This document provides an overview of low-cost or low-frill airlines. It discusses the history and development of the low-cost carrier model globally, including in North America, Europe, Australia/New Zealand, Asia, and India. Key aspects of the low-cost carrier model are described such as cost control strategies, pricing approaches, and operational efficiencies. Specific Indian low-cost carriers IndiGo and SpiceJet are profiled, outlining their business strategies and approaches to achieving low costs and good customer service.
A low-cost carrier or low-cost airline (occasionally referred to as no-frills, budget or discount carrier) is an airline without most of the traditional services provided in the fare, resulting in lower fares and fewer comforts.
A low-cost carrier or low-cost airline is an airline that generally has lower fares and fewer comforts.
To make up for revenue lost in decreased ticket prices, the airline may charge for extras like food, priority boarding, seat allocating, and baggage etc.
The term originated within the airline industry referring to airlines with a lower operating cost structure than their competitors.
The document provides information about various codes and displays used in airline reservations and ticketing on the Amadeus system. It includes:
1) The ICAO phonetic alphabet adopted for aviation use to avoid confusion with similar sounding letters and numbers.
2) Codes used in Amadeus to represent locations, companies, equipment, and other entities with unique identifiers. These include codes for cities, airports, countries, airlines, aircraft types, and more.
3) The different types of displays in Amadeus including availability displays, schedule displays, and timetable displays and how to request each type of display.
Frequent flyer programs allow passengers to accumulate points or miles with each flight that can then be redeemed for rewards like free tickets or upgrades. The first modern program began in 1972 with United Airlines, while Texas International Airlines was the first to use mileage tracking for rewards in 1979. By 2005, over 14 trillion frequent flyer miles had been accumulated worldwide, equivalent to $700 billion in value. Airlines account for frequent flyer programs using one of three approaches: treating redemptions as a contingent liability given uncertainty; recognizing future costs through an incremental cost technique; or deferring a portion of ticket revenue as deferred revenue until awards are used.
Not all airlines are created equal. As in most businesses, there is a sort of stratification of airlines. In many countries, the government owns the airlines. An airline’s rank is determined by the amount of revenue it generates. There are three categories in Airlines: Major, National and Regional.
This document discusses how to calculate special IATA fares and deal with their restrictions. There are different types of special fares like excursion fares and advance purchase fares, with varying restrictions. To determine the applicable fare, analyze the itinerary against the restrictions in the fare rules, starting with the lowest fare. Restrictions include number of stopovers, minimum and maximum trip durations. Once the applicable fare is found, note the fare basis and establish the valid travel windows. Finally, explain the fare rules to the client and issue the ticket.
- Amadeus provides travel technology solutions that connect travel providers and agencies from initial search and booking to ticketing and check-in. It serves major airlines, hotels, and other travel companies globally.
- Founded in 1987 by Air France, Iberia, Lufthansa, and SAS to offer a European alternative to the American Sabre GDS, Amadeus developed a single system to connect travel providers and agencies in real-time.
- Jose Antonio Tazon Garcia led Amadeus as CEO from 1990 to 2008 and remains chairman, having joined at the company's founding. Amadeus now employs over 14,000 people across 195 countries.
This document discusses Porter's five forces model and its application to the airline industry. It analyzes the competitive forces of industry rivalry, threat of substitution, threat of new entry, bargaining power of customers and suppliers in the aviation industry. It also discusses Porter's generic strategies of cost leadership, differentiation and focus and how airlines have implemented these strategies. Common mistakes in airline marketing strategies are outlined such as unclear objectives, improper diversification, overexpansion and overoptimism. Alliance strategies between airlines are also covered.
A low-cost carrier or low-cost airline (occasionally referred to as no-frills, budget or discount carrier) is an airline without most of the traditional services provided in the fare, resulting in lower fares and fewer comforts.
A low-cost carrier or low-cost airline is an airline that generally has lower fares and fewer comforts.
To make up for revenue lost in decreased ticket prices, the airline may charge for extras like food, priority boarding, seat allocating, and baggage etc.
The term originated within the airline industry referring to airlines with a lower operating cost structure than their competitors.
The document provides information about various codes and displays used in airline reservations and ticketing on the Amadeus system. It includes:
1) The ICAO phonetic alphabet adopted for aviation use to avoid confusion with similar sounding letters and numbers.
2) Codes used in Amadeus to represent locations, companies, equipment, and other entities with unique identifiers. These include codes for cities, airports, countries, airlines, aircraft types, and more.
3) The different types of displays in Amadeus including availability displays, schedule displays, and timetable displays and how to request each type of display.
Frequent flyer programs allow passengers to accumulate points or miles with each flight that can then be redeemed for rewards like free tickets or upgrades. The first modern program began in 1972 with United Airlines, while Texas International Airlines was the first to use mileage tracking for rewards in 1979. By 2005, over 14 trillion frequent flyer miles had been accumulated worldwide, equivalent to $700 billion in value. Airlines account for frequent flyer programs using one of three approaches: treating redemptions as a contingent liability given uncertainty; recognizing future costs through an incremental cost technique; or deferring a portion of ticket revenue as deferred revenue until awards are used.
Not all airlines are created equal. As in most businesses, there is a sort of stratification of airlines. In many countries, the government owns the airlines. An airline’s rank is determined by the amount of revenue it generates. There are three categories in Airlines: Major, National and Regional.
This document discusses how to calculate special IATA fares and deal with their restrictions. There are different types of special fares like excursion fares and advance purchase fares, with varying restrictions. To determine the applicable fare, analyze the itinerary against the restrictions in the fare rules, starting with the lowest fare. Restrictions include number of stopovers, minimum and maximum trip durations. Once the applicable fare is found, note the fare basis and establish the valid travel windows. Finally, explain the fare rules to the client and issue the ticket.
- Amadeus provides travel technology solutions that connect travel providers and agencies from initial search and booking to ticketing and check-in. It serves major airlines, hotels, and other travel companies globally.
- Founded in 1987 by Air France, Iberia, Lufthansa, and SAS to offer a European alternative to the American Sabre GDS, Amadeus developed a single system to connect travel providers and agencies in real-time.
