Strategies for Low-Cost Airlines to Increase Ancillary Revenue

The low-cost airline industry is evolving, with a focus on customer-centricity and digitalization to boost ancillary revenue. To enhance customer experience, airlines can provide personalized services through advanced customer analytics, proactive flight recommendations, and improved in-flight amenities such as iPad minis. Additionally, the industry should focus on digitalization by offering dynamic pricing for baggage allowance, Tune Protect insurance, and extra-seat options. Furthermore, low-cost airlines can increase revenue by operating more destinations, enhancing their brand image, and improving their organizational processes. In conclusion, the key to success in the low-cost airline industry is getting to know customers better, providing improved services, and staying competitive through digitalization.

ASSIGNMENT
COVER SHEET
Course Code : 3 5 2 2 N S C
Course Name : Contemporary Aviation Management
Due Date : 10 September 2017
Assessment Item Number : Written Assignment
Campus and Enrolment : Off-campus
Lecturer : Dr. Tarryn Kille
Course Convenor : Dr. Tarryn Kille
Word Count 2023 + Exec. Summary and Recommendations
Student Number [s5090195]
Student Name [Deepika Chander]
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1. Marking Criteria
Grading
5 4 3 2 1 Assigned
grade
Total
available Weighting %
Criteria
1  4 /5 x 60 48
2  4 /5 x 15 12
3  4 /5 x 15 12
4  3 /5 x 10 6
TOTAL 78
2. Please provide a brief justification for the percentage (%) you assigned yourself for
each criterion
Criteria % Justification
1 48
2 12
3 12
4 6
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1. EXECUTIVE SUMMARY
The airline industry is growing fast and in the last few years and the airlines will need to
made radical changes to adapt the new technologies which includes the latest technology
aircrafts and the customer services machine. The airline hasavery clear mission and vision of
the company which will enable the airlines member to work hard to maintain the airline
standards for both short term and long term in future by following the rules and regulation set
by IATA (international Air Transport Association). In future, the loyalty program will be
provided to for airline customers, there will be new aircraft with new technology introduced
by the airline.
The aim of this report is to discuss about the current status of the airline industry in the
global market. This report had also discussed about the increase in the competition in the
market with the entry of various competitors. The introduction of the low cost carriers in
the aviation industry had also been discussed in this report. It is been seen in the report that
the introduction of the low cost aircraft in the aviation industry has changed the entire
scenario with the inflow of more number of customers. The current market scenario of the
aviation industry had been discussed and accordingly a few recommendations are being
provided in this report. This report concludes that initiation of the low cost service may have
adverse impact on the RyanAir. Thus, it is being concluded that, they should initiate various
other business tactics as mentioned in the recommendations to enhance their performance.
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Table of Contents:
Introduction………………………………………………………………………………5
Discussion ……………………………………………………………………………..…6
Chasing the other airlines……………………………………………………………….7
Partnership……………………………………………………………………………….7
Knowing Customer Better……………………………………………………………….8
focus on digitalization in effort to boost ancillary revenues…………………………...8
Conclusion………………………………………………………………………………...9
Recommendations……………………………………………………………………….10
References………………………………………………………………………………..11
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2. INTRODUCTION
In modern society, many people travel around the world by using the airline service and
airport. There are many airline which passengers can choose from and make decision when
purchasing an air ticket. Nowadays, the low-cost airline is the most common ways of travel.
The greatest benefit of using the low-cost airline is passengers can save a lot of money when
comparing with the other regular-flights companies. The airline members will providethe
same onboard security and safety of the passengers. There is not much difference when
aircraft is operated with the low-cost airline or with the regular flight company. The low–cost
carrier will make the enjoyable journey for their passengers by operating with new
technology aircraft with more width space seat in the aircraft and the entertainment service.
Their staff will provide the great customer service to their passengers. All passengers can be
sure of their safety and comfort when travelling with low-cost airline. The airline ensures to
train their pilots according to their license conditions and to their cabin crew members to
upgrade their training when any new policy or equipment implemented at workplace. In other
word the low-cost airline do not make any compromise with the security and safety of their
passengers. Their airline will be met the set standards by Civil Aviation Safety Authority
(CASA) and by international civil aviation organization (ICAO). The airline make enormous
additional profit from on-board flight service and in-flight mobile phone service, including
non-flight schedules service and from low-cost carrier website. The airline also provides the
on-time flight service which help passengers to reach their target destinations. The low-cost
carrier control the fuel efficiency and noise emission by purchasing new environmentally–
friendly aircraft. In an emergency response, quick and fast by following the emergency
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procedures and guidelines and all the equipment will be available around the airport for fast
response. The Low-cost carrier will ensure to make enjoyable journey of their passengers.
