Business Model Case Study

Low-Cost Carriers: A Sustainable Business Model in the Global Aviation Industry

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Abstract:
In the 1970s, the concept of air travel at a reasonable price came into being with the advent of the low cost carriers (LCCs). Their 'no-frills' business model gained instant popularity amongst all segments of customers. Although the LCCs were found to gain global recognition and popularity in a relatively short span of time, they faced their share of challenges too. Moreover, the LCCs faced resurgent traditional airliners that diversified into low cost airlines operations in a bid to regain their market share snatched away by the LCCs. With an aim to cope up with the increasing challenges and to survive competition, the LCCs decided to restructure their business model, improve their service quality and maintain a low cost identity. Critics remained speculative about the future prospects of the LCCs in the commercial aviation industry.

Pedagogical Objectives:

• To discuss the key factors that played a vital role in the emergence of the LCCs.
• To analysethe various challenges faced by the LCCs in the aviation industry.
• To highlight the factors behind Google's dominance in the search engine industry.
• To discuss about the different strategies adopted by the LCCs in order to sustain in the airline industry

Keywords : Hub and spoke model; Traditional airlines; Ryanair; EasyJet; Secondary airports; The yield management system; Pollution; e-Ticketing; Second mover advantage; Discount airlines; Non-financial costs; Customer segmentation; Budget carriers; The Deregulation Act; European commercial aviation industry; Aggressive pricing strategy; Global warming; Airline within airline; No-frill carriers