...BestJet B: The European budget airline industry: origins, growth, market and competition May 2006 __________________________________________________________________ Allan Kinross prepared this case. It is intended to be used as a basis of class discussion rather to illustrate the effective or ineffective handling of an administrative situation Introduction to the European budget airline industry After 9 years of spectacular growth and success, at the beginning of 2006 the European low cost budget airline sector still faced a number of challenges. Though the industry had consolidated with easyJet’s acquisition of Go and Ryanair’s takeover of Buzz, every month in the new millennium seemed to see the start up of new budget airlines and new routes or bases being announced. There were over 75 in autumn 2004. Leading players, easyJet and Ryanair, had orders between them for over 300 aircraft requiring both to more than double in size in the face of growing competition from new entrants, a fight back by established airlines and powerful tour operators. In the two and a half years to October 2004, average seat prices had continued to fall, and Ryanair had not managed to sell all of its ‘free’ seats on offer in special promotions. Revenues were under attack from extreme overcapacity and costs were hit by high fuel prices. In the future, would there be enough (profitable) growth for all, and where would that growth...
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...Easy Jet and Ryanair; pricing strategies Flying high with low prices Introduction Easy jet and Ryanair and the two largest low cost airlines in Europe, they dominate the industry. They introduce low prices to entice customers; the earlier the customer’s book, the cheaper the price. By introducing these prices, Easy Jet and Ryanair have forced other airlines such as British Airways and Lufthansa to lower their prices. Both airlines have copied the American ‘South West airlines’ business model and introduced it to Europe. Easy Jet and Ryanair are able to provide the low prices by maintaining low costs. They cut costs in areas such as administration. With the online booking system, this saves them thousands of pounds every year. While cutting costs, the service given on board flights is not as good as the superior companies such as British Airways and Virgin Atlantic. It doesn’t have to be, as customers know that with the low prices comes low customer service. And for the cheap prices customers pay to fly with Easy Jet and Ryanair, they don’t mind. Ryanair Ryanair is the leading low cost airline in Europe. Founded in 1985 by the Ryan family they began with one flight and one aircraft flying between Waterford and Gatwick airport. Shortly after, they began flying regularly between Dublin airport and London Stanstead, competing with British Airways. ‘Carrying fewer than 700,000 passengers annually in its early years, the figures grew to 21.4 million years...
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...US Defense budget cuts made by the collaboration of both, Democratic and Republican parties, arose some intense debates all over the media, government officials, and citizens. But most importantly this topic bothers the majority of the military representatives who suffer from unfair treatment and disregard of the priceless work and service to the United States of America. The root of the problem seems to begin in 2011 when President Barak Obama signed Budget Control Act, and Congress passed it. It allowed the bypassing traditional way of funding the Defence Department and led to a considerable diminishing of US Army capabilities. At the same time, major counter countries develop stronger armies, such as Russia, China, and obvious thread of...
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...Individual Paper: Week 4 Jacob A. Nolan Professor Lloyd SOC/333 Genders in Society April 7, 2013 Communication Differences and Strategies ‘ving feedback on the problem they do not want to listen to women vent about it (Ivy & Backlund, 2008). Women on the other hand, are known to vocalize their issues to bring closeness to relationship through their conversation. Women will also try to express themselves when communicating but they do not realize that they often just sharing their experiences and emotions and not really looking for the solutions to the problems. This will then come across as seeking advice in reality women are just looking for the audience to listen (Sapiro, 2003). When men have conversations they see a means to determine social order and to prove themselves to their audience. While women, on the other hand, often engage in conversations to become more intimate (Sapiro, 2003). It has been found that women tend have conversations to have a close relationships, while men have conversations to find solutions to their problems (Sapiro, 2003). Men also tend to dominate the conversation while women use the conversations to seek out their thoughts, feelings, and beliefs (Sapiro, 2003). As a result when men and women do experience miscommunications it will be a result of not understanding the different communication styles of each other. As it was stated earlier, women will use their communication...
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...The aim of this paper is to discuss how low cost carriers will continue to impact the airline industry in 2012 and beyond. We will look at the history of the budget airline industry and their consumer targets. As well as analyse what marketing strategies they use that have allowed them to grow so much. A low cost carrier is an airline category defined primarily by low fares but also by a focus on reducing operating costs by eliminating complexity and charge for product elements which go beyond the basic product: the flight. The first budget airline company Southwest Airlines was launched in 1971 in Dallas Texas and turned profitable in 1973. According to the e-magazine Airline Business (2012) research, Southwest Airlines is the biggest domestic airline in USA and is the biggest budget airline in the world by revenue. Ryanair is the second largest low cost carrier with its launch in 1990 In the UK followed by EasyJet and Virgin. In 2001 Ryanair and Easyjet started to offer connections between two airports outside their home which was only possible due to a political decision allowing airlines to turn from more governmentally controlled transport providers to private companies on a free market. LCC became popular since the 1990s because of the low-fares and no-frills service. Compared to the full cost carriers (FCC), more people chose to fly with low cost carriers because they can fly domestically and to more countries. Furthermore, LCC tend to have scheduled flights and...
