers of
Ryan air agree that by keeping low cost, organization can increase profitability.
Low growth and sustainability
Table 11: Emirates
Are you satisfied that low cost strategy helps to ensure sustainable growth of airline
industry?
Frequency Percent Valid Percent Cumulative
Percent
Valid High dissatisfied 2 4.7 40.0 40.0
Dissatisfied 1 2.3 20.0 60.0
Neutral 1 2.3 20.0 80.0
Satisfied 1 2.3 20.0 100.0
Total 5 11.6 100.0
Missing System 38 88.4
Total 43 100.0
Table 12: Ryan air
Are you satisfied that low cost strategy helps to ensure sustainable growth of airline
industry?
Frequency Percent Valid Percent Cumulative
Percent
35

Valid High dissatisfied 1 20.0 20.0 20.0
Dissatisfied 1 20.0 20.0 40.0
Satisfied 2 40.0 40.0 80.0
Highly satisfied 1 20.0 20.0 100.0
Total 5 100.0 100.0
The collected primary data reveals that, 80% participants of Emirates airline are not
satisfied that low cost strategy ensure sustainable growth. On the other hand, 60% respondents
from Ryan air consider that low cost strategy is one of the effective way for sustainability aspect
of airline industry.
Low cost strategy and market share
Table 13: Emirates
Do you think that low cost strategy is helpful in maximizing market share of
business?
Frequency Percent Valid Percent Cumulative
Percent
Valid Yes 3 7.0 60.0 60.0
No 2 4.7 40.0 100.0
Total 5 11.6 100.0
Missing System 38 88.4
Total 43 100.0
Table 14: Ryanair
Do you think that low cost strategy is helpful in maximizing market share
of business?
Frequency Percent Valid Percent Cumulative
Percent
Valid Yes 4 80.0 80.0 80.0
No 1 20.0 20.0 100.0
Total 5 100.0 100.0
The collected primary data reveals that 60% respondents of Emirates consider that low
cost strategy increases market share. Similarly, 80% participants from Ryan air stated that low
marketing increases with adoption of low cost strategy. It depicts that both corporation agree
with same turn and low cost strategy is helpful in increasing market share.
36

Low cost and competitive edge for business
Table 15: Emirates
Are you satisfied that low cost strategy help to create competitive edge for business?
Frequency Percent Valid Percent Cumulative
Percent
Valid High dissatisfied 2 4.7 40.0 40.0
Dissatisfied 1 2.3 20.0 60.0
Neutral 1 2.3 20.0 80.0
Satisfied 1 2.3 20.0 100.0
Total 5 11.6 100.0
Missing System 38 88.4
Total 43 100.0
Table 16: Ryanair
Are you satisfied that low cost strategy help to create competitive edge for
business?
Frequency Percent Valid Percent Cumulative
Percent
Valid High dissatisfied 1 20.0 20.0 20.0
Neutral 1 20.0 20.0 40.0
Satisfied 1 20.0 20.0 60.0
Highly satisfied 2 40.0 40.0 100.0
Total 5 100.0 100.0
As per the collection of primary data, number of respondents who belong to Emirates are
not satisfied that low cost strategy determine competitive edge of the firm. On the other hand,
managers of Ryan air consider that adopting low cost strategy corporation get high rate of return
which in turn create competitive edge of the firm.
Low cost strategy and long run growth
Table 17: Emirates
To what extent it is important to adopt low cost strategy for long run growth of airline
industry?
37

Frequency Percent Valid Percent Cumulative
Percent
Valid Less important 2 4.7 40.0 40.0
Neutral 2 4.7 40.0 80.0
Not important 1 2.3 20.0 100.0
Total 5 11.6 100.0
Missing System 38 88.4
Total 43 100.0
Table 18: Ryan air
To what extent it is important to adopt low cost strategy for long run growth of
airline industry?
Frequency Percent Valid Percent Cumulative
Percent
Valid Very important 3 60.0 60.0 60.0
Less important 1 20.0 20.0 80.0
Important 1 20.0 20.0 100.0
Total 5 100.0 100.0
The collected primary data reveals that number of respondents from Emirates airline
consider merely low cost strategy cannot ensure long run growth of airline industry. On the other
hand, managers of Ryan air stated that company can seek for long run growth of airline industry
with adoption of low cost strategy.
Objectives 2: Relationship between low cost strategy and growth of Emirates and Ryan air-
Impact of economies of scale on competitive edge, long run growth and high rate of return
on airline industry (Emirates)
Model Summary
Model R R Square Adjusted R
Square
Std. Error of the
Estimate
1 .996a .992 .970 .316
Coefficientsa
38

