how the low cost carriers work - quick overview
TRANSCRIPT
HOW THE LOST COST CARRIERS WORK - QUICK OVERVIEW -
• Low-cost carrier (LCC), Low-cost airline, no-frills, discount, budget carrier, cheap flights They all mean the same: an airline that offers lower fares and fewer amenities and services to its passengers
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• Southwest Airlines is considered the ‘parent’ of LCC’s, flying since 1971
• Goal: offer cheap airfares to travelers
• Nowadays LCC’s operate in most major markets of the world
THE ‘PARENT’ OF LOW COST CARRIERS
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• PRINCIPLE: cutting costs in order to give customers a low price product with the bare essentials
THE LOW COST CARRIER BUSINESS MODEL
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• Priority boarding
• Reserved seating or seat choice
• Meal, snack or beverage services
• Limited or no in-flight entertainment services
• Few, if any, ticket refund options
SERVICES NOT TYPICALLY OFFERED
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• Standardized fleet of aircraft reduces training and maintenance costs
• Non-essentials features are removed
• Secondary airports with lower landing fees and marketing support
• Rapid flight turnaround
• Online ticket sales and check-in
• Baggage charges
• Charges for all services
CONTAINMENT PRINCIPLES
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Who benefits if all these services are eliminated?
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• LOW PRICE: travelers can save between 50-80% on air fare
• ONE-WAY TICKETS: some airlines charge extra for one-way tickets, some LCCs sell air tickets ‘a la carte’
• PRICE BENEFITS: for traveling in off peak hours or red-eye flights
• FREQUENT BIG DISCOUNT PROMOTIONS
PROS
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• HIDDEN FEES: taxes, insurance costs, baggage, etc
• EXTRA CHARGES: for not using online ticket sales, check-in, reserved seating
• LESS CONVENIENT SCHEDULES: may be limited to non-peak hours or days
• NO REFUNDS: rescheduling can be costly
• BAGGAGE RESTRICTIONS: carry-on luggage, fees for excess baggage
• ‘LESSER’ AIRPORTS: secondary less-used airports
CONS
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TICKET PRICE is important but other services influence customers to choose an LCC like: • FEES: not all LCCs are ‘fee heavy’
• AIRCRAFT: some fly new planes because they are cheaper to operate overall than 2nd hand craft
• SEATING COMFORT: LCC JetBlue has the largest pitch and seat area of either low cost or legacy airlines
SURPRISES IN CUSTOMER SATISFACTION
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• Endless hours chasing lowest fares doesn’t necessarily mean a win
• Savvy travelers consider factors like restrictions, price, services and amenities available when deciding
• But low cost carriers CAN BE THE BEST CHOICE FOR YOU!
STRIKING A BALANCE
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