European Low-cost Airlines Research Articles

Trends in the development of the air transportation market of Ukraine and influencing factors

Introduction. Given the current complex realities of conducting aviation business in a pandemic, the application of large-scale measures to combat its spread, as well as taking into account the development of liberalization of the air market, analysis of the effectiveness of Ukrainian airlines and identify current trends in Ukraine's air transportation market is an important task. The purpose of the paper is to investigate state of air transportation market in Ukraine in dynamics, to identify current trends and status of national airlines. Results. After the recession of 2014-2015, the volume of international passenger traffic by domestic airlines increased during the period 2016-2019. In 2020, it decreased by 76 %. At the same time, passenger traffic of Ukrainian airlines decreased by 65 % compared to 2019. Over the past five years, Ukraine’s air transportation market has evolved from highly concentrated to moderately concentrated. During this period, domestic airlines were more active in carrying out charter flights, while foreign airlines began to dominate in performing regular and scheduled flights with active participation of leading European low-cost airlines. Analysis of the market share of airlines with the largest volumes of passenger air traffic in air market of Ukraine showed that over past three years there has been a rapid decline in market shares of leading network airlines, both domestic and foreign. There was a rapid growth of market shares of foreign airlines – low-cost carriers. Conclusions. The changes identified in the air transportation market of Ukraine can be explained not only by the consequences of the pandemic, but also by the consequences of air transportation market liberalization. The signing of the Agreement on the Common Aviation Area in September 2021 between Ukraine and the EU will have a direct impact on the development of air transportation market of Ukraine, both in terms of supply and demand. Domestic airlines will be able to benefit from market liberalization only if they increase their competitiveness.

Strategic Behavior of European Low-Cost Airlines: A Review and Economic Analysis

Strategic Behavior of European Low-Cost Airlines: A Review and Economic Analysis

The impact of the internet on the pricing strategies of the European low cost airlines

This study seeks to analyse the price determination of low cost airlines in Europe and the effect that Internet has on this strategy. The outcomes obtained reveal that both users and companies benefit from the use of ICTs in the purchase and sale of airline tickets: the Internet allows consumers to increase their bargaining power comparing different airlines and choosing the most competitive flight, while companies can easily check the behaviour of users to adapt their pricing strategies using internal information.More than 2500 flights of the largest European low cost airlines have been used to carry out the study. The study revealed that the most significant variables for understanding pricing strategies were the number of rivals, the behaviour of the demand and the associated costs. The results indicated that consumers should buy their tickets before 25 days prior to departure.

Explanatory Analysis of Ancillary Revenues: Case Study of Three European Airlines

This paper quantifies an impact of ancillary revenues on changes of airlines total revenues using the data of three European low-cost airlines during the period from 2006 to 2011. The analysis reveals that ancillary revenues are important in generating total revenues in a low cost airlines group in terms of dynamics and subsequent influence on profit/loss result. The research findings confirmed that ancillary revenues influenced changes of total revenues significantly achieving in prevailing cases double-digit percentage share in the changes of total revenues expressed as a whole. So, quantified impact of ancillary revenues dynamics on dynamic of total revenues is undoubtly important for overall dynamics of airlines total revenues. Our analysis based on quantitative approach of explanatory analysis also clearly identified ancillary revenues as pro-operational profit driver through its positive and not marginal impact on dynamics in total airlines revenues. This disclosure is in line with general assumption of considerable role of ancillary revenues in low cost airlines economics.

Frequent Flyer Programs and Low-cost Airlines: Ongoing Hybridization?

This paper provides further evidence of on-going hybridization between airlines business models focusing on frequent flyer programs (FFPs) which were viewed as a typical component within traditional concept of doing business in air services. Confronting list of European low cost airlines which in 2005 had not implemented FFPs we found that eleven airlines within the group analyzed started to use them after 2005. We revealed diversity among FFPs of low cost airlines which confirms a broader role of FFPs out of pure customers loyalty issues covering also issues like product policy, price policy and policy of horizontal cooperation. We discovered main difference between older and newer FFPs of low cost airlines in collecting and rewarding options with regard to services of partnership airlines as well as in implementation of membership levels and purchase of credited units. Evolutionary changes towards mature schemes of FFPs are predicted for low-cost carriers.

