INTRODUCTION •The airlines which operates on the principle of low cost regarding fares. •These airlines usually provide low fare charges as compared to big airlines companies.
Cont. •By reducing its prices, they recover losses from charging high prices on food and baggage carrier. •Comforts are lower to them. •Thisresults in increase in profits as passengers prefer cheap flights. •The competitors are highly influenced by such airlines
Cont. •South West Airlinesisoperatingonsimilar basis in US. •Thishascreatednegativesituationtopremiumairlines resulting in lower profit. •This has impacted on exotic airlines as their market share is reduced. •Revenues are much lower down and costs are eventually increased.
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Cont. •This has impacted on established airlines to open their own subsidiaries. •This is done with the objective to regain the lost market share •This has been destroyed by low cost barrier companies. •Staff is hired with competitive salaries which increases income for airlines.
Cont. •The low cost airlinesusuallylimitspassenger's option •Baggage restrictions are also levied. •They charge extra fees for luggage •Return tickets from the destination are also mandatory to purchase. •It is more than regular prices.
Cont. •Hidden fees are also imparted to customers. •Customers should analyse package costs •It does not result into paying high prices by them. •Taxes and insurance expenses might be included in hidden fees.
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CONCLUSION •Hereby, it can be concluded that organisation operating on low cost basis. •It should not charge significant low prices. •The profit is lower down •As such fares should be charged at competitive prices.
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