No Frills Airlines

INTRODUCTION

There are two types of airlines which is low cost airlines and the conventional airlines. These two different products having their own regular customers and specific customers demand. There also have advantage and disadvantages for these products.

“No Frills Airlines” meaning frill is about the services or product invented which are non-essential features that already have been removed to make sure the price keep lower than other product. In term by using this frill word, it means refer to the fabric decoration.

As everyone known that, a low cost airline is more customers who use these products compared than conventional airlines. There have their own reason why they keep the price lowest as possible as conventional airlines prices.

These two products absolutely have their strategy to ensure their products are accepted by people around them. They need to analyze data about their product which is they need to know their strength, their weaknesses, their opportunity and also threat for their product.

HISTORY OF LOW COST AIRLINES

The low cost airlines was started in seventies by the American domestic carrier Southwest with the sole objective of offering cheap airfares to the customers. This low cost airlines divided into four continents which is North America, Europe, Australia or New Zealand and Asia. This four continents are offering the airlines with the low cost ticket for their customers.

NORTH AMERICA

From the deregulation in the 1970’s till the early 2000’s the transformation of the low cost concept in the United States can only be described as a series of innovations where many other low cost airlines entered into the market. This also caused some of the major carriers to start their own subsidiaries under the low cost banner in order to regain their lost market share (Francis, Humphreys, Ison & Aicken, 2005, p. 85).

EUROPE

In Europe the low cost concept was originated in the UK and Ireland based on the Southwest model with the introduction of EasyJet and Ryanair in 1995. Their success was attributed to the favorable economic framework that encouraged the low cost airline industry. For example, the deregulation allowed airlines of member states to operate domestically within the European Union. Another Example is low charges at underused airports which increased the passenger numbers going into those airports and finally, their direct sales approach using the internet and call centers (Francis et al, 2005, p.87).

AUSTRALIA/NEW ZEALAND

After the deregulation of the Australian domestic market in the early nineties, airlines such as Compass Airlines and compass Mk II started low cost operations. However they were absorbed into the Qantas group as a result of the financial strength Qantas had over the low cost airline. The only significant low cost innovation came in the form of virgin blue which still continues to operate today.

In New Zealand, although the deregulation movement was implemented in 1984, low cost operations did not start until 1995. However, unlike most other countries it wasn’t in the domestic sector but short haul trans-Tasman flights, started by Kiwi Airlines. The response for this by the New Zealand flag ship carrier Air New Zealand, was to create their own subsidiary Freedom Air to gain a market share in the low cost airline sector. Unfortunately, this creation of Freedom Air combined with the pressure from Qantas drove Kiwi Airlines out of the market. However, “Deregulation within New Zealand has meant that new entrants and particularly large airlines with substantial capital are seeing New Zealand as an attractive market to enter and are viewing the domestic and Trans-Tasman routes as possible revenue earners” (Francis et al, 2005, p.89).