Low Cost Airlines Essay Example | Topics and Well Written Essays - 1750 words

Low Cost Airlines - Essay suitFor more than a decade now, the potential of the inexpensive shineline championship has been evident from the huge capitalization of these air expressions at stock market spheres (Brock, 2000). For example, at the start of the current decade, in 2002, Ryanair realized a market capitalization of 4.9 billion Euros, which was 45 percent more, when comp bed to the levels realized by British Airways (Rhoades, 2008). The increased uptake of low-cost airlines was evident from its revenue levels, which were approximated at 20 cadences compared to that of the traditional competitor (Dempsey and Goetz, 1992). The huge success of freshman low-cost airlines in the industry has led to the emergence of new airlines in the same category and exploitation the same stock, trying to mirror their strategies. The success of these airlines can also be traced from the fact that they have stirred up a new class of demand, which offers evidence that they are not getti ng their customers from traditional airlines low-cost airlines are attracting new demand and customers into the industry (Dresner, Lin and Windle, 1996). Due to the major impact of low-cost airlines, traditional airlines have adjudge the threat of the growing competition therefore, have reacted to the new business model, especially in the line of business travel (Meyer and Menzies, 2000). This paper will explore the success strategies of low-cost airlines explore the factors behind their success, analyze their business model and prospect their growth. The deregulation of air transport Following the enactment of the Airline Deregulation play of 1978, the control of airline business and services was, to some extent, moved from the political governing body to the market system (Dempsey and Goetz, 1992). Deregulation refers to the change of the control exercised over air travel from the Civil Aeronautics Board (CAB), which administrated the innovation of airlines into the business, their exit and the pricing of airline services, to the partial control and administration of business systems and infrastructure. Deregulation also have the abolishment of the CABs control of mergers, intercarrier agreements and customer affairs (Dempsey and Goetz, 1992). The complete shift of the control took nursing home after the endorsement of the CAB sun constitute ACT of 1984, which gave way to the economic liberalization of the management of air travel, which was part of deregulation, which was started after the realization that the political control of the economy did not serve the best interests of the general (Dempsey and Goetz, 1992). The air freedoms that came after deregulation Following the deregulation of the management and the control of airline services, all airline operators were allowed the freedom to operate on any route that they chose to operate. The operators of air travel services were allowed the freedom to set the fares of their travel services like they deemed fit, which would be influenced by the forces of demand, and the supply of air travel services (Dempsey and Goetz, 1992). During the time before the deregulation, there were some carriers that were not allowed to operate out of specified states, but after deregulation, these carriers were allowed to fly and operate across the country, without any limitations. Following the deregulation of the air travel industry, the restrictions that had been set in the way of entry into the industry were abolished (Dempsey and Goet