If we take Ryanair as an example, we will notice that they were able to make obscure and unknown airports into visible, the key word here being visible. 2. Difference between a market oriented organisation and those with a sales oriented/product oriented/production oriented organisation Market oriented This is due in part to the regulatory context of long haul services and core components of low-cost operations not being compatible with long haul fights (Flint, 2003). On the contrary, traditional carrier, also called legacy carrier, is a large, full-service air- It knows that a portion of its customers that fly Air Asia don’t have that much money to carry around so there are little chances that they would own a personal credit/debit card. budget terminal is a specific type of airport terminal designed with the needs of low-cost airlines in mind. • Turn-time of the plane is important By this approach, the company has satisfied its slogan “Now everyone can fly”. What is it like to fly on a budget airline? • Average stage length-flight distance – Aircraft– some low-cost carriers fly new planes because they are cheaper to operate overall than second-hand craft. This is a genius strategy because Air Asia knows its customers. How do they manage to be so cheap? This idea of keeping cost as low as possible at the airline’s end was fundamental to Herb Kelleher’s strategy for Southwest Airline… A … The result of this shift is the emergence of the “hybrid” business model. • Airline’s profitability hinged on the fraction of its flown seats occupied by passengers- load factor In-flight savings. When analyzing the characteristics of low cost airline operations, we have to look initially at different low cost airlines and compare them but also look at non- low cost airline companies and compare with them as well. Due to 9/11 the demand for air travel declined sharply. • RPM- number of revenue seats times the number of miles flown While low cost carriers sell super-cheap tickets and often have sales, full service airlines have generally higher fares. Full cross border mergers are still restricted by national regulations in many instances. But the low cost carriers make strong efforts to find new maintenance concepts that are more appropriate for their needs and even more cost efficient e.g. On the contrary to what one might think, a low cost flight is not more dangerous than a regular one, because technical inspections are made regularly by the same companies, no matter the costs of the flight tickets. In 24 months, Air Deccan has revolutionised Indian air travel. low-cost strategy, it is no wonder that the low-cost business model has been difficult to define in recent years. – A simple fare scheme, such because charging one-way tickets half that of round-trips It may seem that low-cost carriers have existed nearly as long as people have been flying airplanes. There is evidence that the low cost carriers are even becoming dominant players on a significant number of intra-European shorthaul point-to-point routes. Low-cost airlines continue to put pressure on the traditional ‘legacy’ airlines to compete while engaged in an intense rivalry with direct low-cost competitors. The principle behind the business model is centered on “cutting costs in order to be able to give the consumers a low price product with the bare essentials.”. The extent to which this expansion of the low cost carriers will affect the traditional airline hub-and-spoke networks poses interesting questions for the European industry and policy makers. – Seating c… through cheaper labour costs. The company has done its research and found that there were a huge mass middle-class people that love to travel by plain. These are the main characteristics where low cost carriers are making profit even ticket fairs are low compared to the legacy carriers. With marketing orientation, a business... ...Low cost airlines have revolutionised flying – but at what price ? 1. Since deregulation (1978) the average return on investment below cost of capital for the 5 largest carriers. If one want to travel for a very short time, then booking a ticket with such a company is the best deal to make. Do they cut corners on safety? In reality not all of the characteristics are related to a low-cost carrier, and it is difficult to check if a carrier operates according to these characteristics. The low-cost carriers (LCCs) were at the forefront of that movement. During short flights, even if the company... StudyMode - Premium and Free Essays, Term Papers & Book Notes. The low-cost model in the airline industry, pioneered by Southwest Airlines, continues to bring profitability, success and challenges to airlines in markets across the world. The main macro-environmental forces which are affecting the airline industry are economical, technological, and natural forces. • After deregulation- high fixed costs and expensive labor, in need of systems to... ...industry and established low cost carrier company Kulula.com’s parent company Comair slipping into the red for the year ended December 2011 (Comair declares six-month loss amid rising costs, (n.d)). BACKGROUND Another micro factors is that the company kept its prices very low and maintained a high rate of aircraft utilization, quick turnarounds, low distribution costs and ancillary income such as its ”Supersize” charge for excess baggage. A number of low-cost airlines have developed modified versions of the Southwest model of operation. English and French only Airports such as Charles De Gaulle in Paris, Heathrow are expensive to … 1.1 In the current difficult climate for European aviation, one sector is performing extremely well, the so-called low cost/no-frills carriers. These so called Low Cost Carriers, LCCs, have been instrumental in radically changing air travel in liberalized domestic markets. • Cost per available seat mile was low for airlines that flew long distances One might think that the biggest customer satisfaction of using a low-cost carrier is the ticket price. Its amount varies from one airline to another, comprising about 10% to 70% (Ryanair) of the offered seats. In a first step, a specific low-price contingent is determined. The business model for fare savings is built around some of these cost containment principles: Standardized fleet of aircraft reduces training and maintenance costs, Non-essential features (reclining seats, frequent flyer plans) are removed, Secondary airports with lower landing fees and marketing support are used, Rapid flight turnaround (more flights per day/increased revenue, less ground time), Charges for all services (onboard services, extra baggage, reserved seating, etc. One might think that the biggest customer satisfaction of using a low-cost carrier is the ticket price. They manage this by cutting their own operating costs. 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