Model Unstandardized Coefficients Standardized
Coefficients
t
B Std. Error Beta
1 (Constant) 19.225 2.092 9.192
Are you satisfied that
low cost strategy help to
create competitive edge
for business?
.075 .139 .054 .539
To what extent it is
important to adopt low
cost strategy for long run
growth of airline
industry?
-1.700 0.33 -1.146 -5.126
Are you satisfied that
business operating with
low cost strategy tends to
get high rate of return?
-3.025 .353 -1.899 -8.577
Coefficientsa
Model Sig.
1 (Constant) .069
Are you satisfied that low cost strategy help to create
competitive edge for business? .685
To what extent it is important to adopt low cost
strategy for long run growth of airline industry? .123
Are you satisfied that business operating with low cost
strategy tends to get high rate of return? .074
a. Dependent Variable: Do you agree that low cost strategy assists organization to get economies of scale?
39

The collection of primary data reveals that there is positive relation between economies
of scale and competitive edge of Emirates. Here, if an organization adopt low cost strategy then
it can attract large number of buyers that aid to create competitive edge of the same. On the other
hand, Emirates airline cannot have long run growth as well as high rate of return with economies
of scale. It is because data are showing negative relationship of economies of scale with two
factors as competition and return.
Ryan air (economies of scale)
Model Summary
Model R R Square Adjusted R
Square
Std. Error of the
Estimate
1 .954a .910 .639 .685
Coefficientsa
Model Unstandardized Coefficients Standardized
Coefficients
t
B Std. Error Beta
1 (Constant) 1.063 1.467 .724
Are you satisfied that low
cost strategy help to create
competitive edge for
business?
-.156 .475 -.229 -.329
Are you satisfied that
business operating with low
cost strategy tends to get
high rate of return?
.813 .527 1.295 1.543
To what extent it is important
to adopt low cost strategy for
long run growth of airline
industry?
.187 .390 .214 .480
Coefficientsa
Model Sig.
1 (Constant) .601
Are you satisfied that low cost strategy help to create
competitive edge for business? .798
40

Are you satisfied that business operating with low cost strategy
tends to get high rate of return? .366
To what extent it is important to adopt low cost strategy for long
run growth of airline industry? .715
a. Dependent Variable: Do you agree that low cost strategy assists organization to get economies of scale?
With the application of statistical technique of collected data, it has been found that Ryan
air ensure long run growth along with high rate of return when it adopt low cost strategy. It is
because low cost strategy facilitates to get economies of scale. However, there is negative
relationship between economies of scale and competitive edge of the firm. Here, management of
Ryan air need to focus on several other factors so as to beat competition. Thus, both Ryanair and
Emirates has adverse relation with economies of scale.
Emirates (profitability)
Model Summary
Model R R Square Adjusted R
Square
Std. Error of the
Estimate
1 .950a .902 .609 .949
Coefficientsa
Model Unstandardized Coefficients Standardized
Coefficients
t
B Std. Error Beta
1 (Constant) 3.325 6.275 .530
Are you satisfied that low
cost strategy help to create
competitive edge for
business?
.775 .418 .666 1.856
To what extent it is important
to adopt low cost strategy for
long run growth of airline
industry?
-.900 .995 -.727 -.905
41

Are you satisfied that
business operating with low
cost strategy tends to get
high rate of return?
.075 1.058 .056 .071
Coefficientsa
Model Sig.
1 (Constant) .690
Are you satisfied that low cost strategy help to create
competitive edge for business? .315
To what extent it is important to adopt low cost strategy for long
run growth of airline industry? .532
Are you satisfied that business operating with low cost strategy
tends to get high rate of return? .955
a. Dependent Variable: Do you agree that low cost strategy aids to increase profitability of airline industry?
The collection of primary data reveals that Emirates can get competitive edge with
increase in profitability. It is because low cost strategy aid to increase profitability that helps to
meet requirement of customers in an effectual manner. However, profitability or low cost
strategy does not determine long run growth. Owing to this, it is very important to consider
several other factors for ensuring long run growth.
Ryan air (profitability)
Model Summary
Model R R Square Adjusted R
Square
Std. Error of the
Estimate
1 .999a .997 .989 .137
Coefficientsa
Model Unstandardized Coefficients Standardized
Coefficients
t
B Std. Error Beta
1 (Constant) 1.788 .293 6.092
42

