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
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.
The requirements for the advance ticket purchases are much more lenient than their competitors’. Early boarding is offered to customers who are members of Southwest Airlines Rapid Rewards. Southwest Airlines sticks to their strategy of low-fare policy and have not followed the competitors along the path of offering add-ons for extra money. The profit margin erosion ends up being compensated by the increase in sales volume. Lastly, point-to-point route system minimizes delays, connections, and the total time spent on the trip.
1. Dupuy, as the decision-maker, had defined the essential points on which the contract would be negotiated. These keys points were often linked first of all to the prices which would maximize the profit and next, the performance of the fleets in order to achieve the structural objectives and enable Iberia to make profits after having covered all its expenses. Today, the competition between aircraft manufacturing companies is often located at the level of fuel consumption, reliability and the possibility of reselling without losing too much money in return on investment. This is something that the chief financial officer understood very well about both Boeing and Airbuses while they focused more on the numbers and not on the technical quality of their aircrafts.
Ryanair also use the best current low strategies to provide them bigger profit by extensive use of ancillary fees to balance their low ticket prices. It allow Ryanair to make up the revenues lost through lower ticket prices by emphasis on ancillary revenues from the sale of a ticket and include sales of related items such as hotel reservation or car rental as well as charges for food, checked baggage, priority boarding, and other items. The other strength for Ryanair is it use new aircraft model, the Boeing 737-800 that allows minimization of training and maintenance costs. This model aircraft also provide efficient management of spare parts inventory and more flexible scheduling of flight crews. Ryanair has the advantage to negotiate on the price concession for this aircraft model as they purchase a large number of aircraft from Boeing.
Few airlines may also incur losses due to the increase in the price of jet fuel. Cost of jet fuel is directly proportional or directly impacts the airline profits and airline fares. Jet fuel prices will impact any airline, whether is a profiteer or a low competitive airline. b) Other factors: There are many other factors, which impact the airline fares other than the fuel they are of following i. Supply and demand: Demand is calculated based on the passenger willingness to pay and travel according to their wishes and their own
Those companies implement lean management which is based on effectiveness, cost transparency, minimum complexity and the focus is on core tasks. This means that low-cost airlines have flatter hierarchies, no complex operations and little bureaucracy. They can also make some savings by adopting downsizing, this happens when the size of the core workforce is reduced and this can further reduce a firm’s costs because fewer in-flight staff is required owing to a limited on-board service. Other ways for cutting costs are the maximum utilization of permitted working hours of all employees such as cutting holiday allowances. The service organizations must meet three key customer needs to deliver service excellence: security, esteem and justice.
They can utilize their inside associations to get the travelers extras and upgrades. At the point where a flight gets cancelled or delayed, their travel agent will re-book everything. Since these days, many individuals book aircraft tickets online which are exceptionally costly, yet these do not accompany inns, transportation, nor an itinerary. Through this study, people can see that with the help of a travel agent, travelers can get affordable travel packages that are valuable, hassle-free, and can maximize the traveller’s money. Every travel agent faces different kinds of problems.
The system allow customer to have a more flexible access mode as they can make purchase by phone and the internet. This enables customers to make an easy and fast reservation. The system can also lessen customer effort in rescheduling their trip as it could reduce their searching effort. UK Essays, (2013). 3.0 OBJECTIVES 3.1 Vision & Mission Air Asia vision To be the main affordable airline in Asia and serving the 3 billion people who currently deprived with substandard network and high ticket prices.
Landing discounts encourage new routes/direct routes, new frequencies or additional capacity and to base an aircraft in the airport. Passenger discounts encourage passenger grow, transfer passenger grow and development of new routes and frequencies while avoiding congestion and night noise. Not all discounts are applicable to all airlines. For example some discounts from table..... are not always applicable for low cost carriers( discount for landing with a larger aircraft / transfer passenger discount). Low cost carriers usually operate single type aircraft fleet and operate a network