The intense competition in the industry has caused SIA’s average passenger load factor to decrease for the third consecutive year. In FY2014/2015, the passenger load factor of 78.5% did not meet the breakeven load factor of 79.5% for flying the planes. To counter this problem, SIA has increased the frequency of flights to Australia to counter competition from Eithad Airways. The airline also set up Scoot, a budget airline and expanded capacity with SilkAir in response to competition from budget airlines. SIA is also potentially increasing its stake in affiliate company, Tiger Airways, and has diversified its strategic investments in order to keep pace with its competitors.
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
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,
Emergence of new Indian middle class, information technology boom, had created a demand for both business and leisure travel. In the year 2003, sensing huge pent up demand (air traveler and per capita use of airline in China being 8 times that of India), the Indian aviation industry kicked off a new phase of development. In spite of the fact the most of the operating cost in the industry is fixed irrespective of business model employed. Most of the new operators choose to use low cost airline as their business model. Hoping to create low cost operating model to make low fares viable.
Several experts believe that budget airline has reformed the entire airline industry and created a momentum for it to grow sustainably. Previously, the airline industry was experiencing a downturn in demand and surging production cost, which led to a profit recession. However, the price was regulated rigorously by the government, causing firms were not permitted to reduce price to stimulate customers demand. Such regulation has forced the fare gone high, and, thereby, customers could only select from similar high fees, discouraging them to fly. Thus, this situation prompted the implementation of relaxation in airline industry through granting more freedom to air-traffic businesses, such as freedom of entry and exit.
To be able to share this product with its partners will give Etihad a potential advantage in attracting customers, particularly given the importance of the virtual network. Conclusion The rapid expansion of the group’s network and access to newer and larger markets is a benefit to all parties. Through the Etihad Partners, Etihad Airways continues to accomplish its own success while boosting the business of the other airline partners with mutually-beneficial alliances, some of which may not have been able to survive without Etihad’s intervention, or would have been relegated to a more marginal status if involved with another investor. Despite the recent trouble regarding regulatory authorities in both Europe and the US the strategy is moving full steam ahead unabated. Strong organic growth by Etihad is aided by extensive commercial partnerships, strengthening the carrier’s hub through a lower capital investment approach.
Each of the aircraft has q capacity of 189 passengers, capable of longer flights, more sophisticated and the most important in build to reduce fuel consumption. The company has orders for 56 new aircraft expected to be delivered over the next two years. The main criteria of new fleet are less use fuel, pollution, noise and the airline strongly opposed to a charge on emissions. The come out with planning to ensure that in the future they able to sustain since they know in future they will concern more about the environmental as well as to overcome the increasing fuel price. Ryanair still need to compete with other competitors by sharing the industry market.
Lastly, when the Malaysia Government implement a 6% Goods and Service Taxes (GST), flight service charges and cost pressure will definitely increase and brings negative effect in the close period. However, this will not stop the long-term progress in terms on increasing in amount of tourist visiting, migrating and popularity growth. Hence, growth at the total passenger traffic at Malaysia’s airport terminal were expected to show progress till the year
This means that the Philippine carriers can launch new flights to the United States and they can change their aircraft types used on existing routes. This will be a great opportunity for the Philippine Aviation Industry as this allows for more flights to different countries. For Cebu Pacific, this upgrade will provide them an access to an important market which they are previously banned on serving. On the same day that the Philippines received its category 1 upgrade, the European Union granted Cebu Pacific access to Europe. The year 2014 is good for Cebu Pacific.
Analysis of current & potential competitors Firefly Firefly Sdn Bhd is a service point-to-point carrier of Malaysia Airlines. Airport, Subang, Selangor and Penang International Airport were the hubs that Firefly operated. The first flight was on 3, April 2007 which is from Penang to Kota Bahru. Firefly plans to have lowest cost in the country that targeting the ASEAN market with crossovers with Air Asia. Firefly provide a very low-cost travel with flights and hotel to customer, this is easier for customer to have a budget hotel and flights together especially for the customers who has low salaries pay.