- Jose Antonio Tazon Garcia led Amadeus as CEO from 1990 to 2008 and remains chairman, having joined at the company's founding. Amadeus now employs over 14,000 people across 195 countries.
This document discusses Porter's five forces model and its application to the airline industry. It analyzes the competitive forces of industry rivalry, threat of substitution, threat of new entry, bargaining power of customers and suppliers in the aviation industry. It also discusses Porter's generic strategies of cost leadership, differentiation and focus and how airlines have implemented these strategies. Common mistakes in airline marketing strategies are outlined such as unclear objectives, improper diversification, overexpansion and overoptimism. Alliance strategies between airlines are also covered.
This document provides an overview of Emirates Airline. It discusses Emirates' goals of reaching the top by excelling and delivering the world's best in-flight experience. The document outlines Emirates' history, fleet, destinations, awards, employment structure, management team, in-flight services for different classes, cargo services, and ground services. It also includes a SWOT analysis, PESTLE analysis, and brief discussion of Emirates' product.
Organisational structure of airline industryJetline Marvel
The document discusses the typical organizational structure of airline companies. It begins by describing a functional structure with departments headed by executives who report to the CEO. Large international airlines may have 8 executives overseeing areas like human resources, finance, operations, marketing, and cargo. Smaller regional airlines have fewer positions but similar divisions. The document also describes the roles and organization of an airline operations control center, and provides Southwest Airlines as an example of a company that has successfully used a centralized structure.
This document provides a summary of an upcoming training session on the airline industry and e-ticketing. It introduces the speaker, Md. Shaifullar Rabbi, who has extensive experience in the tourism and hospitality field. It then provides an overview of key aspects of the airline industry, including industry employment statistics, major airline functions, types of airline jobs, and important reference materials like the Official Airline Guide and Travel Information Manual. Finally, it discusses e-ticketing and the role of global distribution systems and computer reservation systems in airline bookings.
Revenue management is the practice of maximizing revenue from a fixed inventory of airline seats. It originated in the 1970s after airline deregulation in the US. Revenue management systems deliver 3-9% additional revenue gains through analytics-based inventory control and price differentiation. They help airlines set optimal booking limits and prices to reduce unsold seats and maximize revenue based on demand forecasts. While revenue management is widely used, integration challenges remain for some airlines.
The document provides an overview of HR practices at Emirates Airlines. It describes the airline's vision, organizational structure, strategic planning process, job analysis, recruitment and selection, compensation and benefits, training and development, performance appraisal, and references key HR functions. Training and development opportunities have improved employee satisfaction, while strategic alignment and understanding market conditions help ensure HR goals support business strategies. Performance appraisal allows management to measure productivity and provide tailored training to maximize employee contributions.
Passengers prefer airlines because the people want to reach destination faster and safer. Aviation industry is dependent on a number of industries. It is dependent on smooth and effective functioning’s of the different departments. The airlines are dependent on fuel, cabin crew, weather, flight crew, freight, load of the airplanes, flight dispatch scheduling. The Operational Control Centre (OCC) of the airplanes controls the different aspects and oversees the smooth functioning of the different organizations
The document provides information on the various departments and operations of an airline called airBaltic. It discusses the missions and responsibilities of the Ground Operations, In-flight Service, Documentation Office, Flight Dispatch, Flight Support, Crew Planning, Cabin Operations, and Flight Deck Crew departments. It also includes sample reservation forms and IATA airport codes. The document aims to outline the key functions and roles across the different aspects of airBaltic's business.
Airline pricing strategies and revenue managementAMALDASKH
Revenue management is a technique airlines use to optimize revenue from a fixed resource (seats on flights) by selling to the right customers at the right price. It implements supply and demand principles tactically. Key capabilities include forecasting demand and customer price sensitivity to set optimal prices, allocating inventory efficiently, and responding quickly to changes. Cargo revenue management similarly aims to enhance profits across a network. Airlines employ various pricing strategies considering costs, sales goals, competition, and customer value over time. Popular strategies include premium, penetration, economy, price skimming, competition-based, and cost-plus pricing. Demand is inversely related to price - as price falls, quantity demanded rises, and vice versa. Non-price factors
This document discusses marketing strategies for airlines. It begins by defining marketing and noting that marketing involves identifying customer needs profitably. It then discusses trends in the airline business market, including greater use of low-cost airlines and non-refundable tickets. The document also discusses how airlines can segment the market, such as by value, length of travel, and purpose of travel. Finally, it discusses the marketing mix of product, price, place and promotion as key elements in an airline's marketing strategy.
This document provides information on several major international airlines, including Air India, Emirates, Qatar Airways, Lufthansa, Singapore Airlines, Cathay Pacific, All Nippon Airways, Turkish Airlines, EVA Air, and Qantas. For each airline, it lists details such as the CEO, number of flights, hub airports, aircraft types, founding year, destinations served, and subsidiaries. It also includes images related to various aspects of the airlines' operations and passenger experience.
Amadeus is a global travel technology company that provides software solutions for the travel and tourism industry. It was formed in 1987 by four airlines to facilitate airline booking and sales. Amadeus has its headquarters in Madrid and operates globally, providing distribution services to over 700 airlines and developing IT solutions like reservation systems. It has the largest market share of global distribution systems at 38% and passenger service systems at 30%. Amadeus offers solutions for air, hotels, rail, and the entire travel journey from search to post-trip reporting.
The document provides an overview of basic passenger tariff training. It begins with an introduction to traffic conference areas and global indicators. It then covers different types of routings and fares like one-way, round-trip, open-jaw and circle trips. Factors influencing fares like intermediate stops, routing, mileage principles and indicators are explained. The document outlines the step-by-step process for basic fare construction for one-way, return and circle trips including examples. It describes checks like higher rated intermediate points, backhaul minimum and circle trip minimum. The training concludes with exercises for trainees to practice fare construction.
This document discusses airline market segmentation. It begins by explaining the airline business model, including transportation of passengers and cargo, and how technology has impacted communication and logistics. It then discusses the different types of airline customers, including consumers, passengers, and decision-makers within business travel. Key factors that influence customer decisions are also outlined, and the document emphasizes the difference between apparent and true customer needs. The rest of the document focuses on market segmentation strategies for airlines, including segmenting by travel purpose, journey length, traveler origin, and customer requirements. Business and leisure travelers are specifically compared in terms of demand elasticity and airline preferences.
