The Reasons for the Growth in UK Low-Cost Airlines - Coursework Example

Briefly analyse the reasons for the growth in UK low-cost airlines in recent years and discuss the implications for the tourism sector as a whole Contents Contents 2 Introduction 3 Selection and review of relevant source material 3 Discussion 4 Reasons for the growth of low-cost airlines 4 Market growth trend of low cost airlines 6 Low cost airlines implications on tourism sector 7 Conclusion 9 References 10 Introduction UK is experiencing huge growth and development in its low cost airlines industry in the recent years. This growth of low cost airlines has become significant factor is expanding the network of airlines in UK. With the increase of low cost flights the airline industry of UK is acquiring more customers. Many companies are developing their business in the airlines industry of UK. As a result the companies of this industry face strong competition. They try to attract customers by maintaining low price of their tickets. The important companies operating in this industry are Easy Jet, Monarch, Ryan Air etc. These companies dominate the market of low cost airlines which has strong impact on the tourism industry of UK. Low cost airlines facilitate the tourists to travel in many places of Europe at a minimum cost and within a short span of time. With the increase of tourists in UK many new tourist destinations have developed in this country. In many ways low cost airlines enhance the growth of tourism industry of UK. Selection and review of relevant source material Materials for this case study are selected and collected from various secondary sources line book, journals, websites etc. Based on the these sources detailed analysis is done for understanding the reasons for the development of low cost airlines in UK and its implications on tourism sector. Views of some authors are highlighted here for analysing the topic. According to the author Dobruszkes, low cost airlines have become vital part in the growth and development of tourism industry in UK. The author says that there are many reasons for the development of low cost flights. One of the important reasons is to attract more customers. The companies operating in this industry mainly follow cost leadership strategy for gaining more customers. By lowering their price the companies not only attract European customers but also attract customers from different countries (Dobruszkes, 2006). As per the authors Mason and Alamdari, many foreign people are coming to UK for spending their holidays in this country in the recent years. Many of them do not have the capacity to spend their money by travelling through costly airlines. But these tourists want to travel to different places of UK within short span of time which is only possible by travelling through flights. Therefore there was a need for low cost airlines in UK market. Many companies of airlines industry were able to understand this need and they started focusing on developing the service of low cost airliners. By developing low cost airlines the flight companies are able to satisfy the needs of these tourists. This helps the company to generate good revenue. The authors also stated that the recession and financial crash in UK have impacted the airlines industry very negatively. The airlines companies were losing its customers. People became very concerned about their money. They were not willing to spend much on air tickets. This influenced the growth of low cost airlines in UK. By maintaining low cost the airlines company were able to generate their revenue (Mason and Alamdari, 2007). Discussion Reasons for the growth of low-cost airlines There are various reasons for the growth and development of low cost airlines in UK. These reasons are as follows: High Competition: The airport industry of UK experiences high level of competition after trade liberalization and globalisation. Many new companies are taking part in proving the service of airlines in the market of UK. The country has huge number of customers who are interested to experience the services of low cost airlines. This high demand for low cost airlines encourages various airlines companies of UK to cut down their various costs (Swarbrooke, 2002). Economics of density: In the recent years the airlines companies of UK are trying to generate more revenues by increasing the number of flights and reducing the time gap between flight arrival and departure. This helps the companies to provide more flight services to the passengers. As a result by reducing the ticket price of flights the companies are able to increase their profit. Economics of density helps the company to reduce its costs by units (Dunn, 2011). Therefore by maintaining economics of density the airlines companies are able to provide services to its passengers and also able to satisfy its targeted customers. Attracting new customers: The low cost model of East Jet, Monarch and Ryan Air has facilitated these companies to increase its power of customer acquisition. Presently most of the middle class people of UK are very much sensitive about price. They prefer low cost transport for going to different places. This type of customers is not concerned about the service quality or facilities they get within the aircrafts. They are more concerned to save time by travelling through flights which they can afford. Increase in travel frequency: Many people travel in UK for business or tourism purposes. Even the people residing in UK are also travelling frequently to different places of the country various reasons. So the low cost airlines service was developed for facilitating the customers. The growth of this airline increased the number of passengers in airlines industry of UK (Barrett, 2004). Busy lifestyle of people: In UK most of the people live a very busy lifestyle. For them time is equivalent to money. They want to save time as much as possible. For this reason they prefer flight as their mode of transport for travelling to various places. Low cost airlines are able to provide them efficient services which satisfy this type of passengers. This enhances the growth of low cost airlines (Francis, 2003). Financial crisis: After the recession and financial crisis of Europe the people of Europe became very much price sensitive. The recession had a very negative impact on UK economy. Spending capacity of people decreased as a result most of the people were not been able to travel by the costly flights such as British Airways. The airline industry was losing customers for this reason. This influenced the growth of low cost airlines. Still now people are willing to travel by low cost airlines for