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[PDF] Sustainability and Growth of Low Cost Airlines

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Added on  2021-04-05

[PDF] Sustainability and Growth of Low Cost Airlines

   Added on 2021-04-05

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IntroductionOver the past quarter-century, Low-Cost Carriers have been a vital role in this huge expansion ofaviation. They have converted the air travel market by stopping the traditional world of the legacyflag-carriers and starting a revolution in air travel service.Over the past quarter-century, Low-Cost Carriers have been a vital role in this huge expansion ofaviation. They have converted the air travel market by stopping the traditional world of thelegacy flag-carriers and starting a revolution in air travel service.The low-cost carriers are the airlines that reduce all their kinds of costs such as operating costand some service and facilities cost to offer the same ticket for a much lower price compared toother airlines. Low-cost carriers have different names as discount airlines, No-frills airlines, Prizefighters, orLow-cost airlines.Loftleiðir was the first airline to introduce a low-cost travel concept in Iceland. The first low-cost airline launched in 1944 and obtained the rights to fly to the US in 1948. Then it began totake advantage of Iceland’s unique location between North America and Europe by the 1960s.Due to lower costs, the fares became lower, and young Americans were enthusiastic to try low-cost airlines to explore Europe via Iceland, so it became very popular with them. And, the firstairline applied the cost reduction techniques that used today such as reduced thrust takeoff andweight reductions were Laker Airways, which introduced a Sky train service between the USand the UK in the late 1970s.A brief history of the low-cost carrier from around the worldIn North America: Since the deregulation in the 1970s, the creating of the low-cost concept inthe United States can be described as a series of renovation and integrations. For that, a lot oflow-cost carriers such as Pacific Southwest entered the market of which, but some of them wereable to survive the competition, but others did not. Some of the main carriers as well began theirown subsidiaries under the low-cost flag in for regaining their lost market share. In Europe: In 1995, Ireland and the UK started the low-cost carrier idea which is based on theSouthwest model with the introduction of Ryanair and EasyJet. In Asia: It was thought that Asia's strict restrictions proceed and government control will notauthorize suitable conditions for low-cost carriers to flourish. But, there are some factors thathelped the low-cost concept to appear in Asia such as the prompt demographic and economicprogress, crowded hub airports beside underutilized airports, and the need to encourage theirtourism and trade outside the capital cities.In Australia: Airlines such as Compass Airlines and compass Mk II started low-cost operations,after the Australian domestic market deregulation, However, they were absorbed into the Qantasgroup because of the financial strength Qantas had over the low-cost airline. Nowadays, the onlyremarkable low-cost innovation still continues to operate is Virgin Blue.P a g e | 1
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Why Low-Cost Airlines are so Successful?In the 1950s flying was something that only the rich could bear. Since then though the aviationindustry has changed very quickly and now seems to cater to nearly anyone. one of the maintransformations during this industry happened when the no-frills concept grabbed hold toSouthwest Airlines within us. This was the primary successful no-frills carrier that paved the way forfuture low-cost airlines like Ireland’s Ryanair and therefore the UK’s Easy jet.These low-cost airlines have many things that make them successful like :flying just one sort of airplane. Ryanair only flies Boeing 737 and also EasyJet only uses Airbusplanes. This helps hamper costs in maintenance, repairs, training pilots, and room to receive dealsfrom manufacturers.the Landing times are kept as short as possible. The shorter the landing time, the quicker theturnaround. More trips equal more work for the staff, more passengers, and extra money cominginto the airline.keeping the hold luggage to a minimum. This takes time and adds weight to the flight whichincreases the landing time and refueling time. To combat this there's often a charge for excessluggage for passengers.Overheads also are kept to a minimum. instead of flying into large airports and paying higherfees to land, budget airlines find smaller airports in between large airports.They also buy fuel when it's cheap,charge for non-essential services like food and drink,offers eleventh-hour bargains to form sure the flights are full,only offer direct bookings to avoid paying travel agents, and far more.The effect of low-cost airlines on the aviation industryThe impact of low-cost carriers has been huge for the aviation business. The rapid penetration oflow-cost airlines has resulted in traditional carriers chopping routes, closing down hubs and evengiving up service to some cities. In the past few years, with high fuel prices and a rapid globaleconomy taking into account the profit margins of larger carriers, only budget airlines have reportedsystematicallySWOT Analysis of Low-cost carriersStrength Weakness -low operational cost by having single aircraft type - Low operating cost because it is "no frill’-all reservations are online -A very unexploited potential market, especially forbusiness travelers and the "first-time" sector.-increase in cost happen due As a result of theincrease I n the price of fuel sometimes.-Domestic air travel is a very competitive industry.As more and more airlines enter the low-costmarket, the market share of a particular airline, orthe leader, is declining.ThreatOpportunities-State-owned airlines has a major threat to low costcarriers .-Air diseases or terrorist attack anywhere in theworld can negatively affect air travel.-The air cargo sector can be explored.-Differentiation from the old low-cost airline modelsby adding customer service or operating as a full-service airline at low prices.P a g e | 2
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Market ShareAs is the name, low-cost companies aim to offer discount travel tickets to travelers, which certainlyattracts them.In Europe, LCCs Recorded a number of passengers that traveled with them It is estimated around140milion in 2006LCCs seats capacities portion rised to 16.5% at over the Middle East from 14.9% in 2019In 2015 The aviation industry succeeded in carrying passengers Estimate about 3.5 billionpassengers in 2015 Of them, about 984 million were traveling through low-cost companies This number is believed to be double by 2030 According to The International Civil Aviation Organization (ICAO) The LCCs played a major rolein increasing the total number of passenger who travels around the world Low-Cost Carrier Strategies And servicesLow-cost companies rely on reducing costs to provide a competitive price to attract more customersand to attract more customers companies follow different strategiesin-Flight purchase:Companies rely on reducing costs by reducing the services provided within the ticket price andcompensating them for in-plane purchases of these services: food, drink, and other services untilsome companies have moved to provide a toilet service on the plane after paying feesNetwork:Companies avoid high landing costs by using non-major airports, which will affect the cost and,consequently, the final price of the ticketMarketing and HR : Companies need to cut advertising and marketing costs, so most tickets aresold through websites, which reduces commissions for ticket sales agencies. Companies also aim toreduce their workforce to reduce costs, salaries, etc.P a g e | 3
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