This document discusses airline branding. It defines branding as a set of marketing methods used to distinguish a company from competitors and create lasting impressions. Branding tools include identity, communication, awareness, loyalty and strategies. Brand equity is the value of a brand and is measured by assessing these components. The document then discusses corporate brand identity, brand awareness, brand elements like name and logo, brand extension, co-branding, rebranding and brand positioning. It provides examples of these concepts from airlines like British Airways, EasyJet, Air Asia, Nok Air, Thai Airways, Tiger Airways and others.
The Indian aviation industry has grown significantly since its establishment in the early 1950s. Major events include the formation of Air India and Indian Airlines after independence, the introduction of jet aircraft in the 1960s, and the opening of the industry to private players in the 1990s. Currently, India has a rapidly growing aviation market and is one of the largest globally, though challenges around infrastructure and costs remain. Key players include Air India, Indigo, SpiceJet and Jet Airways. The future looks promising for further expansion, though continued policy support will be needed.
This document provides an overview and analysis of Emirates Airlines' business strategies and marketing plan. Some key points:
- Emirates was established in 1985 in Dubai and has expanded significantly to over 80 aircraft flying to over 70 destinations globally.
- It faces competition from other UAE-based airlines like Air Arabia, Etihad, and RAK Airways. Emirates differentiates itself through advanced onboard services.
- Emirates' strategic focus includes its mission to offer high quality service, goals of market expansion, and leveraging Dubai's location and brand reputation.
- Its marketing plan targets UAE tourism/business travelers, expatriates in the UAE, and transit passengers,
This document discusses various pricing tactics used by airlines, including fare actions that change actual fare levels and adjustments to fare rules and restrictions. It provides examples of different types of fare actions like introductory fares for new routes, system-wide sales during weak periods, and segment-specific pricing. Examples of adjusting rules include changing advance purchase requirements, minimum/maximum stay durations, and directional pricing. The objective of these tactics is to maximize revenue by selling seats at the highest fares possible while balancing price-sensitive customers.
The document discusses the different elements of cost for airlines. There are three main categories of costs: 1) Direct operating costs which are related to airplanes and passengers, 2) Indirect operating costs which are not directly related to flight operations but charged to passengers, and 3) Overhead costs which are managerial expenses for sales, marketing, and human resources needed to operate flights smoothly. Understanding these different cost elements is important for both low-cost carriers providing cheap flights and full-service carriers offering luxury travel.
The document defines various IATA global indicators that describe air travel routes between different geographic areas. The indicators include:
AP - Routes between areas 2 and 3 via the Atlantic and Pacific oceans.
AT - Routes between areas 1 and 2/3 via the Atlantic, excluding South America.
EH - Routes between areas 2 and 3 via the Eastern Hemisphere, excluding certain other routes.
FE - Routes between Europe/Ukraine and area 3 with nonstop service to area 3, excluding Japan/Korea.
Air Deccan introduced the low-cost carrier business model in India, targeting price-conscious customers. It kept costs low by outsourcing non-core functions, reducing airport fees and turnaround times, optimizing aircraft capacity, and selling most tickets online. This made air travel affordable to India's large middle class population. However, Air Deccan struggled with competition and was eventually overtaken by Kingfisher as the leading low-cost carrier in India.
1. The document discusses the strategies adopted by key low-cost airlines in India like SpiceJet, IndiGo, and GoAir to maintain low costs and sustain their business operations.
2. The airlines focus on cost control measures like single aircraft fleet types, point-to-point routes, online booking, and dynamic pricing. They also increase revenues through ancillary services.
3. While the low-cost model has helped these airlines grow rapidly, challenges like high fuel costs, lack of infrastructure, and price wars threaten the long-term sustainability of this model in India. The airlines will need to focus on profitability through consolidation or cost reductions.
This document provides an overview of Emirates Airline. It discusses Emirates' goals of reaching the top by excelling and delivering the world's best in-flight experience. The document outlines Emirates' history, fleet, destinations, awards, employment structure, management team, in-flight services for different classes, cargo services, and ground services. It also includes a SWOT analysis, PESTLE analysis, and brief discussion of Emirates' product.
Organisational structure of airline industryJetline Marvel
The document discusses the typical organizational structure of airline companies. It begins by describing a functional structure with departments headed by executives who report to the CEO. Large international airlines may have 8 executives overseeing areas like human resources, finance, operations, marketing, and cargo. Smaller regional airlines have fewer positions but similar divisions. The document also describes the roles and organization of an airline operations control center, and provides Southwest Airlines as an example of a company that has successfully used a centralized structure.
This document provides a summary of an upcoming training session on the airline industry and e-ticketing. It introduces the speaker, Md. Shaifullar Rabbi, who has extensive experience in the tourism and hospitality field. It then provides an overview of key aspects of the airline industry, including industry employment statistics, major airline functions, types of airline jobs, and important reference materials like the Official Airline Guide and Travel Information Manual. Finally, it discusses e-ticketing and the role of global distribution systems and computer reservation systems in airline bookings.
Revenue management is the practice of maximizing revenue from a fixed inventory of airline seats. It originated in the 1970s after airline deregulation in the US. Revenue management systems deliver 3-9% additional revenue gains through analytics-based inventory control and price differentiation. They help airlines set optimal booking limits and prices to reduce unsold seats and maximize revenue based on demand forecasts. While revenue management is widely used, integration challenges remain for some airlines.
The document provides an overview of HR practices at Emirates Airlines. It describes the airline's vision, organizational structure, strategic planning process, job analysis, recruitment and selection, compensation and benefits, training and development, performance appraisal, and references key HR functions. Training and development opportunities have improved employee satisfaction, while strategic alignment and understanding market conditions help ensure HR goals support business strategies. Performance appraisal allows management to measure productivity and provide tailored training to maximize employee contributions.
