Transferring the Successful Business Model of Short-Haul Low-Cost Airlines to the Long-Haul Market – Why Does It Not Work?

Many pilots commute to and from the airport where he/she is assigned. This isn’t always vehicle commute. A number of pilots travel as a passenger by plane to get to the airport- only to travel once more as the pilot-in-command. “The co-pilot, of a commuter jet that crashed near Buffalo, N.Y., commuted to Newark Airport from her parents' home in Seattle, Washington.” (Strickland) This co-pilot has reported earnings of $17,000/year with a regional jet carrier, which brings in the second cause: Salary. “…the cab driver who takes you to the airport makes more than the pilot who's going to fly you…” (Strickland) A pilot’s salary, when it is not complimentary of his/her responsibility, is a stress inducer, which contributes more mental baggage that the pilot must carry.

b. The airline also employs far lesser number of people as compared to other airlines.

Currently the airline industry as a whole seems to be on the road toward recovery. Even before the September 11, 2001 terrorists attacks, industry-wide revenues and profits were far below expectations. This pre-attack downturn was an indirect result of the dot.com bubble burst as

The health of the overall U.S airline industry is still tenuous in-spite of the passenger traffic volumes returning to pre-9/11 levels. A survey estimated that from 2001 through 2003, the US airline industry reported to have lost $23.2 billion dollars, compounded by an additional $1.6 billion in the first quarter of 2004. This $24.8 billion shortfall exceeds the total profits earned over the entire six-year period 1995-2000

Network carriers is existing to own major hub operations for domestic, regional, and international services, other words, covering all sectors; giant, advanced fleets; airline alliances; and a broad array of service offerings, like airport lounges, meals during the flight, and much of cabin categories . Hub operations considerably increase network reach and permit carriers to supply convenient one-stop connections round the globe.

Extending flights to major hubs in Europe to use that as start off for flights heading to Asia and China etc. to mitigate risk of losing customers as a result of unplanned delays.

Witnessing the success of Southwest model and its potential, it wasn’t long until its success was imitated in other continental markets.

Ft Lauderdale is only a short distance from Miami and is not a big inconvenience for customers to choose this site for their travels. After lights were over the aircrews were noting that most people did not eat the olives that came in their inflight meals. When this was researched the company found out that the caterers charged the airlines 60 cents for 4 ingredients and 80 cents for 5 ingredients and that olive was the fifth ingredient in the salad. So, they decided to take the olive out of the equation and ended up saving $40,000 a year. Other fuel savings include, Southwest airlines installing winglets, which help to reduce drag and saving the company 54 million gallons of fuel per year. Or replacing the 27lb seats with 9lb seats made of titanium, smaller magazines, thinner carpet, and food served in cardboard boxes helped. Some international airlines only hire female stewardesses since they weigh less than their male counterparts. Every 2lbs of weight shed saves $100 from an aircraft’s annual fuel bill. EasyJet uses a special paint that has miniscule bumps that help the aircraft cut through the air more efficiently and burn less fuel (A.A.K., 2015).

Aviation is an industry where the health of the global economy is directly tied to success and crucially, profitability. On both a national and international level, the performance of airlines is often used as a barometer for the wider economic climate – this is possible as the number of passengers, and their relative willingness to pay, from both business and leisure sectors, gives a direct insight into the public’s spending on luxury goods and international businesses need to travel. Perhaps this link is unsurprising however, as while the global economy is often tested through the dollar price of a barrel of Brent crude oil, so too does this commodity dictate the price of aviation jet fuels – by far the largest overhead facing commercial airlines. The benefits of almost a full year in falling oil prices – and with them the cost of fuel – have not yet necessarily been felt in the consumer market however.

As legacy carriers have had to adopt new business models to cope with LCCs, the same is happening to tour operators in markets such as Germany and the UK, where they play a dominant role. Having saturated most city-to-city routes, LCCs are now targeting resorts and eating into tour operators ' market share. Full service airlines throughout Europe are being forced to react to the growing power of LCCs by adapting their business models. Iberia, for example, makes in-flight food an optional extra but plans a 17% reduction in domestic capacity for 2006-08. SAS Scandinavian Airlines operates its own LCC, Snowflake, as does

Economical can be another major factor for the airline industry. Airlines ' profitability is closely tied to world economic growth and international trade. Due to the rate of war and terrorist event, the growth rate of economy dramatic slowdown, capacity in Europe outstrips demand, which gains the low yield to the airline industry. The airline industry is now faced with significant capacity overhang and high cost platform, especially in the US. The report shows that, two major airlines American Airline and United airline losses of more than US$ 3billion for 2002, which makes world airlines get struggle.

Ryanair’s average flight represents just 442 miles which is the equivalent of average length of passenger haul. This is a relatively small number that can be explained by the fact that Ryanair does not offer transatlantic flights, but focuses exclusively on routes between Ireland, the UK and Continental Europe. If one divides the number of employees at period end by the employees per aircraft served at period end one receives the number of airplanes, in this case 41,38 airplanes. Furthermore one can calculate the sectors each airplane flies each day. Therefore one starts with the sectors flown each year namely 90.124. This figure can be broken down to sectors flown each month (7.510) and each day (247). By now one divides the sectors flown

The Low cost airline model is a plan of action in the airline industry that is principally centered on expense decrease as the fundamental upper hand (Briody and Ferraro, 2011). The model, which was initially presented in 1978, was a reaction to customer protest to high bills that were being charged by non-contending carriers with high working expenses (Sheth and Sisodia, 2002). Today, most airline carriers have actualized the plan of the business model. It has been demonstrated that executing this plan of action prompts expense focal points of up to 40% for minimal effort transporters when contrasted with built up carriers (Nicholas, 2004). Ryan Air is one of the low cost carriers, which have actualized this plan of

The September 11 attacks left a major impact that the airline industry is yet to recover from. Extended recession and increasing oil prices are the other major factors affecting the growth of the airline industry. At this scenario, the airlines operating with unoccupied seats make huge losses and sometimes the airliner even goes bankrupt; for instance, the kingfisher airlines in India has gone bankrupt due to failure in managing the unoccupied seats and inefficient management in their ticket pricing strategies. Even the recent disappearances of aircrafts from Malaysian airlines have unfavorably affected the global airline industry leaving airlines operating with vacant seats.

The airline industry exists in an intensely competitive market. In recent years, there has been an industry-wide shakedown, which will have far-reaching effects on the industry 's trend towards expanding domestic and international services. In the past, the airline industry was at least partly government owned.