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Low Cost Carrier Airline Abuzar-Ahmed

Low cost carriers or low cost airlines emphasize minimizing operating costs through practices like: operating a single aircraft type to reduce training costs; charging for services normally included by other airlines; using secondary airports; and marketing directly to passengers online to reduce distribution costs. This allows low cost carriers to offer lower fares but fewer amenities than traditional airlines.

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63 views12 pages

Low Cost Carrier Airline Abuzar-Ahmed

Low cost carriers or low cost airlines emphasize minimizing operating costs through practices like: operating a single aircraft type to reduce training costs; charging for services normally included by other airlines; using secondary airports; and marketing directly to passengers online to reduce distribution costs. This allows low cost carriers to offer lower fares but fewer amenities than traditional airlines.

Uploaded by

Noman
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Low Cost Carrier Airline

Lecture 1
Abuzar-Ahmed
Low cost carrier

• Abbreviated as LCC .
• Also known as low cost airline.
• An airline that is operated with an especially high emphasis on
minimizing operating costs and without some of the traditional
services and amenities provided in the fare, resulting in lower fares
and fewer comforts.
• To make up for revenue , with decreased ticket prices, the airline
may charge extra fees – such as for carry-on baggage.
• The term originated within the airline industry referring to airlines
with a lower operating cost structure than their competitors.
Customary practices

• Aircraft: Most low-cost carriers operate aircraft configured with a single


passenger class, and most operate just a single aircraft type, so cabin and
ground crew will only have to be trained to work on one type of aircraft,
however some low-cost carriers choose to operate more than one type and
configure their aircraft with more than one passenger class.

• Bases: Like the major carriers, many low-cost carriers develop one or more
bases to maximize destination coverage and defend their market.  Many do
not operate traditional hubs, but rather focus cities
Continued….

• Non-flight revenue: Low-cost carriers generate ancillary revenue from a variety of


activities, Some airlines may charge a fee for a pillow or blanket or for carry-on
baggage.

• Limit personnel costs: Low-cost carriers intend to be low-cost, so in many cases


employees work multiple roles. At some airlines flight attendants also work as gate
agents or assume other roles, thereby limiting personnel costs.

• Simplicity: Airlines often offer a simpler 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.
Continued….

• Innovative practices: Some airlines resort to very innovative practices.


Many airlines these days work with aircraft manufacturers, but airlines
such as AirAsia goes a step further, working with airports to develop
specially designed low-cost terminals that require far less overhead.
Lower costs are passed on to the airline, and in turn to the customer.

•  Other practices that reduce expenses are the use of UAVs(unmanned


aerial vehicle) for aircraft checkups, tablet PCs instead of logs on paper
(reduces airplane weight), and smart glasses for the pilot.
Structure of operation

• At IATA, a LCC operation is defined as including the following characteristics, at least


to some degree:
• Primarily point-to-point operations
• Short-haul routes, often between regional or secondary airports
• Strong focus on price-sensitive traffic, mostly leisure passengers
• Typically a single service class, with no (or limited) customer loyalty programmes
• Limited passenger services, with additional charges for some services (e.g., on-
board catering)
• Low average fares, with a strong focus on price competition
Continued….

• Different fares offered, related to aircraft load factors and length of time before
departure.
• A very high proportion of bookings made through the Internet.
• High aircraft utilization rates, with short turnaround between operations.
• A fleet of just one or two aircraft types.
• Private-sector companies.
• A simple management and overhead structure with a lean strategic decision-making
process.
Features

• While low-cost airlines differ in service offerings, by definition they feature most of
the following:
• Standardized fleet (lower training, maintenance costs; purchasing aircraft in bulk)
• Absent non-essential features (reclining seats, frequent flyer schemes)
• Use of secondary airports for lower landing fees and marketing support
• Avoidance of airports with high costs
• Rapid turnaround (less time on the ground, more flights per day)
Continued

• Fly also less convenient times of the day, which price sensitive tourists accept (while
business travelers want to fly at times suiting their schedule).
• Online ticket sales to avoid the cost of call centers or agents.
• Online check-in (fewer check-in desks), charge for desk check-in.
• Baggage charges for checked bags to offset baggage handling and loading costs.
• Passenger loading via stairs rather than jetways.
• Use staff for multiple jobs (cabin crew also check tickets at the gate, clean aircraft).
Continued

• Hedge fuel costs (buying fuel in advance when cheaper)


• Charge for all services (including on-board services, reserved seating, and extra
baggage)
• Do not use reserved seating (which slows down boarding), or charge extra for
reserved seating or early boarding.
• Fly point-to-point (passenger transfers to other flights are not accommodated, no
compensation for missed connections)
• Carry little extra fuel (reducing aircraft weight ).

• Outfit plane with cost-cutting modifications, such as winglets.

• Route planning before aircraft arrives at airport (saving time on the ground).

• Market destination services such as hotels and rental cars for commissions.
Thank you

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