Low Coast Buniness Model
INTRODUCTION
A low-cost carrier or low-cost airline (also known as a no-frills or discount carrier / airline) is an airline that offers generally low fares in exchange for eliminating many traditional passenger services. The concept originated in the United States before spreading to Europe in the early 1990s and subsequently to much of the rest of the world. The term originated within the airline industry referring to airlines with a lower operating cost structure than their competitors. While the term is often applied to any carrier with low ticket prices and limited services, regardless of their operating models, low-cost carriers should not be confused with regional airlines that operate short flights without service, or with full-service airlines offering some reduced fares.
THE BUSINESS MODEL
Typical low-cost carrier business model practices often (but not always) include:
• a single passenger class
• a single type of aeroplane (commonly the Airbus A320 or Boeing 737), reducing training and servicing costs
• a minimum set of optional equipment on the aeroplane, often excluding modern conveniences such as ACARS, further reducing costs of acquisition and maintenance
• 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)
• unreserved seating (encouraging passengers to board early and quickly)
• 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 utilization of aircraft)
• simplified routes, emphasizing point-to-point transit instead of transfers at hubs (again enhancing aircraft utilization and eliminating disruption due to delayed passengers or luggage missing connecting flights)
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