Sustainability and Growth of Low Cost Airlines: An Industry Analysis in Global Perspective

Abstract

The main objective of the study is to predict the sustainability of low cost airlines and to identify the future growth options. For the purpose of this research, a “split halves” technique of piloting was considered, whereby two small groups of respondents were asked to fill in the questionnaires and their results were compared in order to ensure if the questions were understood by them in the same manner. Eight in depth interviews were conducted both face to face and over telephone. Customer service analysis also was conducted through survey from the customers at London Stansted and Gatwick Airports traveling to numerous destinations on low cost carriers. As a large number of data has been collected through interview and questionnaire survey, data are also analyzed on a deductive manner based upon the importance and significance of achieving the research objectives. Low Cost Carriers (LCC) have developed their value chain and strategies with a focus on cost reduction in comparison to network carriers who also focused on excellent customer service. Industry specialists and consumers both believe that LCC have benefited the industry by providing low fares and made air travel affordable. However both set of respondents also agree on the need for focus on Client Relationship Management (CRM) as a means for being sustainable. Industry specialists believe that LCC should revolve around the LCC basic model rather than a complete transformation into Full Service Carrier (FCC). LCC need to select a need based outsourcing to reduce their unnecessary operational costs. The research concludes with recommendation that LCC’s should formulate cost differentiation strategy for future growth and sustainability.