Business strategy of low-cost airline Essay

Case drumhead

Allegiant air hose, a taking US company has implemented several tactics in order to be a low cost air hose. It provides low fees for look intoing luggages, get oning and place assignment which enable Allegiant Air to vie with other low-priced air hoses. Even if Allegiant would supply services in Europe, it would be a dominant low cost air hose and would easy catch Ryan air in footings of lower monetary values. Sing a comparing with other low-priced air hoses, recent statistics show that Allegiant Air in-flight fees rose to 22.7 % excess income from accessory and on board purchases, which takes advantage over Ryan air with 19.23 % income from accessory. Such excess charges during the in-flight service may be an incommodiousness for the riders, but they help maintain the company aloft during the economic crisis.

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Allegiant Air is a low cost air hose which occupies 80 aircraft ‘s. The company ‘s scheme besides intends to accomplish another 300 paths which include flights to Mexico and the Caribbean. Although the air hose leases little air planes in order to salvage cost and to bring forth more net incomes, Allegiant avoids the chief airdromes due to the fact that it is more economically good and since they are non in competition with the large companies. Mr Gallagher, the main sole describes how his company already spouses with other concern and provides bundles, 30 % of which are sold to clients.

Article: Ian Wylie. ( 2009 ) “Tactics of low-priced airline”

Fiscal Timess: Published: October 18 2009 hypertext transfer protocol: //

Case commentary

This article describes Allegiant Air tactics low just service and explains how the company adjust to maintain competitory with other low-priced air hoses and in front of. One of its ends is to sell flights from other air hoses on Allegiant ‘s site in order to increase client consciousness and maintain their laterality as a low menu service. Sing to Mr Gallagher address “Shortly, we should be identifiable to 100m people throughout the US” . “At that point, we can leverage the trade name name and set up all your travel” ( Wylie, 2009 ) .

Gallagher is the CEO ( pull offing manager ) of Allegiant Air and understands that because of the recession some alterations were necessary. Which required analysis of their macro-environment. For illustration they have used PEST analysis tool in order to scan the general and the competitory environment. To better these general environment factors required changeless and structured scanning and monitoring. ( Understanding Strategic Management, Henry 2008 ) .

Using an analytical tool such as porters five forces, one is able to non merely look into their external environment, but they are allowed the opportunity to work the powers of the Porter ‘s five forces by enabling them to fundamentally understand what is needed to be changed in order to derive strategic advantages.

The concern method which companies such as Allegiant Air would hold most likely used is Porter ‘s five forces. This is because they have to to the full analyze their market section of being a low cost air hose and they besides have set specific marks in order to derive competitory advantage over its challengers ( Understanding Strategic Management, Henry 2008:69 ) . For illustration if a new air hose would hold tried to come in into the market service, it would hold been really hard to last unless the new air hose had the ability to vie with the bing grater air hoses such as Allegiant. Therefore, if a new air hose attempts to supply and offer their services, it will confront the menace of entry and whether if enters to the market it will depend of the barriers to entry and the reaction of the bing rivals. It would be really hard to last because Alliance has an organized concern program and offers low monetary values tickets for its specific paths, as resulting, this will move the new air hose to discourage its services from come ining the market because it will be hard to last and vie.

In footings of generic competitory scheme, Allegiant concern scheme ensures a tantrum between its scheme and the ( CSFs ) Critical Success Factors of the industry and besides strives for competitory advantage over its challengers. ( Pathfinder 2006:119 )

Allegiant Air has identified the fact that in order to prolong their competitory advantage, it now offers another 300 paths and intends to wing to Mexico and the Caribbean. Their concern scheme is to publicize their services on others companies

and selling flights from other air hoses on the allegiant site. Besides, allegiant has signed up to a wages short term contract footing and utilize airdrome employers on monthly rentals. In instance any specific service weakness, due to short-run contract which Allegiant posses they have the ability to stop it before doing great losingss. This will allows Allegiant to derive competitory advantage over its challengers since they can cut most of their costs in a short sum of clip.

Because of the competitory pricing strategy used by Allegiant, they have made it a hard undertaking for new and approaching concerns to come in their market. However the instance survey which I have chose to measure its strictly based on the US market. Therefore the results of the schemes and analytical theoretical accounts which they chose to accomplish their marks would most likely differ if they were to measure or asses other markets such as the EU, Asia.

It could be considered a good illustration because what can be derived from the above article in the organisation can manage and maintain low costs for its flights by deriving a competitory advantage against its challengers. Besides, the short term contacts that are signed by the Airline contribute to concern scheme and let the company to instantly halt its services in instance net incomes begin to diminish.

It is apparent that this air hose is capable of supplying low cost tickets and besides the air hose ‘s concern scheme is effectual plenty to stay dominant and provides its services at low cost in order to last and vie with rival companies.

hypertext transfer protocol: //

[ Access 21/10/2009 ]

* Writer: Anthony ( 2008 ) “Henry Understanding Strategic Management”

* Writer: Robert M. Grant ( 2008 ) “Contemporary Strategy Analysis”6th edition.

* Article: Writer: By Ian Wylie ( October 18 2009 ) “Tactics of low-priced airline” Financial Times: hypertext transfer protocol: //

Key Wordss
Take advantage, short term contracts, competitory advantage, concern scheme, good specify concern programs, maintain aloft in downswing, profitable concern theoretical account, eventual end – “sell flights from other air hoses on the Allegiant site” .


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