Are you satisfied that low
cost strategy help to create
competitive edge for
business?
.831 .095 1.067 8.751
Are you satisfied that
business operating with low
cost strategy tends to get
high rate of return?
-.163 .105 -.226 -1.543
To what extent it is important
to adopt low cost strategy for
long run growth of airline
industry?
-.238 .078 -.238 -3.042
Coefficientsa
Model Sig.
1 (Constant) .104
Are you satisfied that low cost strategy help to create
competitive edge for business? .072
Are you satisfied that business operating with low cost strategy
tends to get high rate of return? .366
To what extent it is important to adopt low cost strategy for long
run growth of airline industry? .202
a. Dependent Variable: Do you that low agree cost strategy aids to increase profitability of airline industry?
As per the collection of primary data, it has been found that Ryan air get competitive
edge by adopting low cost strategy. It is because profitability tend to increase by putting low cost
strategy. It aids to meet requirement of customers and carry out all business activities in an
effectual manner. Further, Ryan air does not get long run growth as well as high rate of return by
putting lower operating cost. Therefore, both Ryan and Emirates airline has adverse relationship
of profitability of of airline industry with different factors.
5.4 Conclusion
As per the analysis of collected primary data, it can be revealed that Emirates airline
focuses on high cost in order to provide luxurious services. Also, corporation does not consider
long run growth. On the other Ryan air focuses on low cost strategy so as to increase number of
43

customers. It aids to deliver good quality of services and create competitive edge in the
marketplace. However, corporation operating with low cost strategy tend to get economies of
scale as well as sustainable growth. In addition to this, for Emirates airline low cost strategy is
not helpful in increasing overall rate of return. Although, it facilitates to cope up with changing
scenario.
44

CHAPTER 6: CONCLUSION AND RECOMMENDATIONS
6.1 Introduction
This is the last chapter of dissertation where detail information has been provided in
accordance with data analysis. Here, readers or scholars who are conducting the study in same
field can get overviews about the findings. Further, this section consider objectives or research
questions of the study so as to provide evidence that these have been fulfilled. This part of
dissertation plays vital role in providing suggestions for management of industry under
investigation. This in turn helpful to present valid outcome of the study in an effectual manner.
In addition to this, recommendations have also been given according the implication of low cost
strategy in airline industry.
6.2 Review of research objectives
The research objectives are key to completion of study with specified standard. It is
because aim of the study is divided in several objectives in order to achieve the same effectively.
Owing to this, formulated research objectives helped scholar to collect data large amount of data.
The study is based on effectiveness of low cost strategy and objectives are made accordingly.
With the help of objectives at first different cost strategies adopted by two corporations have
been explained. It enables researcher to analyze the role of low cost in the organizations under
investigation. Further, relationship of low cost strategy with growth of airline industry has also
been specified. Similarly, data are collected in the same direction. It enables researcher to carry
out all research activities in an effectual manner.
6.3 Findings and answer to the research questions
According the collection and analysis of primary as well as secondary data, it has been
found that Ryan air offers services at low prices. This enables management to increase number of
customers. By putting low prices corporation recovers operating cost and increases overall rate
of return. However, Emirates airline incur high operating cost in order provide good quality of
services to cater need of people with high income. This in turn facilitates to create competitive
edge and gives good experience to passengers. Furthermore, prices of several factors such as
training to workers, high cost of maintenance and fuel prices tend to increase operating cost.
Owing to this corporation face barriers while meeting demand of passengers.
45

The constant increase in demand of services push prices but at the same time increasing
cost of fuel forces management to incur cost of operation. This has adverse impact on the
profitability. It depicts that adoption of low cost strategy make it possible to cope up with
changing scenario. The low cost strategy gives economies of scale for both businesses line
Ryanair and Emirates airline but at the same time it becomes difficult for Emirates to create
competitive edge. It is because Emirates offers luxurious services and it is the reason behind high
cost.
In case Emirates adopt low cost strategy then it is not possible to provide high quality of
services in comparison to revelries. This depicts that cost strategy has direct relation with
competitive edge and level of satisfaction among customers. Here, level of satisfaction of
passengers depend of their requirements. Further, Ryan air can control cost by putting less
requirement of training among workforce and reducing maintenance cost. On the contrary,
Emirates cannot opt the same due to luxurious segment.
On the other hand, collected data reveals that for Emirates airline low cost strategy does
not have any impact on price of products and services. It is because low cost strategy tend to
reduce operating cost but not the prices. However, management can bring modification in the
pricing structure according the requirement. On the contrary, for Ryan air low cost strategy has
direct impact on prices of services. Here, the main motive of corporation is to offer services to all
types of corporation. Owing to this, low cost of operation as well as marketing is kept. Also,
company keep same type of plane so as to reduce extra cost of maintenance and training.
The Ryan air focuses upon attraction of buyers and increasing the revenue whereas
Emirates put emphasis on satisfying need of customers by offering them luxurious services.
Owing to this, it is very easy for Ryan air to adopt low cost that aid to carry out all business
activities in an effectual manner.
6.4 Recommendations
As per the collection and analysis of collected data, recommendations can be provided for
the industry under investigation. Here, airline industry should opt low cost strategy because low
cost strategy does not have any connection with prices. This gives benefit to company for
controlling cost and accordingly making changes in the internal operation. It is one of the
effective way to ensure sustainable growth for long run. However, for getting competitive edge
46

