The above mentioned examples in the low cost airline history share one common feature. They are either based on or have used a ‘modified’ version of the Southwest low cost model of operation.
The success of low cost airlines can be attributed to what is called a low-cost leadership position strategy adopted by these airlines. According to Flouris & Oswald (2006), “The goal of a low-cost leader is to contain the costs to the lowest relative to industry rivals and, in essence, to create a sustainable cost advantage over the competition. The key to this strategy is that cost is not equal to price”. The original low cost model is designed based on this concept and as outlined in Alamdari & Fagan (2005, p.378), the original South West low cost model consisted of the following:
Fares : Unrestricted and low price
Network: Point to point high frequency routes
Distribution: Travel agents and call centres, no tickets
Fleet: High utilisation, same type of aircraft across the fleet
Airport: Secondary airports with short turnaround times
Sector length: Short (around 400nm)
Staff: High productivity with competitive wages and profit sharing
The above mentioned examples in the low cost airline history share one common feature. They are either based on or have used a ‘modified’ version of the Southwest low cost model of operation.The success of low cost airlines can be attributed to what is called a low-cost leadership position strategy adopted by these airlines. According to Flouris & Oswald (2006), “The goal of a low-cost leader is to contain the costs to the lowest relative to industry rivals and, in essence, to create a sustainable cost advantage over the competition. The key to this strategy is that cost is not equal to price”. The original low cost model is designed based on this concept and as outlined in Alamdari & Fagan (2005, p.378), the original South West low cost model consisted of the following:Fares : Unrestricted and low priceNetwork: Point to point high frequency routesDistribution: Travel agents and call centres, no ticketsFleet: High utilisation, same type of aircraft across the fleetAirport: Secondary airports with short turnaround timesSector length: Short (around 400nm)Staff: High productivity with competitive wages and profit sharing
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