Low Cost Carrier Characteristics
The idea to enter the world of the full cost carriers by low prices isn’t a new one. Already in 1977 Laker Airways founded the “Sky Train” between London and New York. Even if this service was never successful, more and more low cost carriers were founded during the progress of deregulation and the development of an own low cost strategy began.
When we today have a look at the homepages of low cost carriers we cannot but state that nearly all of them are operating successful despite the issues of September 11th in 2001, SARS in 2002 and the war in Iraq in 2003.
Southwest for example has shown a positive net income for the period of 1990 to 2002 (Appendix A) and is nr. 5 of America’s most admired companies in 2005 (Homepage). Also Ryan Air was able to enhance its number of passengers transported from 5000 in 1985 to 24,635,000 in 2004 (Appendix B).
The success of the low cost carriers had major competitive effects on the mainstream full cost airlines of whom many reacted to the new competitor by founding their own “low cost carrier”, namely Shuttle by United, Continental Lite, Delta Express, Germanwings and so on.
But what is it that makes low cost carriers such unbeaten? In this essay I would like to demonstrate some of the key success factors that have made carriers like easyJet, Ryan Air and Southwest so successful.
First it has to be mentioned that no unique low cost strategy exists, it is more that every airline has its own concept, so that the service offered varies between No Frills-Airlines and “quality airlines with lower prices”. Moreover the idea of differentiation has also entered the low cost carrier market in resent times as the competition in this market grows. Nevertheless there are some basic characteristics every low cost carrier has:
similar destinations to the full cost airlines similar cost structures to charter airlines a new product- and service concept concentration on the factor price
(Pompl, 2002)
The main purpose of low cost
When we today have a look at the homepages of low cost carriers we cannot but state that nearly all of them are operating successful despite the issues of September 11th in 2001, SARS in 2002 and the war in Iraq in 2003.
Southwest for example has shown a positive net income for the period of 1990 to 2002 (Appendix A) and is nr. 5 of America’s most admired companies in 2005 (Homepage). Also Ryan Air was able to enhance its number of passengers transported from 5000 in 1985 to 24,635,000 in 2004 (Appendix B).
The success of the low cost carriers had major competitive effects on the mainstream full cost airlines of whom many reacted to the new competitor by founding their own “low cost carrier”, namely Shuttle by United, Continental Lite, Delta Express, Germanwings and so on.
But what is it that makes low cost carriers such unbeaten? In this essay I would like to demonstrate some of the key success factors that have made carriers like easyJet, Ryan Air and Southwest so successful.
First it has to be mentioned that no unique low cost strategy exists, it is more that every airline has its own concept, so that the service offered varies between No Frills-Airlines and “quality airlines with lower prices”. Moreover the idea of differentiation has also entered the low cost carrier market in resent times as the competition in this market grows. Nevertheless there are some basic characteristics every low cost carrier has:
similar destinations to the full cost airlines similar cost structures to charter airlines a new product- and service concept concentration on the factor price
(Pompl, 2002)
The main purpose of low cost