An evaluation of the attractiveness of the budget airline sector

Industry Description Hartley Grimm A.

An evaluation of the attractiveness of the budget airline sector

The concept started in the 70s by the American domestic carrier Southwest as a way to offer cheap airfares to consumers, since then more low-cost airlines started to proliferate gobbling market share to the point that even major carriers had to establish their own subsidiaries that offered lower fares to regain lost customers.

The impact of low-cost carriers to the aviation industry has been tremendous. The deep market penetration of low-cost airlines caused conventional carriers to cut flights, close hubs and even abandon service to some cities.

In Asia and the Middle East the low fare sector has dramatically grown in the last decade and there are no signs that the expansion would be curtailed. The success of budget airlines can be traced back to their business model that expounds that cost is not equal to price.

The original Southwest model consisted of low fares, higher frequency routes, use of secondary airports with short turnaround times and utilizing the same type of aircraft for the fleet.

Low-cost airlines in America offer frequent flyer programs and some have even offered the same frills found in bigger carriers like complementary drinks and different class systems. The Global Financial Crisis and its Effect on the Aviation Industry The weakening global economy has also forced more customers to opt for the no-frills approach to flying just to save money.

While the biggest draw for discount airlines is still obviously the lower fares it offer, this is not the only contributing factor to their success.

An evaluation of the attractiveness of the budget airline sector

For frequent flyers the biggest factor that makes low-cost carriers more attractive is the availability of flights on budget airlines. With conventional carriers scaling back their operations, there have been less choice in schedules. The growth of budget airlines has brought into question the future of legacy carriers.

Big carriers are increasingly pressured by high fixed costs and relevant market positionining to consumers. Legacy carriers are increasingly focusing on cost efficiencies, focus on particular traveler segments, consolidating through mergers and acquisitions and investing in staff training and communications.Home > Low Cost Carriers in the Aviation Industry.

Modern budget airlines still closely follow the same precepts as those laid out by Southwest but because of there are more low-cost airlines competing in the market there have been differences in every budget carrier in their implementation. For frequent flyers the biggest factor that.

The Airline industry provides a very unique service to its customers. It transports people with a high level of convenience and efficiency that cannot not be provided by any other industry or substitute.

Porter's Five Forces - Airline Industry Analysis

“Why are some industries more attractive than others?” This model shows the five forces that shape industry competition; threat of new.

The budget airline sector is becoming a great threat to the main stream airlines in these days. Among the Budget Sector Airlines Ryanair is the most established one.

Here the essay is mainly dealing with the reviewing of the management strategy of the budget airline giant RYANAIR. An analysis of the European low fare airline industry - with focus on Ryanair Student: Thomas C.

Sørensen Student number: The full service airline sector 81 Overview 81 Strategies and positioning used by full service airlines 82 easyJet 84 Overview In Ryanair’s case it determines if the European budget airline industry is an attractive one.

(see: Figure A6) 1) The Threat of Entry The low fares industry, especially, with established leading players as Ryanair, is really hard to enter. The attractiveness, or potential profitability, of the airline industry as a whole in and the budget sector in particular, should first be considered in order to investigate the issues Stelios Haji-Ioannou was facing when entering the industry/5(6).

The Industry Handbook: The Airline Industry