Budget Airlines
Budget Airlines
Threats and opportunities within the industry, a brief Report
Mr. Craig Haldane
Glasgow, 30th November 2014
Contents
1.
2.
3.
4.
5.
Introduction: What is a Budget or Low Cost Airline……………………………………………………… 1
Strategies Within the Industry……………………………………………………………………………………… 1
Threats Within the Industry…………………………………………………………………………………………. 2
Opportunities within the Industry………………………………………………………………………………… 2
Conclusion…………………………………………………………………………………………………………………... 3
1. Introduction: What is a Budget or Low Cost Airline
In the late eighties Europe witnessed the birth of the budget Airline industry. Defined by Gross and Schroder “A low cost airline in the classic and original sense of the term is a provider of a basic product. This is also termed as a no frills airline” (Gross & Schroder, 2007). The general public quickly recognized a budget or low cost airline is a carrier who offer cheap flights, no luxuries in a no-frills setting. The first mover in the European market was an Irish company called Ryan Air. The company was formed in 1985 by Michael O 'Leary and is now the leading budget operator in the European aviation industry with a net profit in 2014 of 522.8 million
Euros (O‘Leary & Bonderman, 2014). Drawing inspiration from the United States Budget Carrier
South West Airlines the industry now accounts for one-third of the market share in Europe
(Hameed, 2007).
2. Strategies Within the Industry
A recent report from the Economist in 2011 describes the early days of the budget airline industry. The airline companies used simple but effective strategy’s to enable low-cost services to the end user. The airlines would often fly into smaller less well known airports thus reducing airport and landing costs. The geographic locations of the airports were often in less populous areas. Therefore, it offered a quick turnaround to get the aircraft back into the air again
(Economist, 2011). A recent independent study in 2007 by Mishma Hameed suggests the
budget
Threats and opportunities within the industry, a brief Report
Mr. Craig Haldane
Glasgow, 30th November 2014
Contents
1.
2.
3.
4.
5.
Introduction: What is a Budget or Low Cost Airline……………………………………………………… 1
Strategies Within the Industry……………………………………………………………………………………… 1
Threats Within the Industry…………………………………………………………………………………………. 2
Opportunities within the Industry………………………………………………………………………………… 2
Conclusion…………………………………………………………………………………………………………………... 3
1. Introduction: What is a Budget or Low Cost Airline
In the late eighties Europe witnessed the birth of the budget Airline industry. Defined by Gross and Schroder “A low cost airline in the classic and original sense of the term is a provider of a basic product. This is also termed as a no frills airline” (Gross & Schroder, 2007). The general public quickly recognized a budget or low cost airline is a carrier who offer cheap flights, no luxuries in a no-frills setting. The first mover in the European market was an Irish company called Ryan Air. The company was formed in 1985 by Michael O 'Leary and is now the leading budget operator in the European aviation industry with a net profit in 2014 of 522.8 million
Euros (O‘Leary & Bonderman, 2014). Drawing inspiration from the United States Budget Carrier
South West Airlines the industry now accounts for one-third of the market share in Europe
(Hameed, 2007).
2. Strategies Within the Industry
A recent report from the Economist in 2011 describes the early days of the budget airline industry. The airline companies used simple but effective strategy’s to enable low-cost services to the end user. The airlines would often fly into smaller less well known airports thus reducing airport and landing costs. The geographic locations of the airports were often in less populous areas. Therefore, it offered a quick turnaround to get the aircraft back into the air again
(Economist, 2011). A recent independent study in 2007 by Mishma Hameed suggests the
budget
References: ADVFN. (2014, 11 19). Retrieved from ADVFN: www.advfn.com Bloomberg Hameed, M. (2007). Low Cost Airlines: A Brief History, The Current State and The Future. Retrieved from aviationknowledge: http://aviationknowledge.wikidot.com/aviation:low-costairlines:a-brief-history-the-current-state History of Illionois Basin Posted Crude Oil Prices. (2014, November 29). Retrieved from http://www.ioga.com: http://www.ioga.com/Special/crudeoil_Hist.htm I Market Reports. (2014, may 29). Low-Cost Carriers Threaten Long-Haul Business of Big Rivals. O‘Leary, M., & Bonderman, D. (2014). Final Anual Report. Retrieved from www.corporate.ryanair.com: Wow Air. (2014). Retrieved from the wow experience, our story.: http://wowair.co.uk/the-wowexperience/our-story 4