Friday, April 9, 2010

Airline Analysis

Legacy airlines show the trend to save money by reducing labor cost, while new entrants have actually increased their labor and aircraft productivity and improving their quality performance.
Labor cost reduction can be counterproductive when they are carried out in away that allows total costs to grow and service quality to decline. They are dominating the market by saving in the right areas
Summing up, low cost carriers who are focused on high quality service and efficiency are ranked higher in customer satisfaction statistics than legacy airlines because they're following the "commitment/partnership relationship" strategy.
Ryanair is taking a different approach by following a "control/avoidance" strategy. Focusing on dominating the competition on a route by route basis through low fares for city pairs with high frequencies, high productivity and short turnaround times, they were able to obtain high profits and reasonable reliability. Their employees are consistently pressured and work overtime. The low cost business model with its focus on keeping costs down (and employees are one of them) seem to be almost expected from costumer because fares are so low. Costumers accept less costumer service in order to fly for cheap.

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