The ‘No Frills’ Airline concept is not a phenomenon of the last couple of years in the Airline industry even if the recent development of these carriers in Europe might lead to this conclusion. The first Airline operating under the ‘No Frills’ concept started in the beginning of the 1970ies in the USA and it took quite a while until this concept was followed by Airlines in Europe, South America and Asia/Pacific. There were a lot of ‘No Frills’ Airlines coming and going again in the last 33 years. To start an Airline and define it as a ‘No Frills’ carrier seems to be not enough to be successful in the market for a lot of years. Only a very restricted number of these Airlines were successful and profitable for years. The question is why. What are the reasons why some ‘No Frills’ Airlines are surviving and others do not. This is one of the questions which will be answered in this paper.
The low cost and low price strategy which is the basis for the ‘No Frills’ concept in the Airline Industry is a business concept which was described by Porter as one of the basic strategies a company can follow. This strategy was followed by a lot of companies in other industries like ALDI, IKEA and Toyota. These companies followed successfully the cost leadership strategy but adopted also other strategic goals to their business concept like quality and corporate culture items. The cost leadership strategy is nothing new but how can it be reached and maintained in the Airline industry? What are the prerequisites and the required activities to be successful in this industry with this concept? In this paper answers to these questions will be given.
Table of Content
1. Introduction
2. Definition of the ‘No Frills’ concept
3. The development of the ‘No Frills’ Airlines from the 1970ies until now
3.1. Pioneers and Followers in the USA
3.2. The development in Europe
3.3. The beginnings in South America
3.4. The development in Asia / Pacific
3.5. The first efforts between continents
3.6. Summary
4. Analysis of the success factors of ‘No Frills’ Airlines
4.1. Network
4.2. Operation
4.3. Fleet
4.4. Sales and Pricing
4.5. Customers and Competitors
4.6. Corporate Culture and Human Resource Management
4.7. Summary
4.8. Checklist for Airline Start-Ups in the ‘No Frills’ business
5. Applicability of the ‘No Frills’ concept to specific Airline Businesses
5.1. A ‘No Frills’ intercontinental Economy Class business model
5.1.1. Description of the business model
5.1.2. Applicability of the Network
5.1.3. Applicability of the Operation
5.1.4. Applicability of the Fleet
5.1.5. Applicability of Sales and Pricing
5.1.6. Applicability of Customers and Competitors
5.1.7. Conclusion
5.2. A ‘No Frills’ intercontinental Business Class business model
5.2.1. Description of the business model
5.2.2. Applicability of the Network
5.2.3. Applicability of the Operation
5.2.4. Applicability of the Fleet
5.2.5. Applicability of Sales and Pricing
5.2.6. Applicability of Customers and Competitors
5.2.7. Conclusion
5.3. Further fields for research
6. Summary
Research Objectives and Themes
This thesis examines the success factors of the ‘No Frills’ airline business model and investigates the feasibility of adapting this concept for intercontinental routes. The research aims to identify whether core drivers of low-cost operations—such as point-to-point networks and simplified cost structures—can remain effective when applied to long-haul, intercontinental services.
- Evolution of the ‘No Frills’ airline industry in global markets
- Core success factors of low-cost carriers (Network, Operation, Fleet, Sales)
- Strategic importance of cost leadership in airline management
- Applicability of low-cost concepts to intercontinental economy and business class models
Excerpt from the Book
The Point-to-Point Network Structure
The Point-to-Point network structure is based on the principle that all offered O&Ds are connected with a direct flight. In this structure no central hub exists where passengers are flown into and decanted on other flights to their final destinations. In case a passenger wants to go from origin ‘E’ to destination ‘L’ he has to buy a ticket from ‘E’ to ‘H’ and a second one from ‘H’ to ‘L’. The network structure of the ‘No Frills’ Airlines is not prepared to offer the customer a synchronised network with a big number of possible O&Ds. It is just based on direct connections between cities. The purpose of this structure is not a profitable network of the Airline in total. Every city pair which is served vice versa has to be profitable in itself and can be considered as a single profit centre within a ‘No Frills’ Airline.
