Operating Management

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Assignment First Page
Student ID number(s):| 30855399|
Student Name(s):| Jin Wang|
Module Name:| Operations and Process Management|
Module Tutor: | Professor Mike Pidd and Dr. Jerry Busby| Essay/Project Title| Operation Strategies of Low-Cost Airlines and the Fight Back of Established Airlines | Word Count:| 1,823|
Assignment Due Date:| 17 December, 2012|

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I/We have read and understood the Lancaster University Postgraduate Regulations (http://www.lancs.ac.uk/celt/celtweb/marp) on cheating and plagiarism and state that the work I submit will be my/our own and will not contain any unacknowledged work from other sources. As the author(s) of submitted work in my/our name I/we am/are prepared to undertake a fair and reasonable oral examination of its contents.

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Note: This form is to be used as the first page for all coursework submissions. 1. Introduction
Low Cost Airlines (LCAs) are airlines provide cheap prices for relatively short-distance flights in a specific region. The typical low cost airlines are Ryanair, Easyjet, Southwest, and Air Asia. This essay mainly discussed the competition in European market. First, it will describe the main features that LCAs have. Next, it continues to discuss the operations strategies linking to the marketing strategies. At last, it will discuss the impact of LCAs on traditional airlines and the actions Full Service Airlines took responding to the emerging of LCAs. 2. Main Features, Marketing and Operation Strategies of the Low Cost Airlines LCAs generally operate routes under the cost limitation or cost leadership strategy. They normally perform operations of low-/no- frills and point-to-point, online (internet) or direct ticket sales, flights for tourism, and short range operations. LCAs usually choose the secondary airports in the destination cities as theirs main airports. LCAs usually don’t offer or have strict limit on seat selection, flight changes, or free airport lounges. LCAs normally use uniform aircraft and engines; apply strict policies of baggage allowance; and don’t provide frequent flyer program (ITF, 2002). For example, one of the largest low cost carriers in Europe, Ryanair, covers 165 destinations (2012 Q4 report), but most of these destinations are located in Europe. Some of them out of Europe are still near around, such as Morocco. On its website, customer cannot book a flight directly from London to Paris. There is one route connecting London to Frankfurt, but the airport of destination is 124km away from the city centre. Another big LCA, Easyjet, has similar operations. The differences are Easyjet’s flights reach Moscow and Egypt. Easyjet has a route from London to Paris which arrives at the primary airport, but no flight to Frankfurt. Low-/no- frills flights mean there will be no entertainment equipment inflight, such as radio and TV, no ticket agents, no executive lounges and no “free” meals. Nowadays, Easyjet will offer airport lounges to customers with a charge from £14 to £25 in different airports. And this is based on the idea that “nobody offers you champagne on the bus, why should they on a short-laugh flights?” (Haji-Ioannou, 2002) Air Asia, one the earliest LCAs in Asia, is one the most cost efficient LCAs in the world (Poon and Waring, 2012). Their route map covers almost the whole Far East, and some cities in India, Sri Lanka and Australia. According to Poon and Waring’s report (2012), Air Asia successfully reduced their operating cost and applied stringent financial management inside the company which has been extended to the vendors and suppliers. Heavily using the IT in decision-making process is one of the key elements of low cost operation in Air Asia. The LCAs...
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