Dabawala of Mumbai

The airlines do not focus on the combination of quality and good service at a fair price; its focus is instead only on providing ultra low cost. It also charges customers for value added features and services. Thus the pricing is value added pricing. When compared to the competitors of Spirit for operating costs per seat mile; it is lower compared to other major airlines. The important points like encouragement to demand stimulation and preference for its low-cost model makes it successful for its low-cost pricing strategy.

Spirit Airlines business strategy is that they do not believe customers should have to pay for amenities unless they are absolutely going to utilize them and the services they chose shouldn’t subsidize other passengers. Spirit believes, they can offer a cheap flight with no amenities and each added amenity will be a cost. In the end, the lower fares will stimulate air travel by attracting customers who would have used on-ground

2. Repossession rates were significantly lower than those of the industry, since its customers were likely to work very hard

• Offer low fares and still maintain a high-quality distinguished product that offers friendly service and a comfortable and entertaining flight experience.

When it comes to providing low cost there are many different strategies easyJet use which help lower its expenses. These strategies are e.g. using the internet for online booking, which reduces distribution costs, it makes an effort to utilise as many aircrafts as possible and making sure the aircrafts are full as possible and flying as much as possible. Another strategy is ticketless travel which reduces the cost printing and other cost related to it. The organisation also reduces cost by not offering free meal during the flight, applying paperless operations as most of their paper work is done online e.g. filing of paper based customer information does not have to be stored in secure places, using economies of scale to lower expenses e.g. buying aircraft , fuel and food all in bulk. Efficient use of airports making sure enough planes are turning over customers, also if the aircrafts are in the hangers and not in service they are still paying the fee to lease the space from the airport authorities. And another good strategy is having few levels of management where they do not have to pay high salary to highly skilled staff.

➢ Low operating cost: They have low prices to attract more customers, who would otherwise take train or bus.

In conducting research on companies that are considered “low-cost providers”, three companies stand out amongst many. A low-cost provider is one that “strives to achieve lower overall costs than rivals and appeals to a broader spectrum of customers, usually by underpricing rivals”. The first company looked at was McDonald’s. McDonald’s offers basic fast-food meals at low prices. Its company structure of having mostly franchise stores allows it to offer lower prices without the overhead of traditional non-franchised stores. McDonald’s also doesn’t have traditional chefs and instead hires and trains inexperienced employees to cook its food, which further reduces its costs and allows the savings to be passed onto the consumer. Another low-cost provider would be Walmart. Walmart relies on everyday low prices rather than sales to attract its customers. Walmart relies on a massive supply chain and economy of scale based on bulk purchases that allow it to receive its product offerings at lower prices. It also sources its products from cheap domestic suppliers and low-wage foreign markets. The high volume of merchandise allows Walmart to sell their products at much lower prices and allows itself to make a profit through high volume discounts. A third example of a “low cost” provider is Southwest Airlines. Southwest Airlines “uses a point-to-point model as compared to the hub and spoke model of legacy carriers like American (AAL) and United (UAL).” This translates into shorter travel

fares to establish profitability and loyalty. However, they are not always the cheapest, so their

Over the years, company sustained low operation costs and tickets prices following well-developed strategy. Among other measures, it was able to keep prices low by flying only one airplane type, minimizing service and maintenance expenses, and convincing employees to cut gate turn-around times and make the airline more efficient (Fitzpatrick, 2005).

It is a no-frill carrier. They were able to cut cost by operating a no-frill carrier i.e. they don't use tickets or travel agents.

Commissary foodservice systems are used in many types of foodservice operations. The airline industry offers a good example of this type of system. This is the most suitable system in the airline industry since air travel is long distance travel and passengers require to eat and drink in the course of their journey. It inappropriate to prepare food in a aeroplane and therefore food should be prepared, pre-plated, sealed, chilled or frozen at a central production facility or near the airport’s premises. When airplane is airborne food is assembled and distributed to the passengers by the stewards. Most airlines apply this system including the British airlines that is renowned for its top class food service onboard. It uses the commissary foodservice system to cater for its passengers and this ensures minimal interruptions and application of safety measures during travels.

Economy – providing the intended service at the lowest cost possible, with regards to maintaining the quality of service

There was a reduction of transportation cost of 9% to € 0.29 per item. With a demand of 4065 units per week, they have a cost reduction of €6,062.65 per year.

(Generic Business Strategies, 2010) Southwest Airlines, Wal-Mart and Nucor Corporation are some companies who use the low-cost strategy. Here are some of Southwest’s key characteristics of its low-cost strategy:

Also, rental cost for the set up of the network towers is cheap which results in high network coverage.