Low-cost carriers pose a serious threat to traditional "full service" airlines, since the high cost structure of full-service carriers prevents them from competing
Air asia provides air travel at substantially lower prices is also known as no-frills or discount carrier. The company offers low fares according to cut out the "non-essential" service. The low cost of airline ticket is extremely basic because it attains high passenger loads and cut out all the extra. It means that the company does not provide meals, drinks, or snacks served free on board. The low cost airlines offer the economy flight which is narrow seat compare with wider business class seats. It also does not allocate seats for passengers as like "free seating" to make passengers board the flight early to get their seat. The additional of schemes or sale promotion activities do not offer by the company as the pricing structures are low. Low cost airline is related to the operating cost are kept to the bare minimum with low wages, low airport fees, low long term maintenance contracts rates, and low fares. So that, Air Asia is able to reduce the overhead and investment in equipments substantially absence of fringe services. Therefore, Air Asia has the operating cost compared to other competitor
Every airline will has its cost advantages over its large overhead expenses. The airlines has well develop of technology infrastructure to support the low cost of its operation. This can be seen through the company use technology to automate customer processing and maximize load on flights. To minimize the expense for maintenance and parts inventory, the company strengthen operational cost containment through very low staff levels, lack of amenities on flights and standardisation of aircraft. The low cost of operation can help to boost up the business of Air Asia Company. Air Asia Company will continuously focus on maintaining a low cost base in order to keep its advantages and gain more
The failure of bilateral agreements within the Asia-Pacific regions negatively impacts on low-cost carriers of that region leading to their underdevelopment (Hooper, Duangphastra & University of Sydney. 1998). In addition, landing charges imposed on AirAsia and other low-cost airlines negatively affect their growth within the region. Conversely, liberalization within Southeast Asia has greatly helped in eliminating air transport charges thus giving AirAsia and other airlines the reason to operate beyond
Ryanair is the most successful and profitable airline in the world. It achieved this by adopting various practices that gives it a competitive advantage over rivals. Ryanair aims to offer air travel services at low rates and this attracted many passengers while at the same time it maintains a continuous focus on cost reduction, operating efficiencies and continuous improvements.
AirAsia is a low cost leader in Asia. However, the competitors for AirAsia are numerous and it is hard for AirAsia to combat with those competitors. Thus, AirAsia will spare no effort to compete with them by keep the costs low. This lead to the bad perception of the customers that budget airlines like AirAsia may compromise safety to keep the costs low and those accident cases, terrorist attack, and disaster happened before will affect the customer confidence and AirAsia may face the losses of customers.
Company’s Strategy: Southwest’s strategy is to improve efficiency in its operations and pass cost saving to its customers by offering them low and competitive prices. Southwest Airlines is dedicated to providing the highest quality of Customer Service delivered with a sense of warmth, friendliness, individual pride, and company Spirit.
Air has become the most preferred method of transportation for many people around the world and more travelers are looking for affordable ways to travel between destinations. Consequently, the increase in customer’s demand for cheaper fares has created an excellent business opportunity for low cost airlines to emerge. Low cost carriers have been successful satisfying customer’s demand for cheaper fares and reducing labor cost. “A high quality low-price entry strategy may seem very attractive at first glance. Obviously, an airline, or any startup firm for that matter, is likely to win a market if it can indeed provide a better product for a
In 2010, views on whether low-fare airlines would continue to flourish in Asia varied. Three factors regulation, population demographics, and socioeconomic trends -drove this calculus. Although the target consumer base for AirAsia was enormous -more than 500 million
The Airline industry is a large and constantly growing industry. It facilitates economic growth, international investment and world trade and is therefore central to other industries as well for globalisation. There are various forces which lead to globalisation in airline industry. Key drivers of change are forces likely to affect the structure of an industry; sector or market. (1).
Flight Centre describes itself as a global discount flight specialist. Taking into consideration the relative size of the Australian and international operations as well as the availability of information on global environment and competitive factors, for this analysis, it is more appropriate to consider the Flight Centre’s industry environment as “The Australian international and domestic airline
The domestic airline industry transports 711 million souls a year. That translates into a staggering $709 billion a year revenue flow (statista.com). One firm, named Southwest Airlines, accounts for 18.3 percent of that market. That 18.3 percent market share places Southwest at the number two spot, behind American Airlines. How does Southwest Airlines successfully compete and thrive in this environment? How do they differentiate themselves from the hoards of legacy carriers? Southwest Airlines encapsulates its strategy in a simple statement: “Meet customers’ short-haul travel needs at fares competitive with the cost of automobile travel (Grant, p.23). As a pioneer in low cost air travel, Southwest has successfully brought down airfares through its short route point-to-point business model, “no-frills” service, single flight strategy, and highly productive employees (Cederholm, 2014). In the following analysis we will investigate Southwest Airlines standing within the industry as a whole and their differentiation models driving success. We will also identify the firm’s competitive advantages as they relate to similar firms in the industry.
Southwest has been projected as a low-cost airline and has been a source of inspiration to other low-cost airlines because of its successful pricing strategies. The company has targeted middle-class society as its potential customers and has adopted variable-price as another pricing strategy. The company has also introduced innovative programs and offer incentives along with discounts to attract a larger customer base under its variable cost pricing strategy (Bhasin,
AirAsia believes in the hassle free, no frills, low fare business concept and feels that keeping costs low needs high efficiency in every part of the business. Efficiency creates savings which are then passed to the customers so that they will able to purchase on the affordable price but still with a high quality of air travel. AirAsia targets people who want to travel around Asia for leisure or business purposes. The fares of Air Asia are relatively known as a lower fares than the other airlines. Selected strategy used by Air Asia targeting to passengers who are willing to travel without frills of meals, airport lounges or frequent flyer miles in exchange for fares which is
The implications of this analysis are that the focus on the Chinese market is justified. The Chinese air travel industry is booming, and indeed this is fueled by that country's rapid growth and the increased demand for