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The product comparison between Network Carriers and Low Cost Carriers and forecasting the future market trends and global competition in airline industry

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The product comparison between Network Carriers and Low Cost Carriers and forecasting the future market trends and global competition in airline industry
The product comparison between Network Carriers and Low Cost
Carriers and forecasting the future market trends and global competition in airline industry

The deregulation in United Stated (US) since 1978 caused the emergence of new airline business models which are dynamic and competitive.

The

negotiation is less restrictive air services agreements contributed the explosion of new entrants with innovative business models entering the market.

This

phenomenon spread to Europe called liberalization in the late 1980s which completely open and unrestricted the market within the European Union. The airlines can restructure their network and business model to maximize the profit under this circumstance. Therefore, global competition became more drastic and occurred around the world.

Airlines changing their business

mode ceaselessly aim to increase the market share especially the development of low cost carrier (LCC) which influenced the whole aviation and tourism industry because the low cost concept stimulated people to travel more frequently and encouraged the first time travel; hence, it seized the big portion of the market share.

This essay analyzes the existing business

models in the contemporary industry and discusses about the distinctive features of products offered by full service carrier (FSC) and LCC.

Finally, it

will forecast the future market trends to see how airlines compete with each other and which business model will dominate the market.

First, FSCs, also known as traditional flag carriers and network carriers are typically operated similar business model such as Lufthansa, British Airways and Singapore Airlines which focus on serving average-paying customers by
0

the competitive hub-and-spoke network and preferable schedule actively.
Moreover, they usually offer the bundling services and emphasize the product diversification and service quality based on class differentiation (Graham,


References: AirAsia (2011a) Company Profile: Now Everyone Can Fly [Online] Available at: http://www.airasia.com/hk/en/corporate/corporateprofile.page [Accessed: 22 March 2011] AirAsia (2011b) Mobile Check-in [Online] Available at: Boniface, B. and Cooper, C. (2009) Worldwide Destinations Casebook: The Geography of Travel and Tourism, Oxford, Butterworth-Heinemann Cento, A. (2009) The Airline Industry: Challenges in the 21st Century, Heidelberg, Physica-Verlag CityJet (2011a) A Truly European Airline [Online] Available at: http://www.cityjet.com/about-us/ [Accessed: 21 March 2011] CityJet (2011b) Flying with us [Online] Available at: http://www.cityjet.com/flying-with-us/ [Accessed: 21 March 2011] Dennis, N. (2007) “End of the free lunch? The responses of traditional European airlines to the low-cost carrier threat”, Journal of Air Transport Francis, G., Dennis, N., Ison, S. and Humphreys, I. (2007) “The transferability of the low-cost model to long-haul airline operations”, Tourism Management, Gillen, D. and Gados, A. (2008) “Airlines within airlines: Assessing the vulnerabilities of mixing business models”, Research in Transportation Malaysia Airlines (2008) Five Star Value Carrier: Business Transformation Plan [Online] Available at: Morrell, P. (2008) “Can long-haul low-cost airlines be successful?”, Research in Transportation Economics, vol O’Connell, J. F. and Williams, G. (2005) “Passengers’ perceptions of low cost airlines and full service carriers: A case study involving Ryanair, Aer Lingus, Air Wensveen, J. G. and Leick, R. (2009) “The long-haul low-cost carrier: A unique business model”, Journal of Air Transport Management, vol
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