However, in the late of 1990’s has only known to be a really successful model that has made changes around the world (Diggines, 2010). The implementation of LCC model has been defined as a strategy that based on the choice to compete on price (Barrett, 2004; Collis, 1991). LCC is an airline that differentiates itself in the market by provides lower ticket prices than competitors (Alamdari & Fagan, 2005; Hunter, 2006). LCC tend to adopt a variety of cost saving strategies such as the use of secondary airports, point to point services, using the internet as the main booking system, often no seat allocation (for faster boarding), and non-participation in alliances (Macário; Viegas; & Reis, 2008). Moreover, its offers single service class and no free meals onboard to reduce operational costs that allow the airline to sell a cheaper ticket, which, in turn, allows passengers to choose between a higher service and lower service prices (Macário; Viegas; & Reis,
The competition of the global world Some people believe that the success of large-scale enterprises, the future will depend on their global competitiveness (Ohmae, 1989).Global competition has already been very evident in plenty of industries such as automobile, pharmaceuticals, soft drinks and financial services, but for the airline industry, due to the restrict of the government regulation and ownership, and the customer preference has only recently begun to have a clear global competitive phenomenon. Levitt (1983) proposed that under the development of communication and transportation techniques, it let the global tourism market and consumers began to pursue the same products and have similar preferences, under the circumstance, enterprise should via the strategy to fulfill the economics of scale and economics of scope, produce and deliver standardized products in global markets, and sell them through a unified marketing program. Bartlett and Ghoshal (1989) also reported that the success of an enterprise depends on its ability to achieve “multinational capability” it is not only has the efficiency of global production and sales but also has the flexibility to adjust to the
The company is the largest in the world when ranked by the number of passengers it carries. However, it is 11th in the overall airline quality ranking. The model has explained this by making assumptions such as slow rates of market growth, a high fixed operation cost, small degrees of differentiation of its products, and entrants of other low-fare carriers (Tum, Norton & Wright 2006). Within the model, substitution of services is only achieved when the demand is more than the supply. In the American Airline company, excess supply is being attacked by the carriers who charge low fares and continue to gain the market share (Huggins 2011).
Thus, the power of the suppliers is high, since the suppliers have a grip on the market due to the huge demand of their manufactured products. Moreover, suppliers can affect the industry through their capacities to raise prices or reduce the quality of purchased goods and services. Bargaining Power of Buyers The buyers in the airline industry are demanding more and better quality services .The bargaining power of buyers in the industry is high due strong as low switching costs and plethora of options in the market. Now, e-ticketing has improved the chance and flexibility to search for different airlines companies leading to down word cost pulls and upward services push. Furthermore, it eases of switching between different airlines companies.
However, the airline industry increases air traffic to smaller airports which benefit Airbus competitors that were building midsize, wide-bodied planes carrying over 300 passengers (Gordon,2018). In 2000 Airbus was 80% owned by the European Aeronautic Defense and Space company and 20% by British BAE Systems (Pitt, Koufopolulos,2012). This helps lower the cost for the consumer and fight it, competitors, as the European Union gives aid to Airbus for their acquisitions. For the consumers, the lower the cost of acquisition is a good entity. Consequently, for Airbus biggest competitors, Boeing, responded from Airbus aircraft by flooding the market with mid-size planes to help the increased volume of air traffic (Hambug,2017).
After the deregulations in the airline industry, the revenue management techniques have become inevitable for airline seat inventory control. Revenue management is the process of selling the limited perishable capacity to the right customers at the right prices so as to optimize the total revenue. Classic examples of RM can be found in the airline and hotel industry where there are finite number of seats and hotel rooms, respectively (Mou and Wang 2014). The main problem in airline revenue management is to determine booking control strategies. Airlines seldom charge the same fare for each seat on a flight, but instead price seats based on customer’s willingness-to-pay.
For instance, the financial crisis in Asia has severely impacted the business al around the world in 1997 (Baker & Sinkula). and the outbreak of SARS (Severe Acute Respiratory Syndrome) conducted in 2003 has proved like how globalization is being spreading so rapidly (Anthony; Meredith), which influences many of the hospitality industry, airlines and other businesses all over the world. Considering the positive side, it enables many of the firms to find and outsource customer all around the world, like the electronic and auto industries. The globalization of operations and production gives advantages to the firms with the help of realization of scope and sale’s (Eicher). Therefore, no one can ignore the fact that
Such culture and environment helped southwest to sustained growth even in economic downturns,etc. Technological:: Advance IT technology is used and Online booking operations, ticketless travelling,etc. Legal: Competitors may intervene in between and create problems in operation. For Example:It is mentioned in the case that Texas based airline imposed 2 cases against Southwest airlines to stop to from flying. Ecological: Terrorist attacks and natural disasters as floods and earthquakes can also have a global impact on consumer’s demand for air travel and put struggling airlines further into the red.Fuel price surge and other economic downturn factor affected the company to some extent.
The aviation industry has tranformed the planet and played a big difference in the people lives. . Since the first flight of the ‘Kity Hawk’ in 1903, the world has chnaged and it has been playing a big part in boosting countries economies. This report will explain that there is many ways affect people lives , this report will also discuss how aviaton solved problems of the world and also its advantages and disadvantages and without aviation we wnt be able to do things which we are doing now. In the 20th Century , mostly people could only afford short journey ;only the rich people can afford to go on aeroplanes.the advent of commercial aviation has opened the doors for the less privileged as well, and now a larger number of people can travel to greater distances in the shortest possible time (Airbus, 2008).Now this industry is expanded alot because of that its much cheaper.Inrecent decades, the phenomenon of budget airlines has enabled many morepeople to fly (Whitelegg, 2008).It also helped all over the world to develop the tourism industry.It is unbeleivable what aviation has done for tourisom.People nowadays travel alot for business and personal use.It also helps boost the worlds economy.One of the most prominent impacts of aviation is that it has revolutionised the way in which goods and people are moved around the world (Pew, 2009).Before people had to face lot of problems if they have to travel it was expensive and time cosuming.Now because of aviation people are feeling
They facilitate trades between countries, enabling these nations to participate and have access on international markets and allowing globalization of their own products. Given that the Air Transport is the most rapid form of global transportation network, many societies depend their economy on this, and as a consequence, makes it critical for tourism and global businesses. The Naga Airport has been serving for many years since its beginning can