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...Introduction Budget airline industry has been profitable during last decade, and particularly Ryanair, as the largest European budget airline company has been vital in this area. Its success in past, issuses nowadays and importantly the sustainablility has drawn significant attention and offered a great oppourtunity for research. This case study will analysis the budget airline through its business model, evironment and industry and finally focus on Ryanair’s strategy position in order to explore its sustainability in future. The framework is briefly illustrated by following figure. Figure 1: Brief Framework of this Case Study The budget airline business model The first company in history to suggest the budget airline business model to the world was Southwest Airlines (SWA) in Texas, USA. At the beginning of 1970s, this company have launched first flights between three major cities in Texas i.e. Houston, Dallas and San Antonio at a price of 20 dollars, which was initiative at that time. It marked itself as budget airline and initiates a business model allowing it to offer scheduled flights service at a very low fare. It would focus on short-distance flights of typically 600 km or one hour with high traffic efficiency. Many strategic approaches of budget airline business model’s operations differ from the more traditional of full service airlines model. 6 main factors can be identified, which are illustrated in the table below: Budget airline | Full service...
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...SWOT analysis Strengths: * EasyJet is the primary provider of low budget air travel, employing an overall cost-leadership model. The airline operates services on 500 routes and carries more passengers than any other UK-based airline. * Recognises CO2 emissions and actively seeks to reduce emissions and support green schemes such as UN certified Perlabi Hydroelectric in Ecuador. * With rapid turnaround times of just 30 minutes, EasyJet is able to offer an efficient and reliable service whilst maximising asset utilisation. * The first low cost carrier to introduce 100% electronic retailing, reducing overheads and producing a highly convenient service for passengers. Weaknesses: * Undifferentiated service in relation to other cheap flight providers such as Ryanair etc * Easyjet does not offer schemes for customer retention and as a result there is no brand loyalty - customers choose the lowest priced flights. * As a result of extremely low operating margins, Easyjet puts itself in a sensitive position regarding any additional of taxes or charges that may be imposed on it by the government. Opportunities: * The withdrawal of several long-established airlines from the less traffic-intense routes offers an opportunity for expansion. This may include the introduction of alternative routes to major cities in Europe e.g. from Dublin to London. * Acquire small low budget airlines with different routes to add to its flight timetable * Offer...
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...| |Strategic Management : Principles and Practise | |Case Study A : RYANAIR | | | | | | | | | 1- You’re invited to use the Value Chain framework so as to explain the extent to which Ryanair has been able to propose low fares to its passengers. In order to develop a competitive advantage - implementing low fares to its passengers - Ryanair offers a series of activities referred to as the Value Chain, as it is shown in the following diagram: |Firm Infrastructure | |Corporate partnerships | |Human Resource Management...
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...in the UK and Europe but also the opportunity to expand into India INTRODUCTION – THE COMPANY AN OVERVIEW Easyjet Airline was established in 1995 by Sir Stelios Haji-Ioannou a Greek Cypriot as part of EasyGroup Holdings Ltd. He envisaged it as a low cost airline which could impact on the existing domestic market in the UK which was at the time dominated by large British companies such as British Airways and British Midland. The Company started with two leased airplanes and began operating from London Luton to Glasgow and Edinburgh In 1996 they began operating from Luton to Amsterdam and now in 2014, operate on 633 routes across more than 30 countries and own 217 Airbus aircraft. They employ over 8,000 people including 2,000 pilots and 4,500+ cabin crew and in 2013 they flew over 60 million passengers They now claim that “over 300 million people within a one hour drive of an EasyJet airport” (Easyjet About Us 2013) The obvious move for the airline for further growth may now be outside of Europe and India may be the best market to consider. PESTLE Analysis Political/Legal Up to April 1997 the European Airline Market was regulated strictly and each county controlled their own airline companies. After 1997 and deregulation the European market opened up for carriers and subsequently for example an Irish low cost carrier like Ryan Air was allowed to operate between two other European countries. Since then European routes have increased by140% ( Ingdahl W. “Flying has never been...
