MOD003311 - The Debate on Permitting Low-Cost Airlines Existence

This essay discusses the operational principles of low-cost airlines, highlighting their strategy of offering lower fares while compensating through charges on additional services like baggage and food. It explores the competitive impact of these airlines, particularly on premium carriers, leading to market share erosion and the establishment of subsidiary low-cost operations by established airlines. The essay also addresses the limitations and hidden fees often associated with low-cost airlines, such as baggage restrictions and mandatory return ticket purchases. It concludes by advocating for competitive pricing strategies that balance profitability and affordability, suggesting that significantly low prices may not be sustainable in the long run. Explore similar documents and study tools on Desklib.

Low Budget Airlines should not be permitted
to exist

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.
• This results in increase in profits as passengers prefer cheap
flights.
• The competitors are highly influenced by such airlines

Cont.
• South West Airlines is operating on similar basis in US.
• This has created negative situation to premium airlines
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.

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 airlines usually limits passenger'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.

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.

REFERENCES
Akamavi, R.K. and et.al, 2015. Key determinants of passenger
loyalty in the low-cost airline business. Tourism management.
46. pp .528-545.
Bilotkach, V., Gaggero, A. A. and Piga, C. A., 2015. Airline
pricing under different market conditions: Evidence from
European Low-Cost Carriers. Tourism Management. 47.
pp .152-163.
Lawton, T. C., 2017. Cleared for take-off: structure and strategy
in the low fare airline business. Routledge.
Yee Liau, B. and Pei Tan, P., 2014. Gaining customer knowledge
in low cost airlines through text mining. Industrial
Management & Data Systems. 114(9). pp .1344-1359.

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