Passengers prefer airlines because the people want to reach destination faster and safer. Aviation industry is dependent on a number of industries. It is dependent on smooth and effective functioning’s of the different departments. The airlines are dependent on fuel, cabin crew, weather, flight crew, freight, load of the airplanes, flight dispatch scheduling. The Operational Control Centre (OCC) of the airplanes controls the different aspects and oversees the smooth functioning of the different organizations
The document provides information on the various departments and operations of an airline called airBaltic. It discusses the missions and responsibilities of the Ground Operations, In-flight Service, Documentation Office, Flight Dispatch, Flight Support, Crew Planning, Cabin Operations, and Flight Deck Crew departments. It also includes sample reservation forms and IATA airport codes. The document aims to outline the key functions and roles across the different aspects of airBaltic's business.
Airline pricing strategies and revenue managementAMALDASKH
Revenue management is a technique airlines use to optimize revenue from a fixed resource (seats on flights) by selling to the right customers at the right price. It implements supply and demand principles tactically. Key capabilities include forecasting demand and customer price sensitivity to set optimal prices, allocating inventory efficiently, and responding quickly to changes. Cargo revenue management similarly aims to enhance profits across a network. Airlines employ various pricing strategies considering costs, sales goals, competition, and customer value over time. Popular strategies include premium, penetration, economy, price skimming, competition-based, and cost-plus pricing. Demand is inversely related to price - as price falls, quantity demanded rises, and vice versa. Non-price factors
This document discusses marketing strategies for airlines. It begins by defining marketing and noting that marketing involves identifying customer needs profitably. It then discusses trends in the airline business market, including greater use of low-cost airlines and non-refundable tickets. The document also discusses how airlines can segment the market, such as by value, length of travel, and purpose of travel. Finally, it discusses the marketing mix of product, price, place and promotion as key elements in an airline's marketing strategy.
This document provides information on several major international airlines, including Air India, Emirates, Qatar Airways, Lufthansa, Singapore Airlines, Cathay Pacific, All Nippon Airways, Turkish Airlines, EVA Air, and Qantas. For each airline, it lists details such as the CEO, number of flights, hub airports, aircraft types, founding year, destinations served, and subsidiaries. It also includes images related to various aspects of the airlines' operations and passenger experience.
Amadeus is a global travel technology company that provides software solutions for the travel and tourism industry. It was formed in 1987 by four airlines to facilitate airline booking and sales. Amadeus has its headquarters in Madrid and operates globally, providing distribution services to over 700 airlines and developing IT solutions like reservation systems. It has the largest market share of global distribution systems at 38% and passenger service systems at 30%. Amadeus offers solutions for air, hotels, rail, and the entire travel journey from search to post-trip reporting.
The document provides an overview of basic passenger tariff training. It begins with an introduction to traffic conference areas and global indicators. It then covers different types of routings and fares like one-way, round-trip, open-jaw and circle trips. Factors influencing fares like intermediate stops, routing, mileage principles and indicators are explained. The document outlines the step-by-step process for basic fare construction for one-way, return and circle trips including examples. It describes checks like higher rated intermediate points, backhaul minimum and circle trip minimum. The training concludes with exercises for trainees to practice fare construction.
This document discusses airline market segmentation. It begins by explaining the airline business model, including transportation of passengers and cargo, and how technology has impacted communication and logistics. It then discusses the different types of airline customers, including consumers, passengers, and decision-makers within business travel. Key factors that influence customer decisions are also outlined, and the document emphasizes the difference between apparent and true customer needs. The rest of the document focuses on market segmentation strategies for airlines, including segmenting by travel purpose, journey length, traveler origin, and customer requirements. Business and leisure travelers are specifically compared in terms of demand elasticity and airline preferences.
This document discusses airline branding. It defines branding as a set of marketing methods used to distinguish a company from competitors and create lasting impressions. Branding tools include identity, communication, awareness, loyalty and strategies. Brand equity is the value of a brand and is measured by assessing these components. The document then discusses corporate brand identity, brand awareness, brand elements like name and logo, brand extension, co-branding, rebranding and brand positioning. It provides examples of these concepts from airlines like British Airways, EasyJet, Air Asia, Nok Air, Thai Airways, Tiger Airways and others.
The Indian aviation industry has grown significantly since its establishment in the early 1950s. Major events include the formation of Air India and Indian Airlines after independence, the introduction of jet aircraft in the 1960s, and the opening of the industry to private players in the 1990s. Currently, India has a rapidly growing aviation market and is one of the largest globally, though challenges around infrastructure and costs remain. Key players include Air India, Indigo, SpiceJet and Jet Airways. The future looks promising for further expansion, though continued policy support will be needed.
This document provides an overview and analysis of Emirates Airlines' business strategies and marketing plan. Some key points:
- Emirates was established in 1985 in Dubai and has expanded significantly to over 80 aircraft flying to over 70 destinations globally.
- It faces competition from other UAE-based airlines like Air Arabia, Etihad, and RAK Airways. Emirates differentiates itself through advanced onboard services.
- Emirates' strategic focus includes its mission to offer high quality service, goals of market expansion, and leveraging Dubai's location and brand reputation.
- Its marketing plan targets UAE tourism/business travelers, expatriates in the UAE, and transit passengers,
This document discusses various pricing tactics used by airlines, including fare actions that change actual fare levels and adjustments to fare rules and restrictions. It provides examples of different types of fare actions like introductory fares for new routes, system-wide sales during weak periods, and segment-specific pricing. Examples of adjusting rules include changing advance purchase requirements, minimum/maximum stay durations, and directional pricing. The objective of these tactics is to maximize revenue by selling seats at the highest fares possible while balancing price-sensitive customers.
The document discusses the different elements of cost for airlines. There are three main categories of costs: 1) Direct operating costs which are related to airplanes and passengers, 2) Indirect operating costs which are not directly related to flight operations but charged to passengers, and 3) Overhead costs which are managerial expenses for sales, marketing, and human resources needed to operate flights smoothly. Understanding these different cost elements is important for both low-cost carriers providing cheap flights and full-service carriers offering luxury travel.
The document defines various IATA global indicators that describe air travel routes between different geographic areas. The indicators include:
AP - Routes between areas 2 and 3 via the Atlantic and Pacific oceans.
AT - Routes between areas 1 and 2/3 via the Atlantic, excluding South America.
EH - Routes between areas 2 and 3 via the Eastern Hemisphere, excluding certain other routes.
FE - Routes between Europe/Ukraine and area 3 with nonstop service to area 3, excluding Japan/Korea.