several other factors should also be considered. It consists of good quality of services, use of
updated technologies and providing additional services to passengers.
Ryan air is already operating at lower cost however management must put efforts for
increasing attention of customers. In this regards, company need to increase the initial
investment so as to provide training among workforce. It aids to improve quality of services. The
company has capability to compete in the market due to low cost as it attract price sensitive
customers. Owing to this, the requirement is generated to attract passengers who seek for good
quality of services. In this regards, corporation should plan for time to time maintenance of
planes. It assists managers to cater need of different types of customers.
Emirates airline operates with high operating cost in order to provide luxurious services.
However, if company adopt low cost strategy then it becomes convenient to survive in long run.
It aids to increase flow of profitability and create competitive edge of the firm n the marketplace.
The rationale behind competitive edge is economies of scale. It is because putting low cost of
services corporations gets economies of scale. It enables management to cope up with changing
scenario.
Furthermore, Emirates needs to focus on several factors like long run growth as it cannot
be determined through low cost strategy. In such kind of situations company need to incur initial
cost such as marketing cost, technological up gradation etc. It leads to increase attention of
customers and also determine long run growth. Also, company can ensure its sustainable
development in the marketplace. Likewise, Ryan air can offer additional services to passengers
to recover the cost of operation. It aids to increase overall rate of return. With the help of
additional services in low prices passengers tend to prefers services of particular company. It
enables management to give high level of satisfaction among services takers.
Emirates can plan for low cost strategy by focus on different target segment. This is the
effective way to cater need of all types of buyers. The company already offers wide range of
services so it is convenient to cover all different segments. It proves to be effective to ensure
long run growth and create competitive edge in the marketplace. In addition to this, Ryan air can
adopt cost effective means to advertise the services instead of making use of those techniques
which consume high time as well as cost. For example, money back guarantee for specific time
47

period can be offered which in increase sales turnover. It aids to reduce cost of operation to a
great extent.
48

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APPENDIX: QUESTIONNAIRE
1. Which is the most important factor behind increasing prices of air travel?
 Higher promotional expenses
 Higher operating cost
 Increasing demand of services
 Higher fuel prices
2. How airline industry cope up with changing scenario?
 New services
 Promotion offers
 Entering in new market
 All of the above
3. Do you think that high cost strategy aids to provide luxurious services to passengers?
 Yes
 No
4. Which one is effective way to recover cost of operation?
 Additional fee for extra service
 Charging for meals
 Low operating cost
 Low cost for staff training and maintenance of planes
5. Do you agree that low cost strategy assists organization to get economies of scale?
 Strongly disagree
 Disagree
 Neutral
 Agree
 Strongly agree
6. Do you agree that low cost strategy aids to increase profitability of airline industry?
 Strongly disagree
 Disagree
 Neutral
 Agree
53

 Strongly agree
7. Are you satisfied that low cost strategy helps to ensure sustainable growth of airline
industry?
 High dissatisfied
 Dissatisfied
 Neutral
 Satisfied
 Highly satisfied
8. To what extent do you think that low cost strategy affect prices of services?
 Highly effective
 Effective
 Neutral
 least effective
 Ineffective
9. Do you agree that different cost strategies help corporations to attract customers?
 Strongly disagree
 Disagree
 Neutral
 Agree
 Strongly agree
10. Are you satisfied that low cost strategy help to increase profitability?
 High dissatisfied
 Dissatisfied
 Neutral
 Satisfied
 Highly satisfied
11. Do you think that low cost strategy is helpful in maximizing market share of business?
 Yes
 No
12. How low cost strategy is beneficial for airline industry?
54