Home » Choose one element of an archetypal low-cost-carrier business modelfrom the list below.Explain how it reduces cost compared with a large…

Choose one element of an archetypal low-cost-carrier business modelfrom the list below.Explain how it reduces cost compared with a large…

Choose one element of an archetypal low-cost-carrier business model from the list below. Explain how it reduces cost compared with a large international network airline. Why do global network carriers not incorporate this element into their business model?

Low-cost carrier business model characteristics (IATA, 2006):

  • Primarily point-to-point operations.
  • Serving short-haul routes, often to/from regional or secondary airports.
  • A strong focus on price sensitive traffic, mostly leisure passengers.
  • Typically one service class only, with no (or limited) customer loyalty programs.
  • Limited passenger services, with additional charges for some services (e.g. onboard catering).
  • Low average fares, with a strong focus on price competition.
  • Different fares offered, related to aircraft load factors and/or length of time before departure.
  • A very high proportion of bookings made through the Internet.
  • High aircraft utilization rates, with short turnaround times between operations.
  • A fleet consisting of just one or two types of aircraft.
  • Private-sector companies.
  • A simple management and overhead structure with a lean strategic decision-making process.

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