INTERNATIONAL BUSINESS

International Business Management

What Factors would determine whether Virgin Express could have succeeded in Europe if Ryanair & Easy Jet had gone out of business?

Virgin Express is an airline, established by the Virgin Group. The concept of low cost carriers has evolved over a period of time. Traditionally, air transport is considered as a luxury transport. The airlines maintained their image of luxurious and royal carriages, which would transport only the “Elite” class or business professionals (Lawrence et al, 2007, p.200). Over a period of time, the quick air travel has gained grounds for the domestic travels as well international journeys. In this regard, the establishment of low cost carriers has constituted a cornerstone in fostering air travel. Business professionals prefer to travel by air instead of roads. Further, the transportation of goods is also available in low fares. Federick (2006) communicated that low-cost carriers has contributed towards the evolution of networks, competition, and the trends of air travel demand. The concept of low cost carrier became established in the year 1995 in European regions (Federick, 2006, p.249).

Ryanair was among the first companies to adopt the low-cost carrier models; the airline adopted this model as to fight its competitive pressure. The airline realised the need for developing an air travel system which would follow a business model, developed to present low-fare schemes. Pacific South -West is considered to be the pioneer of LCC model. The Low-cost carrier is a significant concept, which will expand the business potentials of an airline business. Mason (2001) predicted that this model will not be limited in its application in the leisure sector; rather, the model will attract every frequent traveller towards domestic destinations. Further, the model targets the business professionals who travel for business purposes. The popularity of LCC indicates business values for low cost transportation. The European Cockpit Association communicated that Low-cost carriers have facilitated 20.7 million passengers; this numerical data accounts for 8.6% of the airline market share. Since then, the market share for LCCs continues to grow. Ryanair and Easyjet serves as the dominant airlines, for facilitating the European air travel market. The two airlines expanded to cover the small to medium sized, full-service network. In the year 2004, the airlines transported 27 and 25 million passengers respectively. The airlines ordered new planes, which reflect on their vision of expanding deep into European market (Justin, 2013, p.n.d). Ryanair planned to transport 70 million passengers in 2012, in order to expand its market share.

Franke (2004) investigated the competition between the Low-cost carriers and the traditional airlines. In this regard, the study articulated the influence of aviation authorities, in order to control competition. The enormous competition could seize the market from liberating the high radicals of profit margins. The development of low-cost airlines has facilitated the need for “no-frills”. Before predicting the success for Virgin Express, it is essential to look at the concerns, pertaining to the low-cost supple in Europe.

The demand for air transport is relative to the economic ...