Air Deccan introduced the low-cost carrier business model in India, targeting price-conscious customers. It kept costs low by outsourcing non-core functions, reducing airport fees and turnaround times, optimizing aircraft capacity, and selling most tickets online. This made air travel affordable to India's large middle class population. However, Air Deccan struggled with competition and was eventually overtaken by Kingfisher as the leading low-cost carrier in India.
1. The document discusses the strategies adopted by key low-cost airlines in India like SpiceJet, IndiGo, and GoAir to maintain low costs and sustain their business operations.
2. The airlines focus on cost control measures like single aircraft fleet types, point-to-point routes, online booking, and dynamic pricing. They also increase revenues through ancillary services.
3. While the low-cost model has helped these airlines grow rapidly, challenges like high fuel costs, lack of infrastructure, and price wars threaten the long-term sustainability of this model in India. The airlines will need to focus on profitability through consolidation or cost reductions.
The document provides an overview of Southwest Airlines, including its history, operations, target markets, key success factors, and competitive position within the US airline industry. Southwest is the largest low-cost carrier in the US, with a focus on short-haul, point-to-point routes. It aims to provide safe, comfortable air travel at low prices. The airline's strengths include its low costs, operational efficiency, and customer service culture.
Issues & Trends - The Global Budget Airline Industry V2ahabib10
The document provides an overview of the global budget airline industry, including major players, business models, competitive landscape, and critical issues. It discusses the low-cost carrier business model of relying on high volume and eliminating ancillary services to offer lower fares. Additionally, it outlines several trends and challenges facing the industry, such as managing ancillary revenues, disruptive government regulations, and declining demand due to factors like the H1N1 virus.
The document is a presentation on the aviation industry that covers several topics:
- It introduces the presenter and acknowledges their faculty.
- It discusses factors affecting the development of the aviation industry such as costs, government policies, and competition.
- It provides details on the growth of low-cost carriers in India and compares fares between low-cost and full-service airlines.
- It examines the increase in domestic airlines in India and how the aviation industry impacts the overall economy.
The document outlines the aviation industry in India and the potential for low-cost airlines. It discusses how India's aviation market was previously a monopoly but was opened to private players in 1994. Low-cost carriers emerged promising lower fares but without extra services. Strategies of low-cost airlines included using secondary airports, outsourcing, and charging for extras. Air Deccan launched in 2003 as India's first low-cost carrier, aiming to make air travel affordable through strategies like high aircraft utilization and dynamic pricing. However, factors like rising costs, new entrant competition, and high risk perception have made it difficult for low-cost airlines to succeed in India.
The document discusses competitive analysis of the airline industry. It covers product level analysis, core and supplementary services offered by airlines. It also discusses various aspects of airline branding like positioning, pricing strategies, marketing communications and different flight classes. The core service provided is transportation while supplementary services include information, consultation, order taking, hospitality and billing/payment options. Low cost carriers focus on value pricing while full service airlines offer premium pricing.
The document discusses the evolution of low-cost airline business models. It describes how low-cost carriers initially had significantly lower operating costs than traditional airlines by utilizing strategies like higher seating density, direct ticket sales, and eliminating in-flight services. However, increased fuel costs and competition have reduced the cost differences between airlines. Now many carriers utilize hybrid business models, and low-cost carriers are focusing more on factors beyond price, like partnerships and new services. The business models of both low-cost and traditional carriers continue to change as the airline industry dynamics shift.
Case Study Ryanair Business Strategy Analysis Ryanair is .docxbartholomeocoombs
Case Study: Ryanair Business Strategy Analysis
Ryanair is an Irish low-cost airline headquartered in Dublin, founded in 1985. It
operates 181 aircraft over 729 routes across Europe and North Africa from 31 bases.
Ryanair has seen large success over recent years due to its low-cost business
model and has become the world’s largest airline in terms of international passenger
numbers. Taking Porter’s generic business strategies into consideration, Ryanair
operates a cost-leadership strategy to drive itself into achieving its mission of being
the leading European low-cost carrier (LCC). Throughout this essay the business
strategy of Ryanair will be analysed and the sustainability of their model evaluated.
Ryanair’s objective is to firmly establish itself as Europe’s leading low-fares scheduled
passenger airline through continued improvements and expanded offerings of its low-
fares service. Considering their objectives and mission, Ryanair’s decision on their cost-
leadership strategy was based on a few main factors discussed below.
A major influence was the deregulation of the airline industry in 1978, which removed
government intervention within the European continent. Under the new rules, routes
and fare decisions were made by individual airlines which meant that they could
compete on other factors besides food, cabin crew and frequency. As a result of
deregulation, a large number of new airline start-ups emerged within the EU and
competition among airlines increased dramatically resulting in downward price
pressures. Ryanair was established to take full advantage of these market conditions.
By offering low prices, Ryanair entered a huge and virtually unlimited market.
Having seen the major success of the low-cost carrier Southwest in the United States,
Ryanair decided to follow in their footsteps by establishing an LCC for the European
continent that targeted fare-conscious leisure travellers and regular low cost business
travelers. By doing this Ryanair became the first low-fare airline in Europe. However,
they took the Southwest model further by offering no drinks and snacks at all and
abolishing the frequent flyer program that Southwest now offers its customers.
The evaluation of Porters five forces influenced Ryanair’s choice of a cost-leadership
strategy, as the threat presented by new entrants and the threat of substitutes could
hinder their success. The threat of new entrants is high within the aviation industry
which meant that low fares would help drive away any further competition. The threat
of substitutes to Ryanair had to also be carefully examined. Their primary market,
Europe, had the availability of high speed trains and car holidays. For Ryanair to be
successful, prices had to be low to attract the public, and resist strong
competition from substitutes like Eurostar.
As Europe’s largest low fare airline, Ryanair’s competitive advantage remains in their
abil.
The document discusses the low-cost carrier industry in India. It notes that low-cost carriers like Ryanair and Southwest Airlines have been very profitable compared to established carriers. In India, the key low-cost carriers are Air Deccan, SpiceJet, IndiGo, and Go Air, which have been successful by adopting business models focused on reducing costs and offering lower fares. The market share of low-cost carriers in India has been growing and consolidation is occurring, such as Kingfisher acquiring a stake in Air Deccan. The future of the Indian aviation industry is projected to see significant passenger growth over the next decade.
