Low Cost Airlines

Topics: Low-cost carrier, Airline, Southwest Airlines Pages: 5 (1892 words) Published: March 17, 2011
The Airline Industry has been growing persistently and consistently over the past decade. Central to the globalization taking place in many other countries is the Airline Industry as it facilitates world trade, economic growth, international investment and tourism. It’s growth has generated many new opportunities for the tourism development. The benefits of tourism to the national economies of the countries are being realized by the government of those countries. Because of the companies becoming increasingly international in term of their production, distribution, investment and their customers, business travel has also grown rapidly. Very closely tied to economic growth and trade is the Airline’s Profitability. The air travel industry’s outlook is very strong and fast growing. The Tourism Industry is directly or indirectly related to the Airline Industry. Customers must be understood in order to understand how the new aircraft might fit into the current market. Travel and Tourism can be thought of as a manufacturing industry. Tourism has become one of the major international trade categories. For many developing countries it is one of the main income source and number one export category, creating much needed employment and opportunities for development. The worldwide contribution of tourism to gross domestic product is almost similar to that of airline industry. The importance of tourism tends to higher in developing countries thus making more flights to fly to that destination resulting in inter dependence of tourism and airline industry on each other. One of the best ways to keep this interdependence alive and foregoing was the introduction of the low-cost airlines. The low-cost airlines as the name suggests are amazingly cheap but for every additional thing (from food to luggage), the customer has to pay but another plus point of low-cost airlines besides being cheap is that it promotes tourism vastly. As nicely said by Thomas Fuller, “The fool wanders, a wise man travels” proves this.

As explained above low-cost airlines are remarkably economical and the customer pays for any extra service. The advent of low-cost airlines and their business models have fostered several changes within the travel and tourism industry over and above are having a tremendous impact on the travellers’ behaviour. The key objective of low cost carriers is to increase their reach and provide the services to a large segment. Airport passenger traffic has increased, new travel destinations have emergence, more people now travel more often, while other that could never travel can now afford a travel holiday. Moreover, business travellers now also consist a significant proportion of their customer database, even though the principal target audience for low cost airlines is the price sensitive leisure traveller. The former developments not only create several strategic allegations for traditional airlines but by affecting traveller’s travel behaviour they also have critical implications in the tourism industry as whole. However , despite the anecdotal evidence of such effects , no systematic research has so far examined the impact of low cost airlines on travellers behaviour.
Ryanair was set up in 1985 and is one of the oldest and most successful low-cost airlines of Europe. Ryanair was the first budget airline in Europe, modelled after U.S successful low cost carrier, Southwest airlines. Ryanair transformed the Irish air services market where other airlines like Avair failed to compete with the more powerful national carrier Aer Lingus. In 2001, many believed that Ryanair was like the Wal-Mart and Southwest Airlines of Europe. In fact, Ryanair was one of the first independent airlines in Ireland. In 1985 Ryanair was set up by ryan family with a share capital of just £1 and with their first...

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