Low-cost carriers offer low fares by eliminating traditional passenger services like free food and drinks. They originated in the United States in the early 1990s and later spread to Europe and elsewhere. Low-cost carriers have a lower cost structure than full-service carriers. Examples of successful low-cost carriers include Ryanair and Southwest Airlines. In India, major low-cost carriers include IndiGo, SpiceJet, and GoAir. These carriers have benefited from factors like economic liberalization policies, a growing middle class, and increasing air travel. They employ strategies like direct online ticket sales and multi-tasking employees to keep costs low.
2. Low-cost airline (also known as nofrills, discount or
budget carrier or airline) is an airline that offers generally
low fares in exchange for eliminating many traditional
passenger services.
Origin United States then spread to Europe in the early
1990s and then in rest of the world.
Refers to airlines with a lower operating cost structure
than their competitors.
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3. World Scenario - Low Cost Airlines
The successful low cost airlines are more profitable than
established carriers
Ryanair has a market capitalisation of about £3 billion
Globally, the largest and most successful low cost airline is
Southwest in the US
Operating Margins of different international airlines:
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4. A low-cost airline offers a point to point service model
Full service airlines follows hub and spoke model
The aircraft flies out from the airport only when all the connecting
flights come in.
While in the point-to-point model a passenger travelling on two
separate connecting flights is issued two separate tickets.
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9. Socio-cultural :
Growing middle class :
1993-1999 : 39.5 m to 56.7
households
2005 : 300 m
2010 : 400 m (Estimated)
Increase in leisure travel by tourists
Foreign tourists in 2006 : 3.2 million
Status symbol to travel in plane
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10. Growing middle class income
Consistent GDP growth
Hikein average salary 14%(highest) in the
world
Tourism industry growth
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11. Modernization & Privatization of Airports
Modern Technology for efficient handling of
aircraft, passenger and cargo.
Developing Greenfield Airports with Private
Sector
Example : Bangalore Airport Corporation Ltd.
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12. Demographic and Natural Environment
Changing pattern of consumers
Highest percentage people of age group 20-25
Educational environment
Shift towards Nuclear family concept
High energy cost
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13. A single Passenger class
A single type of airplane reducing training
and service cost
No frills such as free food/drinks, lounges etc
Direct
sale of ticket through Internet avoiding fee
and commission paid to travel agents
Employees working in multiple roles
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15. The projection for Indian Aviation for 2020 is
estimated at:
o400 million passengers
oIncluding 180 million domestic passengers
o1,000 aircraft in the civil aviation sector
Likely to follow of International Low Price Carriers
e.g. Air Arabia, Southwest Airlines etc.
More emphasis will be on Arabian and South-East
Asian circuits.
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16. Constraints :
Infrastructure constraints
Shortage of airport facilities
Parking bays
Air traffic control facilities
Takeoff and landing slots.
Less than 100 airports having more than one
daily service.
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17. Article of Mr. S Sharma, Oct 2007
Business News from Hindustan Times Daily
Report on ‘Study of the Indian Aviation Industry’ on
www.foolonahill.com
www.findarticles.com
Economic servey, 2008
Remote Access Aviation System – RAAS
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Editor's Notes
The concept originated in the United States before spreading to Europe in the early 1990s and subsequently to much of the rest of the world.
He has to check out his bag and then check in to take the connecting flight.==Point to Point A Point to Point network is a typical route network where an airline focuses mainly on its Origin and Destination ( O&D ) traffic. This means that the airline is more interested in transportation of passengers originating from one city ( A ) to another ( B ) and vice versa, but not in connecting passengers between C and B via A. Low Cost Carriers are considered to be pioneers of this paradigm with a classic example being Southwest Airlines of US. Hub and Spoke A Hub and Spoke network is a route network where an airline will not only plan on transporting passengers between two points, but also to connect passengers between two distant cities via its hub.