Majji Suresh (PGP28344)
Is the budget airline segment an attractive place to be? Why (not)?
Yes, the budget airline segment is very attractive in a country where the people are interested to travel in low cost airlines without much comforts like business class and food. And more over if the company can reduce its costs in the areas of operations and utilising the resources more efficiently, then budget airline segment is definitely an attractive place. Some of the areas where we can look into reduce the costs are like using the no frills strategy, reducing the number of travel agents, reducing the aircraft stay in a airport (which reduce the fees to be paid for the airports). The above are the some of the strategies used by the easyjet airways and also they used their resources to maximum extent like they operated Boeing flights for 11 hours per day compared to their rivals who used 6 hours per day. Rising middle class all over the world is also another factor which makes the budget airline segment an attractive place because they can afford the air travel at such a low price there by increasing the volumes of air traffic and helps in increasing the profits of the airlines. As the prices are low for the aircraft, the profit margins are also very low and the airlines has to strictly adhere to its operating policies like punctuality and low fares to attract masses and generate revenues. If one cannot stick to their standards they may lose the market (as in the case it was mentioned some 60 out of 80 carriers went bankrupt). Some other aircraft carriers which are successful in this segment are American southwest airlines and Indian Spicejet (They generated profits after introducing the new strategy of low prices). Also in the case it was mentioned the European budget airline segment was expected to grow by as much as 300% by 2004. So it is definitely a best place to compete and sustain. Also some of the business executives also prefer the low cost airlines as...
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