Low-Cost Airlines: Long Haul Viability

This assignment delves into the feasibility of long-haul low-cost airlines. It examines the operational challenges, strategic considerations, and case studies of airlines like Jetstar Airways and AirAsia X attempting to disrupt traditional long-haul air travel. The analysis includes factors influencing customer satisfaction, competition from legacy carriers, and technological advancements in long-haul operations.

The successfulness of low-cost long-haul
carriers and how to apply it in the Middle
East

Table of Contents
CHAPTER – 3 LITERATURE REVIEW.......................................................................................3
Overview.....................................................................................................................................3
Background.................................................................................................................................3
3.1 Key success factors in airline industry in Middle east..........................................................3
3.2 Challenges for the low-cost long haul carriers......................................................................5
3.3 Successful of Norwegian and AirAsia on low-cost long haul routes....................................7
3.4 Factors directly attracting low-cost long haul airlines into Middle East Market..................8
3.5 Low-cost long-haul Market Segment....................................................................................9
3.6 Potential of low-cost long haul business model in Middle East Region.............................10
3.7 Impact of low cost long-haul carriers in Middle East.........................................................11
3.8 CONCLUSION...................................................................................................................12
REFERENCES..............................................................................................................................13

CHAPTER – 3 LITERATURE REVIEW
Overview
In this section, the investigator will come to know about the depth study of the research
topic. In this, the information is published in the way of secondary resources which will help to
researcher in collecting different data. This section is essential in collecting the data through the
previous research. With the help of different viewpoints of authors, it will beneficial to the
investigator to conduct and analyse the proper research. The purpose of literature review is that it
helps investigator to identify the gap in current knowledge. It also helps to avoid reinventing the
wheel by discovering various research on the topic. A low-cost carrier is that kind of airline
where there has a lower fares and few comforts. To earn the large amount of revenue these
companies are charging high price on food, baggage, priority boarding etc. There are many
authors who have given the information in books, journals which is related with the field of
study. This section helps to researcher in creating the foundation of their topic by analysing
different viewpoints of authors. In this section key factors of airline industry have been
discussed. The challenges which has been faced by them for the low cost long haul carriers is
also discussed and many more. Along with this, various outcome has also been derived from the
previous studies which helps in identifying the literature gap. In long haul, the services are
provided in business class, premium economic class. In present research report, key successful
factors have been discussed which is based on the different viewpoints of authors. Along with
this there are some challenges which are faced by the low-cost long haul flights. The services
which is provided by the Norwegian in which customer can enjoy the fewer services at lower
cost.
Background
The services which are at low-cost long haul in Middle East which, include the nation of
Arabian Gulf (Iran, Iraq, Qatar and many more). In this region, the airline companies are trying
to provide services at lower cost. Now a day, long Haul is in international aviation today which
has been constrained within short-haul market. The airline industry is providing the new sources
to customers in making the large amount of profits. There are many flights which is providing
these services at lower cost. In Middle East, it is essential to provide services at lower cost so
that the people can have good experience.

3.1 Key success factors in airline industry in Middle East
The environment in which firms are operating their business is challenging for them. For
example, these aviation industries facing the problem of globalisation, which has triggered to
heighten the competition due to different firm’s regions. According to Button (2012), it is
examined that there are many strategies which has been used by the airline company in order to
satisfy the customer needs.
For example, historical event of Norwegian air in 2010 the silver awarded and bronze is
achioeved in Skytrax survey by providing the fair services. Through this consumer of Middle
East will enjoy the services at reasonable cost. This was the first airline company who has offer
the services of WIFI broadband on European flights in year 2011. As per view of Chung and
Whang (2011), it is reserved that airline industry has been accustomed in the term of low-cost
carrier. The experts of this industry use this term in different manner such as low-cost no frills
carrier, less frills carrier and many more. There are many key success factors in which these
organisations will compete in market for a long period of time. One of the success key factor is
that “Business Strategy”. The success factors have been guided by their vision, “Everyone
should have right and afford to fly”. In short-term, the primary objective of this company is that
to provide the opportunity to those people who are not very much affordable to travel in flights.
Through this, they are providing the high quality of experiences services at lower cost. For this,
company is conducting proper market research in which they can identify the needs of
customers. First they are targeting those customers who are not able to afford these services.
Some of the key success factors are differentiation, strong brand name, the sturdy relation with
supplier and many more. While travelling from place to another which cover long distance, are
providing few services at lower cost. Through this, customer base will also become strong. As
stated by Clewlow, Sussman and Balakrishnan (2014), it is inferred that the following are some
points in which the airline of Middle East is attaining the success by following basic business
principles.
 The employees of these airline industry need to corporate with their organisation value
on priority basis which will help them to accomplish with their objectives.
 Second, their aim is to attract the customers by providing the operational excellence and
helpful services which should be at very low cost.

