Airport Airline Management Essay Example

Impact of low cost carriers on Full service network carriers

Introduction
Airways are an extremely competitive industry in UK with multiple players vying for the same market share. The airways depend on multiple factors which include service, network, competition as well as profitability. It is important for the airlines to understand the scope of their work, the extent of their operations, expectations of the customers and factors that impact the cost and profitability of the airlines (Shaw, 2007). This is important for low cost carriers as well as full service carriers.

Airline industry in UK

The airline industry in UK consists of two major types of players ranging from low cost carriers to full service carriers. Low cost carriers have come in UK only in the last two decades and are usually considered more suitable for short distance flights. On the other hand, the full cost carriers provide longer distance coverage, better amenities and most of these players have been existing in UK for a very long time (Hanlon, 2006). The objectives of the Airlines are designed in a manner which is entrusted to embedding risk management practices involving business resilience capability within the business to accelerate the achievement of business objectives and to fulfill corporate governance obligations (Doede, 2013). Each of the players in the UK airline industry has to focus on ensuring that all of these are attained (Whyte, et.al., 2012).

Impact of low cost carriers on full service network carriers

Low cost carriers impact full service network carriers as they pose competition to full service network carriers, especially in the shorter routes and internal routes in the country. The Airlines has comprehensive support from the infrastructure which is shared by both the smaller players and the large players as it is government sponsored (Kotler, 2000). As the UK airline industry is a combination of private and public sector players, it becomes essential for them to focus on recovering the costs. Low cost carriers, though do not invest much in the infrastructure, do attract a major portion of the consumer or target segment and this leads to lower profits for full service network carriers (Johnson et al, 2008). Presently the industry is in the growth stage of industry life cycle and has a very high growth rate (Yoo, 2000). The low cost airlines industry has successfully developed a new market segment by capitalising on the growing middle class population globally. This growing middle class population segment has increasing purchasing power with increase in their income levels and is willing to spend higher disposable income (Townsend and Bick, 2011).

Extent of the impact

The impact is intense and to a very high level because it results in effective competition for full service network providers. In case of airlines in UK, customers look at luxury or comfort only for longer distances. Low cost carriers are an economical and equally fast option for consumers which lead to them opting for low cost carriers for shorter distances (Doede, 2013).
Low cost carriers can afford to offer highly competitive prices which is not possible for full service network carriers as their operating costs are quiet high. Also, there are multiple low cost carriers offering consumers with different service packaging, combination and options (Ross, 2009). On the other hand, most of the full cost carriers offer similar service packaging. The different service packaging and economical pricing attracts consumers to low cost carriers. The best part about the UK airlines is that it is very much concerned in protecting its passengers, employees and assets and implementing zero tolerance strategy to crime and this is true in case of all of the carriers, thus leading to loss of competitive advantage to full cost carriers (Jiang and Hansman, 2006).
The aviation industry is a very popular service industry which is known for the quality of service and superiority in technology as factors that form its competitive strengths (Ross, 2009). It is important that the full cost services focus on developing these strengths and other differentiating factors which can help them compete better with low cost carriers. This is extremely important for the full cost carriers from a strategic point of view as well. It can help an airline remain competitive and become a market leader in the long run (Hanlon, 2006).

Recommendations

Investment is a very crucial element and decisions regarding investments require the consideration of several aspects and dimensions (Penner, 2011). The compatibility of the need of stability and risk taking abilities along with his investment portfolio becomes extremely crucial.
It is recommended that the full cost carriers look at cost reduction options as well as different service packaging options in order to remain competitive on the shorter routes as well. This can greatly impact the performance and profitability of each of the full cost carrier airlines in the long run as well as in the short run.
A strategic change is recommended. Its strategy should be to improve the competitive position of the airline is to enhance the entertainment facilities provided in the flight and also improve other luxury facilities in order to attract premium customers and include more number of tour packages thus attracting customers to avail luxury facilities even in case of short routes (Doede, 2013).
Conclusion

References

Doede, K., 2013, Management: A European Perspective, Routledge
Hanlon, P., 2006, Global Airlines: Competition in a Transnational Industry, 3rd ed., Routledge
Jiang, H, and Hansman, R.J., 2006, An Analysis of Profit Cycles in the Airline Industry, Paper presented at 6th AIAA Aviation Technology, Integration and Operations Conference (ATIO), Wichita, Kansas, [Online] Available at: http://dspace.mit.edu/bitstream/handle/1721.1/34988/AIAA-2006-7732-942%20Profit%20Cycle.pdf?sequence=1 Date accessed: 07 March 2015
Kotler, P., 2000, Marketing Management, Prentice Hall Publication.
Penner, J., 2011, Aviation and the global atmosphere, UK, Press Syndicate of University of Cambridge
Ross, P., 2009, Building Brand Value and Influence in the Airline Industry: In a digital swarm era, the dialogue with customers is more important than ever, [Online] Available at: http://www.ddb.com/pdf/yellowpapers/DDB_YP_AirlineBranding_Feb09.pdf Date accessed: 07 March 2015
Shaw, S., 2007, Airline Marketing and Management, 6th Ed, Ashgate Publishing Limited.
Townsend, S. and Bick, G., 2011, Kulula.com: now anyone can fly in South Africa [Online] Available at: Emerald Emerging Markets Case Studies Collection Date accessed: 07 March 2015
Whyte, R, Prideaux, B., and Sakata, H., 2012, The Evolution of Virgin Australia from a Low-Cost Carrier to a Full-Service Airline – Implications for the Tourism Industry, in Joseph S. Chen (ed.) Advances in Hospitality and Leisure (Advances in Hospitality and Leisure, Volume 8, Emerald Group Publishing Limited, pp.215-231
Yoo, J., 2000, A theory of industry life cycle, Journal of Economic Development, 2 (1).