Factors Stimulating the Growth of Budget Airlines
At present, budget airlines have become very popular. An increasing number of people travel by airplane as it is convenient and it is not expensive anymore. One of the major reasons why the budget airlines are so popular is, of course, the low price (Vink 2009). Traveling by airplanes is now more affordable. The second factor that affects the popularity of budget airlines is the rise in potential customers’ income. People in developed countries earn enough to travel by plane. Moreover, people in developing countries earn more and start travelling more. Finally, budget airlines contribute to development of cities’ infrastructure as they make airports more profitable due to the frequency of flights and the number of passengers (Kotler et al. 2008). These are the three major factors that stimulate the growth of budget airlines.
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Europe’s New Budget Airlines
There are a lot of factors that enable European budget airlines to keep their prices low. In the first place, their strategy to attract people with low costs and then raise prices to reach the necessary profitability has proved to be successful. Budget airlines do not offer free food onboard. People are ready to get fewer services at a lower price (Kotler et al. 2008). Furthermore, they also order modified airplanes where one toilet is removed and extra seats are put (Kotler et al. 2008). Besides, some budget airline companies decided to cut costs at the expense of maintenance and they claim that the crew can clean everything as the amount of waste is reduced. Apart from that, some companies (e.g. Ryanair) use smaller airports where charges are low. It goes without saying that companies develop a lot of strategies to reduce costs, but these are four major ways exploited by the majority of budget airline companies.
Kotler, P, Armstrong, G, Wong V & Saunders, J 2008, Principles of Marketing, Financial Times/Prentice Hall, Harlow.
Vink, L 2009, Hand-out elasticities, lecture notes distributed in … on … December 2012.