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...He pauses on 2 of the 16 ads, one from AIG and one from General Electric. “We’re the only company in the world putting ads in our annual report,” Proletariat Capitalist TONY FERNANDES revolutionized Asia’s airline industry by introducing the region’s first low-cost carrier. Now he’s plotting more insurgencies in airlines, hotels and financial services. By Justin Doebele 30 F O R B E S A S I A JUNE 4, 2007 Malaysia’s 40 Richest Sleepover in Kuala Lumpur: Tune Hotels, with rooms costing as little as $3 a night, are Fernandes’ attempt to provide cheap, clean lodging. he boasts. “For others it’s a cost, but we made a $50,000 profit.” Fernandes, 43, relishes turning costs into cash. After all, he built a small fortune by being budget-conscious. Less than six years ago he and a partner paid a debt-ridden Malaysian company 27 cents for a troubled carrier and assumed its $11 million in debt. He relaunched AirAsia Berhad as Asia’s first low-fare airline and the region’s first carrier to allow customers to buy tickets online and through mobile phones. The no-frills outfit got rid of complimentary food and drinks, frequent-flier programs, airport lounges, even cleaning crews; flight attendants now clean the cabins after flights. Ads are sold on the airplanes’ overhead bins and tray tables. All this has helped AirAsia become one of the world’s lowest-cost carriers, according to ABN Amro, as measured by costs per seat flown: just 2 cents for each kilometer, about half what it...
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...|11-16 | |2 Industry environment analysis |17-26 | Reference List 27 Main Body 1. Introduction The European airline industry is a vigorous industry with changing trends that relate to the overall European economy. Traditionally, the European airline industry was mainly comprised of full-service carriers, such as Lufthansa and British Airways. Nevertheless, this situation changed quite swiftly (Datta & Chakravarty n.d.). Government deregulations freed European airline markets from restrictions on prices, competition and services. This enabled low-cost carriers (such as Easyjet and Ryanair) to bring in new services across Europe (Lynch R 2008, p. 750). Currently, low-cost airlines are “the order of the day in Europe” (Datta & Chakravarty n.d.). Key success factors are critical drivers that organisations need to do well, in order to survive (Hubbard, Rice & Beamish 2008,...
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...Strengths: EasyJet is a leading provider of low budget, no frills air travel servicing many of the leading city destinations in the UK and across Europe, including Berlin, Amsterdam, Barcelona, and Prague. They offer a high quality service at competitive prices and offer a number of features including ticketless travel, internet booking and assisted travel services. They have a highly distinctive livery on their fleet of aircraft making them easily recognisable and distinguishing them from their competitors. They have a user friendly website which fully discloses the price breakdown of the passengers planned travel. Offering a full breakdown of the price plan prevents any hidden charges when the customer confirms there booking. EasyJet offers an online promotion alert which is e-mailed to existing customers and contact on the company’s database. Recognised as a leading brand name in the UK travel industry. As a market leader in an industry widely seen as a leading contributor to the green house effect and global warming, EasyJet actively embrace there environmental responsibilities and continue to keep these factors as a keep priority when developing their future strategies. EasyJet operate a fast and efficient service with an average turnaround time of 30 minutes or below. This enables them to maintain a reliable and hassle free service to their passengers. Weaknesses: Domestic air travel is an extremely competitive industry with EasyJet’s main competitors being...
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...government. In addition, the government can also remove regulations such as health and safety regulations, environmental regulations, and employment protection. More companies will be able to start up in the industry under consideration and this will increase competitiveness. When there is an increase in competitiveness, efficiency will be increased, quality will be increase, price will be decreased, and possibly there will be technological improvements as well. For example, the aviation industry in Europe has gone through a process of deregulation and this has led to the proliferation of many private airlines, including budget airlines (such as Easyjet, Ryanair, Monarch, BMI, Thomas Cook, FlyTui). This has increased the level of competitiveness in this industry and thus, reducing the cost (or improving the services) for consumers. Evaluation 1 There is an increase in the external cost. For example, as there are so many different airlines, people are flying more often, more planes are using the airspace, and this has increased the amount of pollution caused by airplanes. Evaluation 2 Although there are less regulatory restrictions, there might still be other restrictions that stops private firms from entering the industry such as high costs, inability to obtain certain factors of production (eg. Lack of capital), lack of knowledge / know-how. Certain evaluation points from Privatisation (above) could also be used to evaluate...
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...Crash Data Evaluation Centre (2). High safety standard can get the trust of the passengers. - Global network/ Wide coverage Both Cathay and Cathay Dragon reaching more than 90 destinations, throughout Asia, the Pacific, Europe, North America, the Middle East and Africa. Cathay also a member of “Oneworld” an alliance of the world’s leading airlines, passengers can travel over 1000 destination under the alliance. At March 2017, Cathay with the Lufthansa Group accomplished a co-operation agreement. Under the agreement, Cathay Pacific will...
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