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Cost Reduction Strategies in Low-Cost Carrier Models: A Comparative Analysis with Global Network Airlines

A comparative analysis of cost-saving strategies in budget airlines vs. global carriers.

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    Cost Reduction Strategies in Low - Cost Carrier Models: A Comparative Analysis with Global Network Airlines Choose one element of archetypal low - cost - carrier business model and Explain how it reduces cost compared with a large international network airline. Why do global network carriers not incorporate this element in their business model Answer 1: Porter five forces analysis is a framework for industry analysis and business strategy development. It draws upon industrial organization (IO) economics to derive five forces that determine the competitive intensity and therefore attractiveness of a market. In airline industry, the strongest force is “bargaining power of suppliers”. All the airline companies are dependent on aviation fuel. Airlines fix the prices of their ticket on the basis of global aviation fuel as major portion of expenses of airline industry consists of oil bill. Airline industry has no control on the price of aviation fuel. The price of the

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