 The facility of 'freedom to choose' should be there for customers which ensures about
that the organisation have reach with several consumers. In this those customers will
apply who are demanding for additional products and services and are willing to pay for
it.
 They are providing the comprehensive and attractive route network which is crucial for
the customers and to gain competitive advantage.
 They are also monitoring these services on regular basis which will help in to improve
the cost base if this is possible. Through this the company will able to maximise their
revenue.
 This industry is using are high technologies in order to develop high quality of cost.
Through this the efficient products and services will also improve the level of
convenience and comforts for the travellers.
 The last one is that, Airline Company can use their strong brand name also and make the
sturdy distribution channels which will further increase in the ancillary revenues.
The revenue of Norwegian is increased to provide the services in low-cost long haul and
becoming competitors for other airline companies also. So that these revenues can make their
success in competitive market. From below diagram it can be concluded that the expenses of
airline industry are increasing year-by-year, which show that they attaining the success in global
market.

(Sources: Annual report 2006-2010)
3.2 Challenges for the low-cost long haul carriers
For traveller’s destination are unremarkable. The idea of low-cost long haul airline is not
new. Since their demise, the new technologies, business process have been developed. So it is
essential, to re-examine the economies of these kind of services which has been provided by
airlines. Airlines are targeting international routes so that they can attract large number of
customers with the help of using this approach.
According to Daft and Albers (2012), it is reserved that, the user’s choices about cities is
very significant in nature. The low-cost challengers are that expansion of these kind of route are
impacting on incumbent network carriers. The following are some challenges which are facing
by the long haul carriers.
Optimising revenue – For these organisation it became difficult to optimise the revenue
from the resources. They have to provide new services according to the needs of customers.
They have to also utilise the market opportunities in which more customers can be attracted
towards. The revenue will increase by increasing operation for the key destination. In this, there
should be increase in the frequencies to Middle East destinations through which these airlines
can serve more high quality of services. There should be an expansion of route service networks
with the help of partnerships. They have to also provide online services through which the
Illustration 1: Revenue and Total operating
Expenses

customers can book the tickets online. The major challenge which is facing by the airline
industry is that they are not providing online services to their customers. So through that,
revenue of organisation is not increasing.
Improving services delivery – The low-cost long haul carrier has to emphasis on the
services. Airline industry has to provide proper training to crew cabin and increase the number of
instructor. They have to ensure about that there is a continuous monitoring and evaluation on the
crew members while convening any instruction to people. With the help of proper training and
development programme the employees will able to provide high quality of services. There
should also change in time-to-time meal services so that customers can have best experience ins
small amount also. If at the time of travelling any person are facing problem regarding the health
issues, then medical emergencies of services should be provided. Further, if there is any change
in flight then they are not convening these message to customers so they are facing these kind of
issues also.
Change in government policies – The long haul airline industry is making policies
according to their capacities. But if there is suddenly change in the policies then it directly
impacts on their objectives. As per the views of De Poret, O'Connell and Warnock-Smith (2015),
it is depicted that the airline company have to make rules and policies while considering the rules
and policies of government. It is essential to considered this because there are many people who
are not able to enjoy the services in airlines.

Increasing productivity – The airline company have to continue have to review on their
organisation structure for giving the efficient services. If there is no increase in any kind of
services, then it became difficult for the company to retain in market for a long period of time.
All the worker as well as employees have to work in coordination to provide efficient result.
(Source: Low cost challenger)
Norwegian is planning to start long-haul flights in which they can attract large number of
customers. International Airline Group, is disclosing a plans to establish new airlines which is
linked with the low cost carrier. In this they will open a long-haul operation so that customers
can enjoy. From above diagram, it shows that the share price of the airlines is fluctuating. It does
not remain constant. So in order to maintain the price, they have to provide high quality of
services to customers.
Illustration 2: Low-cost challenger

