During the past 15 years, there has been a considerable increase in the share of air travel within Europe that is carried out by low-cost airlines. These new airlines apply the most drastic cost saving measures in order to drive air fares down to a minimum. This paper will first explore the deregulation process of the European aviation market which was the precondition for the emergence of low-fare carriers in the early 1990s. It will then take a closer look at Ryanair, the current low-cost leader in Europe and describe its history, the elements of this distinct business model, its successes, and also some limitations. The last part of the paper will concentrate on the impact that low-fare airlines like Ryanair have on the aviation market. It will explore the changes on the market that can be expected in the long-run and will pay attention to the question if and how traditional full service carriers can respond to the increased competition.
Table of Contents
- Introduction
- Emergence of Low-Fare Airlines
- Precondition: Deregulation of the European Aviation Market
- Emergence of Low-Fare Airlines in the United States
- Emergence of Low-Fare Airlines in Europe
- The European Low-Fare Leader: Ryanair
- History
- The Business Model
- Success of the Model
- Limitations of the Model
- Impact on the European Aviation Market
- Conclusion
Objectives and Key Themes
This paper examines the emergence and impact of low-fare airlines (LFAs) on the European aviation market. The focus is on Ryanair, the leading LFA in Europe, and its unique business model. The paper aims to explore the preconditions for the emergence of LFAs, the key elements of Ryanair's success, and the potential long-term effects on the European airline industry.
- Deregulation of the European aviation market
- The rise of low-fare airlines
- Ryanair's business model and its impact on the market
- The competitive landscape in the European aviation market
- The future of the European airline industry
Chapter Summaries
- Introduction: The paper introduces the concept of low-fare airlines (LFAs) and their impact on the traditional airline industry. It highlights the rise of LFAs in Europe and the competitive pressures they pose on established carriers.
- Emergence of Low-Fare Airlines: This chapter explores the deregulation process of the European aviation market, which paved the way for the emergence of LFAs. It discusses the role of the European Commission and the impact of bilateral agreements between EU countries.
- The European Low-Fare Leader: Ryanair: This chapter focuses on Ryanair, the leading LFA in Europe, and its history, business model, and success factors. It analyzes the key elements of Ryanair's cost-saving strategies and its impact on the market.
- Impact on the European Aviation Market: This chapter examines the broader impact of LFAs on the European aviation market, analyzing the changes in competition, pricing, and market share. It explores the challenges faced by traditional full-service carriers in adapting to the changing environment.
Keywords
This paper focuses on the European aviation market, specifically low-fare airlines, deregulation, Ryanair, business model, cost-saving measures, competition, impact on market share, and the future of the airline industry.
Frequently Asked Questions
What were the preconditions for the rise of low-fare airlines in Europe?
The primary precondition was the deregulation of the European aviation market in the early 1990s, which ended state monopolies and allowed for increased competition.
What are the key elements of Ryanair's business model?
Ryanair's model focuses on drastic cost-saving measures, including using secondary airports, a uniform fleet, point-to-point routes, and minimal in-flight services to offer the lowest possible fares.
How has Ryanair impacted the European aviation market?
Ryanair and other low-fare airlines (LFAs) have significantly increased their market share, forcing traditional full-service carriers to lower their prices and adapt their own business strategies.
Can traditional full-service airlines compete with low-cost leaders?
Established carriers face challenges in responding to LFA competition, often having to restructure their operations or launch their own low-cost subsidiaries to maintain market relevance.
What are the limitations of the low-fare airline model?
The paper explores potential constraints, such as market saturation, rising fuel costs, and the difficulty of maintaining extreme cost efficiency as the airline grows larger.
Where did the low-fare airline concept originate?
The model first emerged in the United States (notably with Southwest Airlines) before being successfully adapted for the European market by carriers like Ryanair.
- Quote paper
- Frederik Boesch (Author), 2005, The Ryan Air Model - Success and Impact on the European Aviation Market, Munich, GRIN Verlag, https://www.grin.com/document/50631
