An evaluation of the attractiveness of the budget airline sector

The Airline industry provides a very unique service to its customers.

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. For frequent flyers the biggest factor that makes low-cost carriers more attractive is the availability of flights on budget airlines.

An evaluation of the attractiveness of the budget airline sector

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.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. “Why are some industries more attractive than others?” This model shows the five forces that shape industry competition; threat of new. Competitive Environment of the Airline Industry (Nick Krynski) A.

Dominant Economic Traits. 1. Market size – Total revenue was $ billion for the airline industry for 2. Scope of Competitive Rivalry – Seller rivalry is primarily national, but competition does occur regionally and internationally as well.

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3. 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 attractiveness of the airline industry post 9/11 September, 11 terrorist attack which involved two major US firms (American and United Airlines) has been a major shock to the entire airline industry. 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.

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.

The Industry Handbook: The Airline Industry