Strategic Management (Lucky Air Case Study)Parth Khurana
Lucky Air is a Chinese low-cost carrier based in Kunming, Yunnan. It was founded in 2004 and officially became a low-cost carrier in 2016. Lucky Air operates domestic routes from its hub at Kunming Changshui International Airport using a fleet of 57 narrow-body aircraft that fly to 62 destinations. It faces competition from other Chinese carriers like China Eastern Airlines and Kunming Airlines. Lucky Air aims to cut costs through strategies like cost leadership, differentiation, and using information technology. However, it also faces threats such as high fuel costs and industry regulations.
Effective Business Strategies in Corporate Travel Marketerya1
The European corporate travel market is worth $327 billion annually, making it attractive yet challenging for airlines. It is expanding despite economic downturns but corporations are becoming more cost-conscious. Airlines face intense competition from both legacy carriers and low-cost carriers. Major challenges include economic instability, accelerating liberalization, the low-cost carrier revolution, and high fuel prices. Airlines are implementing strategies like alliances and loyalty programs, focusing on social responsibility, using hub networks, and developing premium classes and low-cost business models to compete in this complex market.
The document discusses critical success factors of low-cost carriers (LCCs) globally and in India. It analyzes the performance of LCCs in India and reasons for their failure. It then provides strategic options to make Indian LCCs economically viable.
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Low frill airlines
1. Low Frill Airlines
(Case Study)
Assignment work
2018
Submitted to: Submitted by:
Mr. Ajay Bhardwaj Vaibhav Makwana
Lecturer MBA TTM 1st
SEM
Dept. of Tourism Mgmt. DSVV, Haridwar
…………………………………………..…………………………
DEPARTMENT OF TOURISM MANAGEMENT
SCHOOL of T C & M, DEV SANSKRITI VISWAVIDYALAYA,
GAYTRIKUNJ, SHANTIKUNJ, HARIDWAR (U.K.) INDIA
2. Low Frill Airlines
INTRODUCTION
A low-cost carrier or low-cost airline is an airline that generally has lower fares and fewer comforts.
To make up for revenue lost in decreased ticket prices, the airline may charge for extras like food,
priority boarding, seat allocating, and baggage etc.
The term originated within the airline industry referring to airlines with a lower operating cost
structure than their competitors. While the term is often applied to any carrier with low ticket prices
and limited services, regardless of their operating models, low-cost carriers should not be confused
with regional airlines that operate short flights without service, or with full-service airlines offering
some reduced fares.
Brief History From Around the World
The concept of a low cost airline was started in the seventies by the American domestic carrier
Southwest with the sole objective of offering cheap airfares to the consumers. This created a
situation where already established flag ship carriers or legacy airlines to lose a significant amount of
the market share to these newly formed low cost airlines, purely because of their ability to charge a
lower price over traditional full cost airlines.
North America
From the deregulation in the 1970’s till the early 2000’s the transformation of the low cost concept in
the United States can only be described as a series of innovations, proliferations and consolidations
where many other low cost airlines (e.g. Pacific Southwest, New York Air, Jet America) entered the
market of which, some survived the competition and others did not. This also caused some of the
major carriers to start their own subsidiaries under the low cost banner in order to regain their lost
market share (Francis, Humphreys, Ison & Aicken, 2005, p. 85).
Europe
In Europe the low cost concept was originated in the UK and Ireland based on the Southwest model
with the introduction of easyJet and Ryanair in 1995. Their success was attributed to the favorable
economic framework that encouraged the low cost airline industry. For example, the deregulation
3. allowed airlines of member states to operate domestically within the European Union. Another
Example is low charges at underused airports which increased the passenger numbers going into
those airports and finally, their direct sales approach using the internet and call centers (Francis et al,
2005, p.87).
Australia/ New Zealand
After the deregulation of the Australian domestic market in the early nineties, airlines such as
Compass Airlines and compass Mk II started low cost operations. However they were absorbed into
the Qantas group as a result of the financial strength Qantas had over the low cost airline. The only
significant low cost innovation came in the form of virgin blue which still continues to operate today.
In New Zealand, although the deregulation movement was implemented in 1984, low cost operations
did not start until 1995. However, unlike most other countries it wasn’t in the domestic sector but
short haul trans-Tasman flights, started by Kiwi Airlines. The response for this by the New Zealand
flag ship carrier Air New Zealand was to create their own subsidiary Freedom Air to gain a market
share in the low cost airline sector. Today, an offshoot of low cost carrier Virgin Blue operates
Trans-Tasman routes under the banner Pacific Blue.
Asia
In Asia, it was always thought that the tight government control and restrictions implemented will
not allow favorable conditions for low cost airlines to prosper. However the rapid demographic and
economic progress combined with congested hub airports alongside underutilized airports and the
need for governments of those countries to promote tourism and trade outside the capital cities
influenced in the bringing the low cost concept to the continent of Asia. Seeing the success of some
of the European airlines such as easyJet and Ryan air, Malaysian carrier Air Asia started low cost
domestic operations in 2001 based on the South West model. Other subsidiary airlines such as Tiger
Airways and ValuAir have also started operations and are still in service today (Francis et al, 2005,
p.90).
THE “LCC” PHENOMENON IN INDIA
Southwest Airlines, now a major carrier in the U.S., operating local routes in Texas in the 1970s
pioneered the low cost carrier business model. In India, the model was introduced in 2003 by Air
4. Deccan. However, the same descriptive label masks the significant differences in ways the model has
worked in India vs. U.S.
First, in terms of market share, LCCs accounted for almost 30% of all domestic passengers carried
in 2006. As of November 2006, it rose to 35%. This rate of market penetration of LCCs is
remarkable given that the market share was zero in August 2003. Low cost carrier operations account
for 44% of all flights within India compared to19% in the U.S...
The second significant difference has to do with the relationship between low cost and low fare. In
U.S., the LCCs offering low fares are also truly low cost operations. In India, the airlines that offer
low fares are in reality not low cost operations. They are LCCs only in name. Among the LCCs in
India, Spice Jet has the lowest unit cost at 6.2 cents per ASK, which is comparable with Southwest,
Easy Jet, and Jet Blue. But this is more than twice that of the best performer, Air Asia with unit cost
of slightly over 3 cents per ASK..