3. DISCUSSION
The Provision of high-quality service on routes and in markets that currently are either
unserved, poorly served, or under-subscribed by existing carriers, thereby setting both a
new trend and a new pace in air service to and within the Southeastern European
region.Employment of cost-effective, up-to-date regional aircraft that will be sized right
for the market and the route, leading to higher load factors, reduced costs, improved
efficiency and flexibility, greater passenger comfort and satisfaction, and higher net
profits. Outfitting these aircraft with the latest aviation technologies and navigational
equipment will help ensure the highest level of reliability, punctuality, safety, and
customer satisfaction.Utilization of the latest electronic and informational technologies
in sales and marketing; reservations, ticketing and check-in; scheduling and resource
planning; cargo tracking; and operational oversight. Such techniques as internet
marketing, reservations, and sales; electronic ticketing and check-in; online quality
control, resource planning, operational oversight, cargo and baggage tracking, and
customer service, all will reduce staffing requirements while offering ease-of-use and
greatly enhanced access by and convenience to customers.
Recognition that not everyone is geared for the electronic world leading the proposed
airline to provide a high level of non-electronic service as well particularly to the many
newer less-experienced travelers– but in future the loyal customers found in the
region.Ensuring a friendly, cooperative, enjoyable, yet highly professional face to the
customer.Development and implementation of cooperation’s, associations and
partnerships with other larger more established and highly regarded airlines both within
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and beyond the region to provide an extensive range of connections through fares
frequent-flyer mileage sharing and other passenger and client advantages through
interline arrangements, code shares common hubbing and so forth
Chasing the other business airlines
There are many Low-Cost carrier been through the re-bundling exercise which mean
instead of buying the individual service as one by one, customers can buy the fair
package deal with better seat availability, larger baggage allowance and lounge access as
compared with the full-servicecarrier, but at competitively priced.
As to attract more business customers the low-cost airlines will also starting to sell
tickets through the global distribution system (GDS), which used by many corporate
buyers. Many airlines have launched their loyalty programs to attract more customers
and to compete with other airlines in the market.
Partnership
Another important development implemented by low cost carrier is to partnership with
other airlines, even with the full carrier service which is a very important commitment
for airlines which they were doing to avoid costly involvement to continue flight service
on time. Further, partnership may therefore hold the key to the development of a proper
long-haul long cost airline industry in Europe. Partnership will allow passengers to book
the next connect flight instead of booking the separate flight ticket with other airline for
instance Ryanair, which serve 203 destinations across 33 countries which has the largest
European route network of all airlines.
Many airline engaged customers by implementing marketing strategy an in-seat
entertainment systems programmed with current television shows, movies and games for
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kids to make comfortable journey for their passengers. The new butterfly seat would be
existing in future aircraft. The butterfly would allow flight attendants to change a seat
from economy to business very quickly in between flights before boarding the flight but,
however both the economy and business class would still be existing, but there would be
more economy seat available in the aircraft which could be the marketing strategy by the
airline.
In future, there are lots of emerging improvements which include both the general cabin
comfort and amenities moreover, the airlines handing out device for passengers to use
in-flight instead of installing screens on the back of seat, the airline would offer iPad
minis for passengers to use on flight routes.
Knowing Customers Better
Low cost carriers should aim to understand their individual customers’ preferences, so
that they deliver service which is personalized and tailor offerings as need be. The
airlines need not rely only on customer loyalty programs but should invest in advanced
customer analytics. Apart from this, they should look at their organizational processes
and ensure that customer service is embedded in the organization. Whenever the
customer interacts with the airline in processes like looking up flights, doing booking,
checking-in, boarding and in-flight processes, the airlines should be able to capture data
about what customers really prefer and use this to exceed expectations by providing
stellar service.
Greater knowledge of customers enable airlines to provide improved and more intimate
customer experiences. Low Cost Airlines can for example offer proactive recommended
flights to the preferred destinations of a customer. This will lead to greater revenue
generation due to customer retention and loyalty. Customer loyalty will also enable the
airline to benefit from sales through direct channels rather than through online travel
booking sites, which take a certain revenue percentage. Low-cost airlines will achieve
strategic marketing positioning if they take care of customer needs, this will lead to
brand advantage, and new customers will be attracted to the services being offered. This
will lead to growth in terms of the market share, which the airline has. Getting to know
customers is therefore key if low cost carriers are to succeed.
