Low Cost Airlines
Introduction of the industry
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. India's first low-cost airline, Air Deccan started service on August 25, 2003. The airline's fares for the Delhi-Bangalore route were 30% less than those offered by its rivals such as Indian Airlines, Air Sahara and Jet Airways on the same route. The success of Air Deccan has spurred the entry of more than a dozen low-cost airlines in India. Air Deccan now faces stiff competition from other low-cost Indian carriers such as Kingfisher Airlines, Spice Jet, Go Air and Paramount Airways. The industry is growing with a whopping growth rate of over 40% and it commands nearly 30% of the market share in the Indian civil aviation sector. The players of the industry are not only increasing their market share but increasing the market base as a whole and that is very evident from the surveys conducted by the airlines companies which reveal that a majority of their customer are either first time fliers or have switched over from railways. Thus the one billion dollar plus population has loads of opportunity for the low cost airlines.
Business model
Typical low-cost carrier business model practices include:
• a single passenger class
• a single type of airplane, commonly the Airbus A320 or Boeing 737 (reducing training and servicing costs) except for Song (airline) Boeing 757 and Kingfisher Airlines order of the A380.
• a simple fare scheme (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 (avoiding air traffic delays and taking...
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