These flies in the face of what LCCs outside India like Ryan air have done when they were in a
similar stage of their growth. Ryan air focused on lowering costs while finding ways to enhance
revenues by selling food and drinks during flight to captive passengers and selling services such as
insurance, hotel reservations, and rental cars on its website. Deccan seemed to have followed similar
strategy in terms of charging for baggage (by offering limited baggage allowance) and food, and
expanding capacity but with a crucial difference that it did not share the obsession of Ryan air and
Air Asia to reduce costs.
The Low Cost Model
The above mentioned examples in the low cost airline history share one common feature. They are
either based on or have used a ‘modified’ version of the Southwest low cost model of operation.
The success of low cost airlines can be attributed to what is called a low-cost leadership position
strategy adopted by these airlines. According to Flouris & Oswald (2006), “The goal of a low-cost
leader is to contain the costs to the lowest relative to industry rivals and, in essence, to create a
sustainable cost advantage over the competition. The key to this strategy is that cost is not equal to
price”. The original low cost model is designed based on this concept and as outlined in Alamdari &
Fagan (2005, p.378), the original South West low cost model consisted of the following:
5. Fares : Unrestricted and low price
Network: Point to point high frequency routes
Distribution: Travel agents and call
Fleet: High utilization, same type of aircraft across the fleet
Airport: Secondary airports with short turnaroun
Sector length: Short (around 400nm)
Staff: High productivity with competitive wages and profit sharing
Fares : Unrestricted and low price
Network: Point to point high frequency routes
Distribution: Travel agents and call centers, no tickets
, same type of aircraft across the fleet
Airport: Secondary airports with short turnaround times
Sector length: Short (around 400nm)
Staff: High productivity with competitive wages and profit sharing
6. LCC Model Features
Low Cost Carrier's commonly use one single type of aircraft which is small and more fuel
efficient such as Boeing 737 and Airbus A320 families.
They tend to keep only single passenger class in the aircraft.
In order to reduce the HR cost LCC's encourage their employees to work in multiple roles.
For E.g. Flight attendants may clean the aircraft or work as gate agents.
Low Cost Carrier's charge for pillow, blanket, food, prior boarding, carryon baggage or any
extra comfort.
Low Cost Flight's generate revenue by providing a-la-carte option and commissioned
products.
LCC's do not provide any in-flight entertainments, complementary toys, variety of news
papers and magazines etc.
Low Cost Flight's operates with minimum equipments to reduce the aircraft weight and to
reduce the acquisition and maintenance cost. Reduced aircraft weight will reward more fuel
efficiency.
Benefits of Low Cost Carrier's
Low price – the most obvious benefit to travelers who can save between 50 – 80 percent on
airfare, especially when booking early.
One-way tickets – some airlines charge extra for one-way tickets; a number of low-cost
airlines sell air tickets a la carte, priced according to availability.
Price benefits for traveling during off-peak hours or red-eye flights.
Frequent big discount promotions.
Disadvantages of Low Cost Carrier's
Hidden fees – taxes, insurance costs, baggage, etc.
Extra charges for not using online ticket sales and check-in, reserved seating.
7. Less convenient schedules – travelers’ flight options may be limited to non-peak hours/days.
No refunds; rescheduling a flight can be costly.
Baggage restrictions like carry-on luggage only; large fees for excess baggage.
“Lesser” airports – some low-cost carriers fly out of secondary, less-used airports that may
be a considerable distance from the destination
Indian Aviation Industry Facts
60 Million Passengers Served – 90 Million Domestic Passengers/ 20Million International
Passengers
45 Million Tons of cargo handled
Operations with 920Airlines, @ 4200 Airports, with 27000 Aircrafts
Inbound Air traffic from 87Foreign countries
Outbound Air traffic to 40countries
International Passengers growing at CAGR of 14%
8. Indigo Airlines
IndiGo is a low-cost airline headquartered at Gurgaon, Haryana, India. It is the largest airline in India
in terms of passengers carried, with a 42.6% market share as of October 2016. The airline operates to
41 destinations and is the second largest low-cost carrier in Asia
It has its primary hub at Indira Gandhi International Airport, Delhi. The airline was founded as a
private company, by Rahul Bhatia of InterGlobe Enterprises; and Rakesh Gangwal, a United States-
based expatriate Indian; in 2006. It took delivery of its first aircraft in July 2006 and commenced
operations a month later.
The airline became the largest Indian carrier in terms of passenger market share in 2012. The
company went public in November 2015. Facts and Figures 8 consecutive years of profitable
operations Market share of 42.1% as of November, 2016 Fleet of 126 aircraft including 14 new
generation A320neos "Great Place to Work for in India” 8 years in a row
Strategies Adopted By Indigo Airlines
IndiGo has become the new market leader with its slow and steady approach within just eleven years
of launch. IndiGo focused on what they thought would matter to its flyers -It communicated to the
flyer his basic need of getting from point A to point B on time.
Here are the major reasons why the airline has managed to scale to the top, despite being the
youngest airline in India.
Indigo's stuck to its low-cost, single class model
While Kingfisher and once market-leading Jet Airways bought rivals, flew multiple plane models
and struggled to mix full-service and low-fare options, IndiGo stuck with its policy of offering one
class of no-frills service on a single type of plane. Indigo has chosen to stick to the world's best-
selling single-aisle aircraft, the Airbus A320.
9. Selling and leasing back planes helps its balance sheet
Secondly, it maintains a young fleet by selling and leasing back its planes. IndiGo uses six-year sale
and leaseback agreements, so the airline is constantly replacing its aircraft. This prevents the need for
overall checks and major repairs, which means IndiGo understands how to work the margins.
Operationally it would be impossible to make a profit at the very low fares they were offering
through the first four years of operations, where ticket prices on Indigo were roughly 40 percent of
cost of operation.
