Low Cost Airlines Success Essay

992 words - 4 pages

The phenomenon of low-cost airlines is relatively recent in the airline industry, and it was firstly introduced by Southwest Airlines, set up in 1067 and the only American airline that has been consistently profitable for the last thirty years . It took much more time to see the first low-cost, no-frills European airline, Ryanair, in 1991, which emulated the Southwest's budget model. "We went to look at Southwest. It was like the road to Damacus. This was the way to make Ryanair work". (Michael O'Leary, Chief Executive, Ryanair)The low-cost model became so popular among passengers. Budget carriers have gained an important market share. In fact, "On latest official estimates, no frills operations already accounted for some 30% of domestic US passengers numbers by last summer and should account for more than 20% of total passenger miles within North America. In Europe too, the summer schedules suggest that no-frills sector will take close to 20% of traffic" .This success is motivated by the low ticket prices which can be achieved by maximising cost reductions. The airlines' low-cost model is based on high seating density, high daily aircraft utilisation, a single aircraft fleet, simplified boarding procedures, the use of secondary airports, elimination of in-flight catering, direct booking from internet, etc. "In essence, the successful innovation which these carriers introduced into Europe was the provision of easily accessible scheduled short-haul services at very low unrestricted fares" .Ryanair and Easyjet are the two most important low-cost airlines in Europe. Both of them dominate two-thirds of the European Low-cost airline market . Their success is not just consequence of their reduction-costs policy, they have implemented new technologies in their operational and distributional systems such as, online booking which "is easy and there are financial incentives to make it more attractive than the telephone or a travel agent. AirTran, easyjet, jetBlue, Ryanair, Southwest and others benefit from this cheap distribution. Ryanair now takes well over 90% of its bookings directly from the web into its OpenSkies reservations system, supplied by Accenture-owned Navitaire" . Both of them strongly follow the reduction-costs concept that gives them the possibility to offer cheap ticMarketing* ProductAs it has been said before, low-cost airlines do their best to cut their prices in order to offer flights at the lowest possible prices. Therefore, cheap flights are the products or services that are offered by budget carriers. In terms of product strategy, the carriers have achieved to satisfy customers needs. "They saw some glaring white space to offer a low-priced product with none of the frills but none of the cost either. In other words, they focused on customer needs and built the service levels around them: and have emerged as fast-growing, pro-consumer heroes for their pains".After analysing the results that low-cost airlines have reached, it is easy...

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