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    Budget airlines use several business tactics to keep costs low and fares affordable. They operate fuel-efficient planes bought after disasters at lower costs. They buy oil in bulk to get wholesale discounts. While ticket fares are low, budget airlines make money through expensive add-ons like baggage and food fees. They keep operating costs low by employing fewer workers with low salaries who perform multiple tasks. Budget airlines also save money by flying from smaller airports near major cities rather than larger hubs to avoid higher airport tariffs. Through these techniques, budget airlines have been very profitable and seen rising revenues, posing challenges for larger airlines.

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    Budget airlines use several business tactics to keep costs low and fares affordable. They operate fuel-efficient planes bought after disasters at lower costs. They buy oil in bulk to get wholesale discounts. While ticket fares are low, budget airlines make money through expensive add-ons like baggage and food fees. They keep operating costs low by employing fewer workers with low salaries who perform multiple tasks. Budget airlines also save money by flying from smaller airports near major cities rather than larger hubs to avoid higher airport tariffs. Through these techniques, budget airlines have been very profitable and seen rising revenues, posing challenges for larger airlines.

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    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
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    3 views9 pages

    Budget

    Uploaded by

    Boston Sports
    Budget airlines use several business tactics to keep costs low and fares affordable. They operate fuel-efficient planes bought after disasters at lower costs. They buy oil in bulk to get wholesale discounts. While ticket fares are low, budget airlines make money through expensive add-ons like baggage and food fees. They keep operating costs low by employing fewer workers with low salaries who perform multiple tasks. Budget airlines also save money by flying from smaller airports near major cities rather than larger hubs to avoid higher airport tariffs. Through these techniques, budget airlines have been very profitable and seen rising revenues, posing challenges for larger airlines.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
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    of 9

    By Siddharth

    The Principle of
    the Budget Airline

    Budget airlines
    use small aircraft
    to transport
    people across a
    small distance for
    a cheap fare. With
    the help of a few
    business tactics,
    look for this
    aviation sector to
    be on the rise…
    Oil

    Budget airlines usually operate


    flights that have very good
    efficiency rates. Most of these
    planes are bought at lower
    costs right after a disaster. For
    example, Ryan-Air ordered 146
    planes right after 9/11. High
    efficiency rates mean that they
    have to spend less money an
    fuels, lowering the overall
    ticket costs. Also, they buy oil
    at huge volumes. The
    wholesale rate gives them a
    good discount. This therefore
    leads to lower fares.
    Add-ons

    Budget airlines usually offer


    low ticket fares but there are
    always a number of expensive
    add-ons. For example, Ryan-Air
    adds a 40 euro penalty for not
    printing out a boarding pass.
    Also, food and beverage
    services on these flights are
    usually not complimentary, and
    have to be purchased. These
    small add-ons eventually
    increase the margin of revenue
    for the company substantially.
    Attractive Fares

    Budget airlines have very


    attractive pricing. For example,
    Easy-Jet operates a London-
    Nice service that only costs 9
    euros. These rock-bottom fares
    cause people to flock to these
    airlines.
    Fewer Employees with
    Low Salaries

    By operating only one type of


    plane, companies like Ryan-Air
    don’t need very qualified
    mechanics, reducing the
    salaries they pay. By making
    the passengers print out their
    own boarding passes, they save
    money on salaries. Most
    budget airline employees are
    young and don’t have a high
    salary expectation for
    themselves. The employees
    that work for budget airlines
    usually have to do multiple
    jobs. For example, a flight
    attendant may have to also
    need to clean the plane before
    the passengers board. By doing
    this, budget airlines are able to
    lower production costs and are
    able to offer cheap flights.
    Airports

    Most budget airlines avoid


    airport tariffs by flying out of an
    airport near a major city, not an
    airport inside a major city. For
    example, most European
    budget airlines fly out of
    London Luton, London Gatwick
    or London Stanstead rather
    than London Heathrow. They
    usually brand their smaller
    airports as theirs, to gain
    authority of the airport
    management. Furthermore,
    these companies make sure
    their planes are always in the
    air, making money. Also, most
    budget airlines do not have the
    concept of hubs, saving costs.
    In conclusion, with the help of the above business techniques,
    budget airlines are very profitable. The revenue they make are
    significantly on the rise. Major airlines are having a lot of trouble
    competing with these airlines. United tried to make a budget
    airline called Son but failed miserably and had to declare
    bankruptcy .

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