Quality and detail key to good service
IndiGo's executives, including staff at the check-in counters, air crew and sales and marketing staff
are hired only after Bhatia meets each of them individually. Besides, the airline also employs far
fewer people, with one of the industry's leanest work forces. The airline also broke industry
standards with simple things like turnaround time. This is the time taken for a plane to be ready for
the next flight between landing and takeoff. IndiGo boasts of a turnaround time of less than 30
minutes.
Concentrated customer focus
IndiGo's success model largely relies on consistent low fares, regular on-time performance and
minimal flight cancellations. However, the airline's biggest edge over others is its focus on customer
focus. IndiGo only emphasizes on-time performance. Indigo has continuously built around this
image through its tongue-in- cheek advertisements on television and print media.
Using Smart Technology
Unlike manual systems used by other airlines, IndiGo planes are equipped with a digital link system
for transmission of short, simple messages between aircraft and ground stations via radio or satellite
called Aircraft Communications Addressing and Reporting System (ACARS). Before every IndiGo
flight departs an automatic message is triggered from the aircraft to its operations control centre - and
immediately the same departure time gets recorded in the software. Similarly, the moment the flight
lands an automatic message is triggered from aircraft to control centre. Hence, the on-time
performance is diligently monitored for every flight in real time.
10. SPICEJET AIRWAYS
SpiceJet is a low-cost airline based in New Delhi, India. It began service on May 23, 2005. It was
earlier known as Royal Airways, which was earlier known as ModiLuft. It is promoted by the
Kansagra family. By 2008, it was India's second largest low-cost airline in terms of market share.
Spice Jet was voted as the best low-cost airline in South Asia and Central Asia region by Skytrax in
2007.
Cost Control
Spice Jet is focused on twin pillars of cost control and growing its ancillary revenue. It follows the
classical ―low-cost‖ airline model of very competitive fares, a single type of aircraft and a single
class of service, point-to-point operations, quick turnarounds, no frills, and internet-based ticketing.
But unlike other low-cost airlines, water and snacks served on-board Spice Jet aircrafts is free.
Spice Jet has also focused on the curved winglet design which reduces noise and improves fuel
economy by 2-3 per cent. The company has also expanded inner aircraft room by reducing
unnecessary storage areas and allotting them to passenger seats.
Pricing strategies
The airline marked its entry in service with Rs. 99 fares for the first 99 days, with 9000 seats
available at this rate. This deal was followed by a Rs. 999 promotional scheme on select routes. Their
marketing theme is "offering low 'everyday spicy fares' and great guest services to price conscious
travelers. Their aim is to compete with the Indian Railways passengers travelling in AC coaches. The
airline in May 2007 offered two-lakh seats at a special price of 99 paisa for two or more persons
travelling together on all non-stop flights covering 14 destinations. Recently in January 2009, it came
up with another attraction – ‗Book two air tickets, Pay for one‘.
11. Value-addition to customers
Spice Jet has introduced online travel insurance in partnership with TATA AIG with which they
have maintained a consistent rate of 28 per cent of sales since the introduction of the product.
It provides value-adds to clients by having internet banking for customers, wherein they can select
any bank with which they have an account and can use their own login credentials, which is
essentially for customers not owning a credit card or not inclined to using one, are among the other
major initiatives.
Apart from these, it provides efficient information flow to clients, wherein the system gives the
clients a recorded call giving information about the flight; creating a portal for crew (pilots and cabin
crew), which enables them to communicate with each other. Spice Jet plans to introduce an on-board
wireless telephone system for all Spice jet passengers.
Operational efficiency
As Michael Porter says, a company can outperform its rivals only if it can establish a difference it
can preserve. It has partnerships with global leaders in their respective fields to enhance safety and
reliability. The company is well supported in the maintenance department by KLM and state-of-the-
art technology from world leaders like the Star Navigation, Russell Adams and Tech Log.
Spice Jet Airlines has started partnership with Navitaire, the world‘s renowned low-cost support
system for reservations and revenue management. E-booking and Eticketing are available in Spice
Jet. It made significant investments in information technology to provide a backbone for operational
effectiveness.
These approaches resulted in Spice Jet achieving the lowest costs in the industry (Rs. 2.65/Available
Seat Kilometer (ASKM) in 2008) and a flight dispatch reliability exceeding 99.5%. Spice Jet’s
efficiency is comparable to that of the legendary low-cost Southwest airlines.
12. Marketing Strategies
Spice Jet has a unique marketing strategy that focuses on word-of-mouth marketing, supported by
print and Internet media initiatives. To build further on its branding value, Spice Jet has introduced
on-board merchandise sales such as goggles, airplane models, perfumes, caps and watches. Sales of
branded merchandise will also be available through the company's website.
Strategies for Future sustenance
Expansion Plans
Spice Jet started its operations with 5 Boeing aircrafts in its fleet and ramped it up to 18 aircrafts
covering 17 destinations and 117 flights daily by May 2008. It reported a net loss of Rs. 133.51
crores in the year 2007-08 and a loss of Rs. 17.91 crores in 3rd quarter of 2008-09. Spice Jet still has
major expansion plans. It has another 30 aircrafts on order for delivery between 2008 and 2011.
Open to Foreign investments
"If any foreign airline comes on board as a strategic partner, company will certainly welcome them.
If the right opportunity is presented Spice Jet could be a buyer too." – Chief Executive Officer,
Sanjay Aggarwal on Feb 18, 2009. He expects consolidation in the Indian airline industry over the
next 12 to 24 months as the landscape is too small for so many players.
Convenience to passengers
It plans to initiate roaming agents wherein passengers without baggage are assisted by the roaming
agents at the airport to skip check-in are some of the other initiatives. In future, Spice jet plans to
start Web Access Protocol (WAP) on the mobile phones of the passengers and SMS check-in
through which passengers can skip check-in by just showing the barcode or the notification on their
mobile phones.
Ancillary Revenues
Spice Jet have entered into a Joint venture with The UK based online retailer UnderFivePound.com.
The company through its website, sells a range of men‘s, women‘s and children‘s clothing along
with other items such as jewellery and house ware gadgets, all for less than £5 and is known for its
discounts and freebies.
13. Keeping the pricing of the merchandise
value-for-money items on board, to its customers
Keeping the pricing of the merchandise in sync with the image of a LCC, Spice Jet
money items on board, to its customers
Spice Jet expects to sell