saving their money (Gillen and Lall, 2004). The cheap fare of low cost airlines matches with their spending capacity. So they tend to take the service of low cost airlines. Market growth trend of low cost airlines In the mid of 1990, development of low cost airlines started in Europe. Globalisation and trade liberalization had influenced this growth to a large extent. From the very initial stage the budget or low cost airlines are able to capture good amount of market share and customers. Day by day the popularity of low cost airlines has increased a lot. With the help of low cost flights the airline industry of UK is able to increase its customer base (Williams, 2001). Slowly Ryanair, Easy Jet, Air Berline and some other low cost airlines were able to reach maximum number of customers. More low cost airlines companies entered in the market of UK which increased the competition. The airlines company in this industry competes with each other on the basis of price and the routes they cover (Tretheway, 2004). This diagram shows that from 1992 the passenger base of low cost airlines has gradually increased. This influenced the growth of low cost airlines industry in UK. From 1992 till tow large number of European people prefer low cost airlines for saving money and also time. The growth of low cost airlines has significantly increased from the year 1996. In this year both Easy Jet and Ryan Air have started their business and expanded the network of airlines industry (Morrison, 2004). In the present UK market there is high demand for low cost flights. Therefore it is still expected that there is a large scope for low cost airlines company to enhance their business and increase their revenue (Doganis, 2001). Low cost airlines implications on tourism sector Low cost airlines have created strong impact on tourism sector of UK. This type of airline companies has facilitated many tourists to come to UK and explore its different beautiful locations. The low cost airlines travel through many routes. For this reason many new tourist destinations have developed (Dobruszkes, 2005). People are able to reach many places within a short span of time. Tourists from different countries are able to come to UK by spending minimum amount of money as their travelling expenses. Therefore low cost airlines are able to reduce the travelling expense of the passengers. This helps UK to attract more tourists. The cheap rates of the flights influence many travellers to visit UK frequently. This enhances the growth of tourism industry in this country. In a report of European Travel Commission it was published that in the years 2005, 2006 and 2007 low cost flights played a major role in the growth and development of UK’s tourism industry (Wintzer, 2007). Many tourists came to UK for spending their short vacations. (This chart shows the number of trips took place in UK for low cost airlines from the year 2004 to 2010) Low cost airlines have helped the tourism industry of UK to generate more revenue by its weekend, short trip tourism (Simerson, 2011). These airlines companies also have tie ups with hotels of UK. The passengers of these low cost airlines company can purchase tickets and also can book their hotel room, hire cars or check travel destinations from the websites of these airlines company. The low cost airlines of UK also support the cultural tourism of this country. This encourages many tourists from all over the world to experience cultural tourisms of UK. The low cost airlines company of UK have designed their routes for carrying travellers to various tourists’ destinations of UK. This helps these companies to acquire more number of customers and create positive impact on tourism industry of UK. For example many tourists’ destinations of Norway, Germany, Sweden, Belgium etc have experienced large number of tourists in the recent years with the development of low cost airlines (Proctor, 2014). With the development of new tourist destinations, many hotels have developed in UK. This helped the tourism industry of UK to generate more revenue and entertain more tourists. Conclusion Earlier the cost of flight tickets was high in UK. Only upper class and upper middle class people used to travel in flight. But present the airlines industry of UK has large number of customers. Different types of passengers travel in the flights of UK. This change has happened for the development and growth of low cost airlines in UK. These airlines facilitate the passengers to travel in different places of this country at a very minimum price. This case study highlights different reasons for the establishment and growth of low cost airlines in Europe. Low cost airlines companies face tough competition in UK market. The low cost airlines companies have major contribution in the growth of tourism sector of UK. New routes are developed for the growth of low cost airlines. This has also influenced the growth of tourist destinations in UK. References Barrett, S., 2004. How do the demands for airport services differ between full-service carriers and low-cost carriers? Journal of Air Transport Management, 10(1), pp. 33–39. Dobruszkes, F., 2006. An analysis of European low-cost airlines and their networks. Journal of Transport Geography, 14(4), pp. 249-264. Doganis, R., 2001. The Airline Business in the 21st Century. Routledge: London. Dunn. G., 2011. Low Cost Carrier: growth Expectations. [Online]. Available at [Accessed on 29 April 2015]. Francis, G. et al., 2003. Airport–airline interaction: the impact of low-cost carriers on two European airports. Journal of Air Transport Management, 9 (1), pp. 267–273. Gillen, D. and Lall, A., 2004. Competitive advantage of low-cost carriers: some implications for airports. Journal of Air Transport Management, 10 (1), pp. 41–50. Mason, K. J. and Alamdari, F., 2007. EU network carriers, low cost carriers and consumer behaviour: A Delphi study of future trends. Journal of Air Transport Management, 13(5), pp. 299-310. Morrison, W., 2004. Dimensions of predatory pricing in air travel markets. Journal of Air Transport Management, 10(1), pp. 87–95. Proctor, T., 2014. Strategic marketing: An introduction. New York: Routledge. Simerson, B.K., 2011. Strategic planning: A practical guide to strategy formulation and execution. New York: ABC-CLIO. Tretheway, M., 2004. Distortions of airline revenues: why the network airline business model is broken. Journal of Air Transport Management, 10(1), pp. 3–14. Williams, G., 2001. Will Europes charters carriers be replaced by ‘‘nofrills’’ scheduled airlines. Journal of Air Transport Management, 7(1), pp. 277–286. Wintzer, E., 2007. 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