Low Cost Carrier Business Model

Low Cost Carrier Business Model

  • Submitted By: zura19
  • Date Submitted: 04/29/2010 5:38 PM
  • Category: Business
  • Words: 400
  • Page: 2
  • Views: 749

Low-cost carrier business model practices include:

a single passenger class
a single type of aircraft (commonly the Airbus A320 or Boeing 737 families), reducing training and servicing costs
a minimum set of optional equipment on the aircraft, further reducing costs of acquisition and maintenance, as well as keeping the weight of the aircraft lower and thus saving fuel:
no AVOD etc.; often excluding conveniences such as ACARS and autothrottle
no in-flight entertainment systems made available
no seat recliners, seat pockets, window blinds or seat headrest covers
a simple fare scheme, such as charging one-way tickets half that of round-trips (typically fares increase as the plane fills up, which rewards early reservations)
flying to cheaper, less congested secondary airports and flying early in the morning or late in the evening to avoid air traffic delays and take advantage of lower landing fees
fast turnaround times (allowing maximum use of aircraft)
unreserved seating (encouraging passengers to board early and quickly, thus further decreasing turnaround times)
simplified routes, emphasizing point-to-point transit instead of transfers at hubs (again enhancing aircraft use and eliminating disruption due to delayed passengers or luggage missing connecting flights)
encourage the use of direct flights. Luggage is not automatically transferred from one flight to another, even if both flights are with the same company.
generation of ancillary revenue from a variety of activities, such as à la carte features and commission-based products
emphasis on direct sales of tickets, especially over the Internet (avoiding fees and commissions paid to travel agents and computer reservations systems)
employees working in multiple roles, for instance flight attendants also cleaning the aircraft or working as gate agents (limiting personnel costs)
a disinclination to handle Special Service passengers, for instance by placing a higher age limit on unaccompanied...

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