Grounded: Characterising the market exit of European low cost airlines

The aim of this paper is to undertake a comprehensive study of low cost carrier (LCC) market entry and exit in Europe between 1992 and 2012. In the 20 year period between 1992 and 2012, 43 LCCs have taken advantage of the progressive liberalisation of the European aviation market and commenced scheduled flight operations within the continent. Of these 43, only 10 remain operational, a failure rate of 77%. This paper contributes to extant literature on LCCs by examining the market entry, business practices, operating longevity and fate of failed operators to characterise European LCC market exit. Drawing on the findings of a detailed continental-wide study, the paper identifies that an airline's start-up date, the nature and size of its operation and the size and composition of its aircraft fleet are key factors which influence LCC success and failure. The implications for both European and emerging LCC markets are discussed.

Rivalry amongst European low cost airlines: Are shareholders enjoying the game?

We develop a model of quantity and price competition for low cost airlines based on announcements of new routes and their impacts on the announcer and on its rival. We find that both firms’ profits may rise or fall as a result of an announcement of new routes, depending on launching costs for the announcer, and on whether market expansion or market substitution is dominant for the rival. We present an empirical study for two European low cost airlines that shows asymmetric behaviour; while EasyJet announcements have positive effects on Ryanair’s share price, the opposite is does not occur. This suggests that an airline’s reputation for reacting in response to rivals’ announcements may affect the stock market and may thus affect announcement behaviour.

An analysis of European low-cost airlines and their networks

The growth of low-cost carriers (LCCs) is currently focused on the Western European market, where they represent the most determining factor in the evolution of airline networks. In this area, they stand for 18% of the total air transport supply according to seats. Limited to short and medium haul flights, networks are not too concentrated (no hubs). They are North–South, and compete with—when they have not replaced—some charter routes. The use of air freedoms beyond the fourth is still limited, but exclusive routes are a frequent phenomenon linked to the option for secondary (urban or regional) airports and/or niches. Finally, low-cost carriers give fresh impetus to point-to-point routes by drawing new networks complementing those of full service network carriers (FSNCs). If no hubs as such can be found in these new networks, significant concentrations characterize the major bases. The geography of low-cost networks is to a large extent the geography of EU air transport liberalization.

Frequent flyer programs for European low-cost airlines: Prospects, risks and implementation guidelines

The continuous growth of passenger numbers masks the fact that the European market for low fare air travel is radically changing. New airlines, takeovers as well as bankruptcies are reflecting strong competitive pressures within the market and from established network airlines fighting back to retain their market shares. European low-cost airlines (LCAs) operate with significant differences in unit costs and most of them are reporting marginal profits or losses. This suggests that many market participants will re-evaluate their business model and depart from aggressive low-cost, no-frills positioning by using service features such as frequent flyer programs (FFPs) to offer something more than simply cheap tickets. The author assesses prospects and problems involved in setting up FFPs and outlines how such a program should be designed for European LCAs to increase customer loyalty and long-term profitability.

An exploratory study into airport choice factors for European low-cost airlines

Low-cost carriers are an increasingly important part of the European aviation industry. Airport choice is a crucial factor in determining their success or failure. While research has been conducted into airport choice factors, their relative rankings have not previously been investigated. This paper addresses this through an exploratory survey of eight European low-cost airlines. The paper finds that demand for low-cost services is the most important choice factor, with aeronautical charges ranked fourth. Further analysis reveals different requirements depending upon airline characteristics. This implies that airport managers need to tailor their service offering to individual low-cost airlines rather than treating the sector uniformly.