3.3 Successful of Norwegian and AirAsia on low-cost long haul routes
Asian low-cost carriers have matured rapidly in past decades. The significant of departure
from them establish base of short-up providing the local routes within Asia. These airlines are
bringing new competition for network carrier which make the large market segment. The issue
regarding the long haul is becoming more relevant with the claim that Norwegians in long-haul
will earn profit in future. They are also adverting new entrants in new areas such as Canada's Air
Canada Rouge, West jet and many more. De Wit and Zuidberg (2012), the think of long-haul
services is domain by the equipment. Norwegian deposes AirAsia. Which is now becoming a
leading industry in low-cost long haul airline in terms of flights. Norwegian is providing the
flights at reasonable rates in which they can attract large number of customers. The number of
these flights are plus 48. A years ago, Norwegian has offered many flights which has been
overtaken by AirAsia so that they can become the world's largest LCLH carrier. The carrier has
increased the long-haul flights in summer by 34%.
From view of Escobar-Rodríguez and Carvajal-Trujillo (2014), it is examined that while
providing the many number of flights the customers will get more attracted. These services are
provided in different routes. Which is longer than 4500 kilometres. These airlines are trying to
provide better quality of services to customers who are travelling for more than six hours. The
proper training has been provided to employees in order to deliver quality of services. Through
this the customers will enjoy their travel journey also. At the time of travelling it is essential to
provide all kind of services in which the customers can feel relax. This airline is becoming a
leading airline company in which they are targeting large number of customers. As there are
many competitors of this airline such as British airways, Jet airways and many more. It is
peculiarity of the airline business to connect one flight rather than two in cheaper. The paying
less to receive more is economically preposterous. For Middle East for example, Iran, Kuwait
and so on. In these places the services regarding the low-cost long haul is mandatory. Through
this the company will target the new customers and beat their competitors.
3.4 Factors directly attracting low-cost long haul airlines into Middle East Market
As per view of Graham and Dennis, (2010), it is inferred that the factors which are
directly attracting the towards the low cost long haul airlines. In these flights there are few
services which has been provided at lower cost. The employees are distributing their efforts
while providing the quality of services to customers. These organisations are directly focus on

the direct sales through websites. However, they are attempting to attract more business
travellers in distributing the strategies towards into direct channels. With respect of long haul
market, they are mostly depended upon the Global distribution system in travel agent are making
more efforts to provide appropriate services.
From below, if the classes are not provided according to the needs of customers then it
will directly impact on the objective of airline firm. 73% of class configuration of economy class
are not applicable for low-cost, long-haul operations. Class configuration is done according to
the low-cost operation.
Illustration 3:
Class Configuration
(Source: Class Configuration)
The transportation of passengers is not only potential source of the revenue for airlines.
Long-haul connections are generally unavoidable longer which is foolish of LCC and neglect the
revenue stream. As stated by Hazledine, (2011), it is reserved that political, economic, social,
technological has to be analysed the organisation while entering into the Middle East Market.
The rules and regulation which has been framed by government has to be properly followed by
the organisation to enter into Middle East market. The cost advantage of long haul is reeling
upon long haul flights which is difficult to achieve. The operational and cost advantage has

derived from the quick around which are needed for the aircraft servicing. In long haul, the time
zone are changes according to the destination. In long haul routes, it requires food and
entertainment while travelling from one place to another.
3.5 Low-cost long-haul Market Segment
Market segmentation is an easier step which personalise the market campaign. The
company have to target customers according to the segmented group, rather than targeting
potential customers. The airline company have to grouping the consumers together which allows
the market to target specific audience in cost effective manner. Jiang, (2013), with the help of
market segmentation it reduces the ineffectiveness of marketing campaign. The airline company
have to identify the marketing opportunity in which they can target the customers. By finding out
the marketing opportunities the company can increase their market shares also. The segmentation
of low-cost long haul can be done on the basis of geographical and behaviour. In geographical,
the services should be provided according to the requirements of customers. The proper services
have to provide to customers at the time travailing. As in long route, there are many customers
who are belonging from different cultures and it is important to provide services according to
them. According to Kim and Lee, (2011), it is reserved that the services should be provided at
reasonable price so that customers can easily use these services. Airline Company has to be loyal
with their customers so that they can retain for a long period of time.
With the help of market, it also increases the awareness about the organisation of
Norwegians that this airline is providing the low-cost long haul services. The market will directly
segment according to the needs of customers. With the method of low cost, the cost of services
can be set in proper manner. Lowery and Du, (2011), the market can also be segmented
according to the demographic. In this the services have to provided according to the age, gender,
religion, family size and many more. These services should be provided in appropriate manner so
that the customers will attract towards. In Middle East of the economy various strategies has to
be used by the airline company such as cost leadership strategy, marketing policy. It is an
effective competitive market strategy which is related economy of scale, technological software
etc. By effectively using these factors airline industry will be indicating the importance level of
implementation of the cost advantage.

