[...] Only due to their rapid success, growth of European aviation is back on the level it was before 9/11. Nevertheless, airline managers are starting to realize that the time of endless growth and success is slowing down or, in the worst case, coming to an end. This for example, has caused easyJet, one of Europe’s largest low-cost carriers, to launch a long-term management programme. The aim is to realize its strength and weakness by scrutinizing the market and to position the airline in a way that substantial long-term growth is still possible. Especially as market consolidation is already taking place and competition is increasingly fierce: The outlook is that the market will be dominated by just two or three low-cost carriers within Europe and some full-service airlines operating world-wide networks.
Strategies must be determined now to find the best market, the right network and competitive costs.
This essay will firstly look at commercial aviation in Europe. Following that will be an analysis of the leading carriers and their business strategies.
Table of Contents
1 INTRODUCTION
2 ANALYSIS OF COMMERCIAL AVIATION IN THE EUROPEAN UNION
2.1 MAIN MARKETS
2.2 MARKET CONSOLIDATION
2.3 LEGAL REQUIREMENTS
2.4 LEADING MARKET PLAYERS
2.5 ANALYSIS OF MARKET PLAYERS
3 STRATEGIES TO BE A SUCCESSFUL LCC
3.1 THE IDEA
3.2 PRICING
3.3 COST STRUCTURE
3.4 NETWORKS AND SCHEDULES
3.5 AIRCRAFT FLEET
4 CLOSING REMARKS
Objectives and Core Themes
This study examines the evolution of the European aviation industry, specifically focusing on the competitive dynamics between legacy full-service airlines and the rising low-cost carrier (LCC) model. The primary research objective is to analyze how LCCs have achieved rapid market penetration and what strategic measures incumbent airlines and LCCs are adopting to ensure long-term viability in a consolidating market.
- The transition from state-dominated aviation to the competitive low-cost model.
- Structural market analysis of European aviation, including passenger growth and consolidation trends.
- Critical examination of successful LCC business strategies, including pricing and cost-cutting measures.
- Comparison of operational models, specifically "Point-to-Point" versus "Hub&Spoke" networks.
- Evaluation of fleet management and its impact on the cost base of European airlines.
Excerpt from the Book
3.3 Cost Structure
LCCs reduce costs primarily by using the Internet as their main channel of distribution. 95% of all easyJet bookings are made via the booking website. Although most have airport sales desks and call-centres, fares will also be higher then. Customers have to pay for the extra service. Usually no paper tickets are issued, a confirmation email with a booking reference must be produced at the check-in counter. Bookings can normally be changed, but only for a fee. Most full-service airlines offer their customers the convenience of booking via travel agencies, call centres, websites and sales desks. Depending on the class, bookings sometimes can be changed for free. Baggage allowance is treated differently among the airlines. For loading purposes each bag is calculated with 13 kilograms, hence representing a great portion of an aircrafts weight. For this reason, some airlines are restricting allowance for checked-in luggage, e.g. Ryanair 15 Kgs, others allow more. Less weight due to less luggage means less fuel used.
The flight itself implies about the same operating costs for any airline. The only way to reduce costs is to increase productivity. This can be achieved by putting more seats in the plane. LH has 126 seats in their A319s, EZY 156 seats.
Above all, planes are operated more hours each day, doing more revenue flights. Therefore LCCs try to minimize turn-around times. US carrier Southwest calculated that they would need 31 more B737s, if they extended ground times by just 10 minutes.
Chapter Summaries
1 INTRODUCTION: This chapter provides an overview of the shifting landscape in European aviation, highlighting the shift from high-cost state-owned carriers to the low-cost model as the industry standard.
2 ANALYSIS OF COMMERCIAL AVIATION IN THE EUROPEAN UNION: This section analyzes market recovery post-2001, identifying key European markets, airport performance, and the ongoing trend of market consolidation among airlines.
3 STRATEGIES TO BE A SUCCESSFUL LCC: This chapter details the core components of the low-cost business model, including aggressive cost-cutting in distribution, network management, and fleet utilization.
4 CLOSING REMARKS: The concluding chapter reflects on the permanence of the low-cost model and discusses the changing value perception of air travel among consumers.
Keywords
Aviation, Low-cost carriers, LCC, European Union, Market consolidation, Hub&Spoke, Point-to-Point, Business strategy, Cost structure, Ryanair, EasyJet, Lufthansa, British Airways, Air travel, Airline management
Frequently Asked Questions
What is the core focus of this publication?
The work provides a comprehensive analysis of the European commercial aviation sector, specifically investigating how the rise of low-cost carriers has reshaped industry competition and business strategies.
Which specific themes are central to this study?
Central themes include market growth, airline consolidation, operational strategies (Point-to-Point vs. Hub&Spoke), cost management, and fleet optimization.
What is the primary research goal?
The aim is to identify the critical factors contributing to the success of low-cost carriers and to evaluate how both incumbents and budget airlines are adapting to a highly competitive environment.
What research methods were employed?
The study utilizes descriptive market analysis, comparative airline case studies, and an evaluation of industry trends based on passenger statistics and reports from 2001 to 2005.
What does the main body address?
The main body breaks down the economic landscape of EU aviation, evaluates the business models of major players like Ryanair and EasyJet, and analyzes operational strategies including pricing, network design, and aircraft utilization.
Which keywords best describe the content?
Key terms include Aviation, Low-cost carriers, Market consolidation, Hub&Spoke, Point-to-Point, and Airline management strategies.
How does the author view the future of Hub&Spoke networks?
The author notes that while Hub&Spoke networks are efficient for managing high passenger volumes, they are vulnerable to "network disruptions" during poor weather, whereas Point-to-Point is perceived as a simpler, more robust strategy for modern European LCCs.
Why did EasyJet avoid purchasing Deutsche BA?
EasyJet explicitly cited the rigidity of German labor laws as the reason for declining the acquisition, as they felt these laws would prevent them from operating their efficient, low-cost business model effectively.
- Citation du texte
- Anne Pleul (Auteur), 2005, How to survive the skies over Europe - European lowcost carriers, Munich, GRIN Verlag, https://www.grin.com/document/89308
