Market Structure of Low-Cost Airlines

INTRODUCTION
This report is formed to elaborate the Market
structure for low cost airline. There is a market
structure of easy Jet, WIZZ air, ryanair, Thomas
Cook and JET2.
How different market strategies and pricing
strategies helps to get competitive advantages.
This report is divided in two parts, first part
defines market structure of low cost airline and
second part is a contains conclusive overview
MARKET SIZE
The market size of low-cost airlines is growing
rapidly.
The number of passengers using LLC increased
by 8.4% to 78 million in 2016 (Mintel, 2016).
The graph shows the overwhelming dominance
of Ryanair and Easyjet carried almost 200
million passengers annually.
MARKET STRUCTURE
Sole: objective: provide subsidized cost to
consumers.
Repercussion: Legacy airlines lose significant
market share.
Network: high frequency point routes.
Distribution: no tickets or call centres and
travel agents, easy and publicly available online
ticket purchasing sites.
Fleet: high utilization or same type of aircraft
for either fleet.
Airports: secondary airports, short dispatch
times.
Sector length: short, around 400 miles.
Staff: competitive wages, high productivity,
profit sharing.
Conclusion
The market size of the lower cost airlines is
constantly increasing and almost 200 million
passengers are using their services in order to
travel from one location to another. The
bargaining power of customers are higher as
they are are having many options available from
where they can purchase ticket such as internet
sources and on the other hand the bargaining
power of suppliers are low. The threats of other
substitutes which are available at market place
is high as passengers can travel by bus, trains
etc. As there are high competitors available at
market areas who are giving services in same
industry thus firms focus on selling their tickets
at half prices if their space is empty. The future
trends are related with organising loyalty
programmes for customers by giving them best
facilities and luggage facilities. Government can
also provide subsidies to firms in order to
expand their ventures. The major issue is related
with extra charges which had to be paid by
customers in relation to luggage and also the
food prices are very high. The emphasis on the
objective which is provided through its various
distribution network and fleet of airline
industry. The travelling ratio of people are
higher in the year 2017 while comparing to
2016.
FUTURE TRENDS:
Advanced infrastructure and sources
Improved and high technical aircraft
Customers interest and involvement towards
luxury and quality standards
MAJOR PLAYERS’ TURNOVER
REFERENCES
Baldwin, W. and Scott, J., 2013.Market structure and technological change (Vol. 18). Taylor & Francis.
Carvalho, P., Marques, R.C. and Berg, S., 2012. A meta-regression analysis of benchmarking studies on water utilities market structure. Utilities Policy.21. pp.40-49.
THE LOW-COST AIRLINES INDUSTRY
STUDENTS ID: STO16438555; CIO16438317; TOL16438565; OGN16438482;
ORZ16438491.
THE KEY ISSUES:
Chances to lose credibility due to high competitive market
Risk of uncertain market trends and customer involvement
Threat of potential entrants
Is LOW
Entering this industry requires strong
capital investment.
Return on investment is slow. (Body,
D. 2014)
Cost savings are needed, but is
difficult. (IATA, 2017)
Power of customers (buyers)
Is HIGH
Customers have many options to
find tickets at low prices.
The advertising of all competitors is
available anywhere - internet,
television, posters, newspapers,
radio.
Low-cost airlines have not only a
single type of customer, but
multifaceted - from businessmen to
ordinary tourists. (Paylor, A. 2017)
Threat of substitutes
Is HIGH
Short destinations, allowing the
client to choose an alternative
way of travel.
The customers can have
travelled by: train, bus or car in
all European country.
Bargaining power of suppliers
Is LOW to MEDIUM
There are two dominating
suppliers of aircrafts – Boeing
and Airbus (Boddy, D.
2014:90).
The aircrafts in this industry are
not brand new because the
companies must to save costs.
Competitive Rivalry
Is HIGH
The companies in this sector:
Ryanair, Easy Jet (Plush, H.
2017), Wises Air (Last minute
2018, Thomas Cook (Opodo
2018) and Jet2.com (Opodo
2018)
Similar services at similar
prices. (Sky scanner 2018)
PORTER’S
FIVE
FORCES