3.6 Potential of low-cost long haul business model in Middle East Region
According to Maertens, (2010), with the increment of tourist at other countries it leads to
rise traffic rate also through which pollution get emerged day after day. The low cost long hauled
flight is not a new idea but a thought which many have failed to attempt. This increases the
capacity of productivity, performance and the operations of the company. This is the strategy
which is adopted by many companies so as to increase their revenue. The potential of it has been
very strong in Middle East region but it is not successfully operated by many airlines who have
tried to adopt it. This requires a very deep study and formation of very strong strategies for
implementation. The main motive of an airline is just to attract more and more customers and its
potential for the customers is that they will get low cost services for the long distance
destinations. According to Moreira, O’Connell and Williams, (2011), long haul business model
is a very impactful source which assist the business very nicely to boost its operation but
implement it is not a left hand job. There is a huge cost incur in the airline when it travels to
faraway places so this procedure inclines so much cost into its implementation. To cut this cost
every factor which is causing expenses has to be ascertained and rectified. Only than a low cost
long haul flight services would be provided by the company to provide satisfaction to the
customers. Hence the potential of development in both the ways the company as well as
customer preferences is at a very large scale but huge planning for its implementation is required.
A company has to plan by assessing each and every factor critically analysis of implementing
low cost long haul has to be done.
3.7 Impact of low cost long-haul carriers in Middle East
The concept of low cost long haul airline is not new in present time but it can say that
previous attempt in this regard was not successful. Previously, there were few airlines in market
because this industry was highly regulated and new entrants were restricted by licensing policy.
Due to development of new technology, it is appropriate to examine this services in effective
manner. Laker Airways transformed its UK charter into long haul in year 1977. It had many
features as point to point operation, catering service is available with extra pay in flight, single
class seating etc.
According to O’Connell, (2011), the growth in number of flights that are supplied by low
cost carriers can either be resulted in stagnated or contracted. The incumbents have decreased in

these market. It may result in reduction in capacity because its aim to feed more customers to
long haul network. It may result in drop of mean price on different routes.
According to Lowery and Du (2011), one of the major thing for attracting large number
of customers is low cost. It leads in draw vast range of customers through which an organisation
can attain high range of profit as well as they can also become able to survive in a competitive
market for more period of time. The same thing gets involved in the given case study scenario.
The airway service provider provides low cost services to their users which generally use to
travel long distance. In the middle east many providers give quality services with cheap rates and
thus with the help of this thing they generate more and more revenue. It is completely concerned
with an appropriate marketing strategy. This tool enables them in getting more and more clients
as well as it also leads in increase their mouth to mouth promotion. Such factors are helpful in
growth of a firm through which they can also provide more and more services with improving
quality.
in effective manner.
After the introduction of Air-Arabia, the Middle East has growth in low cost carrier. As
per the current report, total 6 LCC are operating in this region (Long-haul Low Cost – A Viable
Business Model?, 2017). 6 LCC that are currently operating are air Arabia, fly Dubai, rak-
airways, Nasir, Jazeera airways and Egypt.
3.8 Conclusion
On the basis of above study, the information of different authors has been analysed which
help the investigator to get relevant information. Through this the investigator has found out the
sources which is essential to increase the impact of low-cost long haul carrier in Middle East. For
airline industry it is essential to provide services in Middle East zone also so that the customers
can be aware about these services also. As there are many challenges which are facing by the
customers while travelling from one place to another. Norwegian is providing fewer services at
lower cost. The company cans also segment the market on the basis of needs of customers. For
this the manager have to conduct proper market research for identifying the customers for the
low-cost long haul flights. They are trying to provide these services to the people of Middle east
in which they can easily travel from one country to another.

REFERENCES
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