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Focus on digitalization in effort to boost ancillary revenue
The other future improvement includes the dynamic pricing of baggage allowance and
the Tune protect insurance as well offering extra-seat option to customers and enhancing
in-flight meal options. The low-cost airline will operate more destination in future which
help the airline to increase revenue and to compete with the other airlines in business.
The low-cost airline planning to turn into a fully-fledged digital airline. The
digitalservices included BIG Duty free, BIG pay, onboard wi-fi, to name a few and
airlineexpectation this will increase their revenue from ($12.75) per to ($15.20) as
perpassenger.
4. CONCLUSION
In conclusion, the low-cost airlines offer the cheap fare for flight for their passengers and in
addition to maintain their low-ticket price they cut down their larger number of services
which would then impact on their business growth. The low-cost airline use the internet
services to sell their ticket instead of using dealers, or the flight center services. This might
decrease the expenditure of each air ticket price for dealers. Furthermore, by providing the
low-ticket prices to their Passenger, the airline would chargers Extra money for food and
beverages and for luggage as well which makes the airline customer unhappy about their
services and as result for that some passengers would then choose the other airline with more
services for the same price. The low-cost airline does not offer the refundable tickets and
allow the less weight of luggage to their customers, in addition to that, the full airline service
provide more service choices which are suitable with the demand of the travelers. They
usually give the proposal of refundable tickets, more Kilograms of luggage weights and in
flight food service.
the low-cost airline passengers can certainly enjoy the low rates which will effectively boost
savings for frequent flyers. Which would help people to save as 50%to 80% especially when
booked tickets in advance. Frequent promotion provides by the airline which will be
available only for few days which makes the airline customers alert. This will be available
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on the website where customers can set the departure date and time to and from their specific
location to book their tickets. in the low-cost airline, the customers can enjoy the new
technology plane experience with more seat space inside the aircraft and by using the in-
flight entertainment service and where Passengers get to enjoy the new features and
amenities, as well as a smooth and seamless flight experience.
5. RECOMMENDATION
Low-cost airlines can get benefit only if they flight to few destinations.
 Firstly, by improving their integrated marketing communication strategy of the company
by developing new measures and programs which must include all components of
marketing communicating mix in synergetic manner so that company message can be
delivered to its target customers segment in an effective and unambiguous manner.
 The Secondly management strategy would be to upgrade the website features so the
customers can easily access to the online website when buying a ticket also to give
special discounts / promotions for customers with flexible seat availability so that
passengers can choose their seat when booking a ticket. The airline should also provide
the service to their dealer when booking the flight ticket as because many people do not
access the online website or not feel confident booking ticket by using their website.
 The airline can start campaign to connect with customers which could involve collecting
fund for charity to help people.low-cost airline needs to improve their brand image. For
e.g. as a Ryanair ‘s business strategy by increasing its market share and profitability
through competitive prices in a certain negative impact upon the brand image of the
company as because many people assume the low-cost airline as being the cheap or their
staff do not provide the enjoyable customer service experience.
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 The low-cost will recommended to change the perception among existing and perspective
customers through emphasizing quality advantages of their offers along with their
process. In addition, the airline mustensure the low-cost airlines image is associate to
being vale rather than being cheap.
 The new passengers screening technologies must be integrated into long-range
implementation plans for upgrading the airport security system to prevent future incident
which will be more convenient to search where or not the item which causes alarm is a
threat, and the as result passengers will experience less delay of their flight.
6. REFRENCE:
Research Gate. (2017). Retrieved August 3, 2017 from
https://www.researchgate.net/publication/222670695_EU_network_carriers_low_cost_carrier
s_and_consumer_behaviour_A_Delphi_study_of_future_trends
Ryanair. (2017) Retrieved July 29, 2017 from https://www.ryanair.com/gb/en/
The National Academic Press. (2017) Retrieved August 1,2017, from
https://www.nap.edu/read/5116/chapter/11
Wikipedia Low-Cost Carrier. (2017) Retrieved September 5, from
https://en.wikipedia.org/wiki/Low-cost_carrier
UK Essay Trusted by Student. (2003). Retrieved August 2, 2017 from
https://www.ukessays.com/essays/management/low-cost-airlines-the-operations-strategies-
management-essay.php
sky scanner. (2002). Retrieved August 5, 2017 from https://www.skyscanner.com.au/?
utm_source.
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Readers’ Travel Award. (2010). Retrieved august 3, 2017 from
http://www.cntraveller.com/magazine/readers-travel-awards-2010/page/transport-low-cost-
airlines
QBT Business travel made simple. (2016). Retrieved September 5 from
http://blog.qbt.travel/low-cost-or-full-service-airlines
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