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The Air Transportation Industry: The Global Airline Industry

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CHAPTER ONE: INTRODUCTION

Airline industry considers being one of the most important tools of the creation of a global economy. It is a major economic force as it has a strong impact on the related industries such as tourism, cargo, and aircraft manufacturing (IATA, 2015; CAPA,2013).
Today the global airline industry continues to grow quickly. According to the International Air Transport Association (2015), the industry revenue has doubled over the past years to reach $746 billion in 2014. Low-Cost carriers (LCCs), has been driven much of that growth. Growth also came from starting up new airlines around the world, which lead to increase the competitive level, especially in the commercial aviation sector (CAPA, 2013). The LCCs has been driven …show more content…

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, 2008). Figure 1 below illustrates the major characteristics of LCC model. By observing the characteristics of the model, business and long-haul travelers are more likely to fly with FSCs, while LCCs attracts leisure or infrequent travelers traveling domestically or regionally based on some factors: travelling culture; airport availability; density of population; relative wealth; and access to internet facilities (Macário; Viegas; & Reis, 2008; Mason,

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