The Five Success Factors of Running a Budget Airline

Question 4a

The five success factors of running a budget airline are as follows:

Flight plan: The main target market for the low cost carries are the short-haul to medium-haul. Mainly they provide connection to cities with a high route traffic density by point-to-point services from secondary airports with high frequencies and short turnaround times. To work economically either the number of passengers willing to fly can be enhanced significantly by the low cost carrier in order to get the appropriate load factor or the traffic density of a city has to be very high. Therefore the short turnaround times from about 20 minutes the routes can be flown with a very high frequency. As a result low cost carriers have a high aircraft and crew utilisation and therefore lower unit costs (Doganis, 2002). In order to avoid a direct competition with the full cost carrier serving the same destination, low cost carriers often choose secondary airports which are easy to reach from major cities. This also has the advantage of lower airport charges and good available slots (Maurer, 2003).

Labour costs: “For most airlines wage costs and associated social security and pension payments for staff represent the largest single cost element” (Doganis, 2002, p.115). They can save by Fly with the minimum staff required, minimize the proceedings and overnights, minimize social security payments and Avoid trade unions federations.

Sales distribution: “Ticketing, sales and promotion represent around 14 per cent of the total operating costs of scheduled airlines of ICAO member states…” (Doganis, 2002, p.143). To save on distribution cost, low cost carriers do not require expensive ticket facilities like travel agencies which claim commissions but sell their tickets mainly through their own reservation system like the internet or call centres. Thus saving money through the benefit of electronic ticketing which makes the ticket-less travel possible.

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