There is this general acceptance that the low cost airlines, otherwise known as the discount airline have been in the business of offering low fares eliminating most of the conventional passenger services. The business of low-cost carrier is mainly designed by the three main elements that are simple product, positioning and low cost of operating. In case of simple products the budget airlines have been offering planes having narrow seats having single class, having no seat assignments and ticketless travels. For positioning, they mainly target the non-business passengers, especially the leisure traffic. They boast of short heave point-to-point traffic having high frequencies along with insistent marketing. In matters related to low operating cost, they are being boasted by low wages, lower air fees and low cost for protection. They have the highest online sales of tickets through internet along with shorter ground waits for processes related to simple boarding. These carriers have been using the simple fare system, where increases as the seats of the plane fares of the airlines fills up, rewarding the early reservations, primarily known as the yield management (Paci and Marrocu 2014).
The Budget cost airline model has been treated to avoid any particular narrow market issues, mainly the low margins of operating costs in the planned airline market. Since the inception of the liberalization of the listed airlines across the globe, there has been difficulty with carriers sustaining the margins above zero. The models of business that have tried in resolving this issue have generally been explored by airlines along with certain innovative practices, like the frequent-flier scheme, computer reservation systems (CRSs) and business lounges (Koo, Caponecchia and Williamson 2015). There seems little or no doubt that the hu8dget airlines have, in certain markets, resulted in low fares in short period of time for travelers along with better selection of service sorts. The major element of the budget airlines model has been their focus on core business. Many attributes enjoyed in a full-service, heritage carrier like extra baggage facility, meals and insurance can be attained from a budget airline at added price (Schimmel 2013).
Budget airlines like EasyJet and Ryanair have undergone striking changes over the period of last two years in order to win over fresh customers who were formerly deferred by the budget tour. Even a few years ago, Ryanair’s boss, Michael O’Leary, was intimidating in introducing “standing room only” departures and the policy of “pay per pee”, indicting the customers a pound to fritter a penny during flights.
In the present scenario, the Irish low cost or budgeted airlines is trying hard to refurbish its image, introducing its answer to the tickets of business class, an attempt made to woo the travelers of corporate nature willing to pay more for their air travel. In the year 2014, Ryanair commenced the “business plus” tickets, starting from £59.99 in contrast to the regular or normal fares starting from £19.99, allowing passengers in making alterations to their flights up to 40 minutes prior their original flight was due for departure with no extra fees. The business travelers were offered an allowance of 20 kg baggage that ordinarily can cost £75 during high season along with premium seats at the front of the cabin of the aircraft.
There has been a claim from Ryanair that 25 million out of the 85 million passengers that fly with it are business passengers, with the airlines seeking further into the territory to win market share on routes like London to Cologne, London to Dublin and London to Madrid. In the year 2015, Ryanair thought of targeting the public sector, especially the route from London to Glasgow that has long being exploited by their rival, EasyJet. EasyJet’s ‘flexi fare’ products takes into account the unrestricted changes, free selection of seats, free seize luggage along with priority boarding (Jackson 2016).
In the year 2010, the chief executive of EasyJet, Carolyn McCall stride efforts in wooing the corporate travel agents and the global distribution systems- “GDS”, with bigger companies using it for the purpose of booking business travel. In the year 2012, EasyJet took the boldest decision of ending the bun fight for seats that have been putting off so many of the passengers off the budget air travel, rolling out the fully billed seating. It meant that passengers would be receiving the seat number in advance, although they are required to pay for the privilege of choosing seats all by themselves.
These revolutions within the budget air travel have enforced heritage carriers like the British Airways to up their competition as well. British Airways have learnt from the budget airlines by providing cheaper hand luggage-only tariff. Airline companies like Ryanair are confident of augmenting their market share as recession has forced enough shifting in the ways organizations have been approaching their travel budgets.
The main idea behind the budget airlines is the notion spins around cutting of costs for being able to provide customers a product at low price having bare essentials. There are certain ways through which low budget airlines have been able to tackle the issues and being successful.
Since the preface of the booking of internet ticket by South West Airlines in the year 1996, most of the airlines have pursued the trend of either limiting or restricting the participation of travel agents for distributing their products. Around half of the sales of ticket are now being done online and in certain cases like RyanAir, EasyJet along with Air Asia takes up to 80 per cent of online ticket sales. Costs for distribution, on an average, accounts for 17 per cent of the total operating costs of the airlines (Ott and Theunissen 2015).
Fleet Standardization and Fleet Utilization:
Boasting the same sort of aircrafts can have major reduction in the cost of training and maintenance along with increasing the effectiveness by offering greater amount of flexibility for the crew of aircraft. Fleet utilization can be stated as the direct measure of effectiveness which can be almost 80 per cent elevated than the legacy carriers (Koo, Caponecchia and Williamson 2015). This high rate of utilization is being attained through quicker turnarounds at the airports, augmenting the number of segments each aircraft can maneuver.
Sector Length:
Budget airlines or the low cost airlines have been flying short haul routes (which are less than 4 hours), thereby various sectors can be done in a particular given day (Harvey and Turnbull 2016).
Human Resources:
There has been a major decrease in the cost of labor in Budget Airlines as facets like ground handling can be outsourced to other organizations. Similarly, independent contractors within the industry of aviation are being hired and thereby less amount of training is necessary for the same. In case of budget airlines business replica and employment relations, management in budget airlines have been able to generate a company atmosphere that is special in nature through proper emphasis on the mentality of ‘us against others’, building loyalty to employer. Methods like paternalistic are being built for supporting loyalty and to a certain extent the spirit of ‘underdog’ community is also being focused on. Budget airlines employees generally get lesser pays that their counterparts working for legacy airlines, their organizational culture might influence in more effective process (Harvey and Turnbull 2016).
UK along with Europe ‘s skies might become less crammed as the budget airlines find themselves squeezed by the war of prices and the ever mounting cost of aviation fuel. The major difference between the budget airlines of Europe and that of America is the budget airlines have existed in Europe for less than ten years. New carriers have sprung up in Europe, with many disappearing at rapid speed. The shares of Europe’s two foremost budget airlines EasyJet and RyanAir, have been declining steeply in the current months after the organizations have issued the warnings for profit. Both these company management have criticized of crazy pricing by the start-up budget haulers, having no real hope of survival (Schimmel 2013).
The main trouble has been that the budget airlines in Europe are plagued by low rates of interest, boasting of second-hand airlines, along with off the shelf software. Every week there has been a launch of a new budget carrier with some other going bust. Budget airlines like RyanAir and EasyJet have also complained about overcapacity, where they require attracting more passengers per year, more than their double existing number (Jackson 2016).
Reference:
Harvey, G. and Turnbull, P., 2016. Human resource management and industrial relations. Air Transport Management: An International Perspective, p.307.
Jackson, J., 2016. Airline finance. Air Transport Management: An International Perspective, p.169.
Kloeg, J. and Schaal, H., 2014. Low-cost, long-haul–Flight of fancy or business of the future?.
Koo, T.T., Caponecchia, C. and Williamson, A., 2015. Measuring the effect of aviation safety risk reduction on flight choice in young travellers. Safety science, 73, pp.1-7.
Ott, L. and Theunissen, P., 2015. Reputations at risk: Engagement during social media crises. Public Relations Review, 41(1), pp.97-102.
Schimmel, M., 2013. Communication in the UK Budget Airline Industry: How PR affects corporate success. Anchor Academic Publishing (aap_verlag).
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