Business Models in the Airline Industry January 30‚ 2013 Winter term 2013 Outline Evolution Hub-and-spoke route networks Legacy carriers Low cost carriers (LCCs) Ultra low cost carriers (ULCCs) Regional and charter carriers Evolution Before deregulation Full service network carriers No low cost models No price competition (same price on a given route) Full-quality service Point-to-point route networks After deregulation Proliferation
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Timeline Causes of Failure • High cost by High jet fuel prices – Jet-fuel prices - biggest share of airline’s cost – in the past year alone‚ fuel prices have surged more than 60 percent Escalating fuel prices since 2007 • High cost by Low fares – tickets to Gatwick for as little as HK$1‚000 one-way – Compared to Cathay Pacific’s flights to Heathrow: • Economy class - less than 20 % • Business class – one-third of the price –
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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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The case of Dogfight Over Europe: Ryanair describes the journey of two brothers and their emerging airline business. For almost a year their small airline had just one prop plane that held 14 passengers and operated within the small‚ secondary airports between Ireland and London. They experienced some initial success‚ but wanted to expand and grow the business more. The airline industry in Europe and more particularly Ireland and London was ripe for a new emerging business. There were many opportunities
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operations M2 Explain the implications of the legal requirements of airfield operations Student’s name: Blessly Ortiz Assessor’s name: Rami El Samra Introduction: Low-cost carriers are no-frills airlines that offer cheap ticket fares to passengers who would like to fly at a minimal cost. Many low-cost carriers start to enter the aviation market which became one of the struggles to all major airlines that have already existed years back. Through the years‚ these types or airlines
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cost carriers (LCCs) in Europe and throughout the world. Michael O’Leary‚ Chief Executive of Ryanair‚ Europe’s largest LCC‚ wants to offer free airline tickets by replacing traditional ticket sales with revenues produced by ancillary activities.2 His statement reflects how Europe’s LCCs have morphed the Southwest Airlines model of providing overall value into an a la carte style of offering ultra-low fares and charging consumers for services such as checked baggage. Mr. O’Leary needs to add a frequent
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ancillary revenue activity‚ to reveal that ancillary revenue1 reported by airlines grew to $27.1 billion in 2012. This represents a more than doubling (101 percent increase) of the ancillary revenue of $13.47 billion from 2009. Once largely limited to low fare airlines‚ ancillary revenue is now a priority for many airlines worldwide with new activity among global carriers in Europe. The disclosures of ancillary revenue‚ which IdeaWorksCompany has analyzed since 2007‚ demonstrate how far the industry’s approach
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customer’s requirements by offering affordable fares and frequent flights from regional airports. Market leaders between budget airlines are: Other growing low cost carriers: In 1986 a little known airline started service between Ireland and the UK. By copying American Southwest Airlines‚ in 1995 the small airline –Ryanair - was carrying around 2.4 million passengers per
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INDIVIDUAL ASSIGNMENT TWO SPECIFIC INSTRUCTIONS This assignment is based on AirAsia‚ one of the Malaysia’s low cost airlines. The case study below provides some basic background information. You are however encouraged to source more information about the low-cost airline concept‚ the Malaysia airline industry and AirAsia’s key competitors‚ Tiger Airways‚ Jetstar and Firefly. Ten marks (10) will be allocated for the technical quality of the assignment and students will be penalized if the
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European Airline Industry – Strategies for the New Millennium European Airline Industry – Strategies for the New Millennium Debarshi Datta‚ Analyst‚ Airline Vertical with Subham L. Chakravarty‚ Asst. Manager‚ Airline Vertical This paper depicts the current scenario in the European Airline Industry through in-depth analysis and appropriate case studies and suggests restructuring‚ along with the implementation of modern IT systems as an effective tool in the struggle for survival. SkyTECH
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