Also, some airport hubs cannot consolidate traffic bound for many itineraries. Having this limitation and knowing the fact that some passengers prefer non-stop flights, consideration of both hub-stop and non-stop routing strategies can be more cost-efficient than a pure hub-and-spoke network (Jeng 1987). In other words, non-stop flights are always the most desirable in terms of convenience but on the other hand less desirable in terms of price for price sensitive customers. Moreover, the stops at the hub airports increase the expenses for the airline companies due to the facility charges and landing fees. Therefore, the airlines can generate more revenue by considering these key parameters and applying best network routing
When there are good in economic growth, consumer’s discretionary income rises and there is often an increased demand for air travel that people like to travel and spend their leisure time with vacation and others. But, when economic downturn, demand for air travel will decrease. Therefore, these economic factors have affected Ryanair’s profits. Ryanair needs to make a new strategy or adjust their plan in order to meet the economic condition. This is because to avoid wastage during low travel periods besides taking the opportunity when there is peak-time travel.
fierce between 2 LCCs or when a LCC plans to enter a full service airlines sector. This is also true the other way around. Bargaining Power of Buyers can be ranked as moderate with LCC’s coming into the picture since the deregulation of the industry and internet making it easy to book and fly. Customers tend to stick to known companies which have a strong presence in the market. Thus, it is safe to say that there is low-to-moderate bargaining power of buyers in this sector Bargaining Power of Suppliers The three main costs for the airlines are fuel, labour and Airport charges.
Lower cost of flying urged more people to go on travel in a higher frequency and generated more income for entrepreneurs. This further intensified the air-bus market with additional competitors entering and existing firms were reorganizing strategically. Therefore, it was recommended that budget airline acquired another possible competitive edge, other than employing lower price, to establish an unceasing growth. References Fageda, X., Suau-Sanchez, P., & Mason, K. (2014). The evolving low-cost business model: Network implications of fare bundling and connecting flights in Europe.
To do this, for their financial indicators they are trying to find new sources of revenue in order to minimize the fares and costs. Besides lowering the costs and fares, they also have customer profitability, when this increases, sales and revenues increase respectively. For their customer indicators, they aim to acquire more customers since this gives them an idea on customer satisfaction. The most basic way to earn customer satisfaction is on-time flights, this is another indicator for Southwest since customers doesn’t like it when their flights late even though they got it at a cheaper price, in line with this is on-freight deliveries. For their internal processes indicators, they do their best to improve operational efficiency since they offer services and not products.
Ryanair can lose their lead in competition because of lack of advertising. With their growing fleet and number of flights the competitive rivalry is low. 2.3 Strategy of Ryanair 2.3.1 Low Fares Ryanair sets their fares depending on demand on a particular flight and also by outstanding time before departure. If it is closer to the departure date the fare will rise due there will be a higher demand for it. Also Ryanair sets the low fares to stimulate the demand of their service.
The company also operates point-to-point service that is not part of the mainline network. This enables Delta Express to operate point-to-point service that is not part of mainline operations. Delta Express gains leverage from being offer Delta SkyMiles frequent flier points. They introduced seasonal fares and constantly keep costs down. Even though the industry remains intensively competitive now, most the carriers have a route system well suited to their individual strengths, and fewer carriers have a route system well suited to their individual strengths, unlike fewer carriers are on the verge of bankruptcy or struggling to maintain the turnover.
There is also price discrimination used by AirAsia. There are different types of price discrimination such as seasonal discounts, incentive discounts and general prices that depends on location. Penetration pricing strategy This is the most common pricing strategy that AirAsia provided. This strategy is working best for AirAsia airline to have low production and conducting a large-scale operation and long run production. This is due to AirAsia set a low initial price for customers and also launch a low cost carrier.
Understanding the factors that affect your flight ticket prices used to a confusing process in itself, but not anymore as the codes have been decoded by the experts and we’d like to share with you some of the top factors. Flight Distance I think this is the common sense that the price of flight ticket will depend upon the time your flight takes to reach the destination, right? The farther you fly the more expensive your flight tickets will be. However, this is not the case always. You may get cheaper tickets for a 2-hour long flight than the one that needs only 1-hour.
According to Zeithaml (1988) perceived service quality is important rather than price. In this case, there is no doubt that budget airlines have competed successfully with full-service airlines, especially in the price-sensitive leisure market (Fourie and Lubbe, 2006) as budget airlines offer low fares as a competitive strategy, yet passengers’ perceived service quality is the most fundamental (Chang and Yeh, 2002). Saha and Theingi (2009) pointed out budget airlines able to provide low fares to passengers because of the cost reduction in operations, instead of diminishing service standards, though service quality is important to budget airlines. There is some studies integrated SERVQUAL model to measure airline service quality (Sultan and Simpson, 2000; Chang and Yeh, 2002), revealed from the literatures, reliability rated as the most important dimension among airline passengers. Thus, measuring and identifying the passengers’ perceived service quality is essential for an airline as service quality is critical for airlines to enhance effectiveness and competitiveness (Gilbert and Wong,