In respect to costs this network structure has significant advantages compared to a ‘Hub and Spoke’ network and cost reduction is the main purpose of a ‘No Frills’ Airline in order to be able to offer low fares. The advantages of this network system are all resulting in the utilisation of the operated aircraft. The more an aircraft is used per day the lower the unit costs per seat are and the lower the offered fares for a flight can be. So the daily utilisation of the fleet is the purpose of the ‘No Frills’ Airlines and the Point-to-Point network structure supports this purpose by the following facts: No waiting for connecting flights. The departures of flights do not have to be synchronised with incoming flight. There are no passengers expected coming into a destination and continuing on another flight as booked. There is no risk that a departure of a flight is delayed because of a delayed arrival of another flight. The flight scheduling for each city pair can be done independently. This increases the utilisation of aircraft because delays do not sum up.
Summary of Chapters
1. Introduction: Presents the scope of the thesis, outlining the historical development of the ‘No Frills’ concept and the research question regarding its profitability and survival.
2. Definition of the ‘No Frills’ concept: Explains the terminology and core business approach that differentiates ‘No Frills’ airlines from traditional flag carriers and charter airlines.
3. The development of the ‘No Frills’ Airlines from the 1970ies until now: Traces the historical growth of low-cost airlines across the USA, Europe, South America, and Asia/Pacific, highlighting key pioneers and successful market entries.
4. Analysis of the success factors of ‘No Frills’ Airlines: Analyzes the five operational pillars—Network, Operation, Fleet, Sales/Pricing, and Customers/Competitors—that drive the competitive advantage of low-cost carriers.
5. Applicability of the ‘No Frills’ concept to specific Airline Businesses: Investigates the theoretical and practical feasibility of applying low-cost success factors to intercontinental economy and business class business models.
6. Summary: Concludes that while the ‘No Frills’ model is highly successful in continental markets, its application to intercontinental air travel significantly reduces cost-saving potential and remains largely unviable.
Keywords
No Frills, Low-Cost Carrier, Point-to-Point Network, Cost Leadership, Airline Management, Fleet Utilization, Intercontinental Flights, Revenue Management, Yield Management, Aviation Deregulation, Business Model, Aircraft Turnaround, Secondary Airports, Airline Start-ups.
Frequently Asked Questions
What is the core focus of this thesis?
This work fundamentally explores the ‘No Frills’ business model, analyzing how low-cost airlines achieve profitability and whether these specific success drivers can be replicated in different market segments, particularly intercontinental travel.
What are the primary themes discussed in the paper?
The research concentrates on the five pillars of the low-cost model: network structures, operational efficiency, fleet management, sales and pricing strategies, and the specific impact of customer and competitor dynamics.
What is the main research objective?
The primary goal is to determine if the ‘No Frills’ concept, which thrives on short-haul point-to-point operations, can successfully be adapted to long-haul intercontinental routes without losing its cost-leadership advantage.
Which methodology is employed in this research?
The author performs an analytical study based on existing literature, industry magazines, and comparative data of successful low-cost carriers like Southwest Airlines, Ryanair, and easyJet to derive a checklist for airline start-ups.
What topics are covered in the main section of the paper?
The main section investigates the transition of the ‘No Frills’ concept from continental to intercontinental operations, critically evaluating why past attempts have failed and analyzing the structural limitations of applying standard low-cost metrics to long-haul flights.
What keywords characterize the research?
Key terms include 'No Frills' model, cost leadership, point-to-point networks, intercontinental viability, and operational efficiency within the aviation industry.
Why are intercontinental 'No Frills' models deemed problematic?
The thesis argues that on intercontinental routes, non-controllable costs (like fuel and overflight royalties) increase and the inability to achieve high daily aircraft utilization rates through multiple short legs negates the cost-leadership advantage found in continental operations.
Does the author recommend an intercontinental Business Class 'No Frills' model?
No, the author concludes that a Business Class 'No Frills' model is inherently contradictory, as the premium product requirements (seats, catering, entertainment) drive up costs that are incompatible with the strict low-cost strategy required to achieve the 'No Frills' status.
- Quote paper
- Sven Brueninghaus (Author), 2004, Applying the 'No Frills' concept to other specific Airline Businesses, Munich, GRIN Verlag, https://www.grin.com/document/23446
