Low Cost Carriers

Topics: Low-cost carrier, Qualitative research, Research Pages: 5 (1663 words) Published: June 24, 2013
Juan Batista
MBAA
Business Research Methods
ERAU

With airline deregulation and the spread of increased competition to airline markets around the world, control of operating costs and improved productivity have become critical to the profitability of airlines. The emergence and rapid growth of “low-cost” airlines is due in large part to their ability to deliver air transportation services at substantially lower costs and at higher levels of productivity than the traditional “legacy” airlines. In response, legacy airlines have had to find ways to reduce operating costs and improve the efficiency of how they utilize both their aircraft and employees. The selected reports make reference to the low-cost airlines or LCC. The first relates to the success of this model in long-range routes (more than 800 km) also called ' Long Haul' (Morrell, 2009), and the second aims to determine the limits to the growth of this companies (Wit, 2012).

What measure of central tendency did the authors report? What are the potential issues with each measure of central tendency? Do you agree with the author’s choice? Explain. As explained in the second paper many low cost carriers (LCCs) continue to enjoy rapid growth and still have a fair number of new aircraft on order recently. There are signs however that the market for LCCs is limited, owing to increasing route density problems, primarily in Europe but seemingly also in North America: the fact that average frequencies have decreased and average route distances increased since 2001 indicate that LCCs are increasingly operating in exceedingly thinner niche markets. This perhaps explains why LCCs have been trying to adapt their business strategies to assure future growth by shifting to primary airports, facilitating transfers, engaging in codesharing, entering alliances, and acquiring other airlines. I share the point of view of the author because the figures presented in this paper reveal signs of a saturating continental market for LCCs. The indications point toward decreasing average frequencies and increasing average route distances. The route density constraints that stem from this will likely lead to a slowdown in organic LCC growth over the next few years, forcing LCCs to (partly) adopt other business strategies for future growth. Many examples include shifting to primary airports, facilitating transfers, engaging in code sharing, entering alliances, and acquiring other airlines (Wit, 2012). Pick one of the papers you selected and determine if the paper is applied or basic research. In two to three paragraphs, summarize the research question, the source of the data, and methods used in the analysis. In the first paper the research question is whether the very successful, largely short-haul LCC business model can work over long haul sectors? This paper compares the cost and other advantages of LCCs and evaluates how far they might be applied to long-haul sectors. In my opinion it is applied research because it is systematic study undertaken to obtain knowledge (over LCC) or understanding (why the model can work…) which is necessary in order to establish the possible means by which a known and exact need may be met. Applied research can help make a decision about a variety of business and management decisions. A key question for airline management, governments and related policy-makers is whether the very successful, largely short haul LCC business model can work over long-haul sectors? The LCC business model has managed to lower unit costs by an average of 55 % or more compared to network carriers by simplifying processes (including cutting out frills), higher labor and asset productivity, and fierce negotiation with labor and outside suppliers. In conclusion, the above is based on economics and a view of what rationale investors might take into account. That has never prevented experiments in the past, and thus there are likely to be many low-cost long-haul attempts in the...

References: Hunt, A. (2006). European Low-Cost Carriers. OAG.
Morrell, P. (2009). Can long-haul low-cost airlines be successful? Research in Transportation Economics.
Thomas, J. (2003). Here for the Long Haul: Low-Cost and Legacy Carriers can coesxist. L.E.K consulting.
Wit, J. d. (2012). The growth limits of the low cost carrier model. Journal of Air Transport Management.
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