STRATEGIC ANALYSIS

Strategic Analysis of the UK Low Cost Airline Industry

Strategic Analysis of the UK Low Cost Airline Industry

Introduction

A business strategy theory is observed to be very useful to support the aviation researches by providing them a sense of existing competitive pressure faced by all the airlines globally. Strategy can be assumed as a hierarchy which represents the organizational framework of multidivisional companies in which the common direction is stated by the corporate strategy in terms of choice and scope of business field that are to be followed by the company. The business strategy is comprised of the effective plans that ensure the prosperity of the company in the competitive market place. A low-cost airline or low-cost carrier refers to an airline that is comprised of less comforts and facilities with low cost. In order to generate revenue in low cost, these airlines also charge extra to provide food and beverages, baggage and seat allocating etc. Over the last years, the airline industry in UK has experienced prominent success. it is observed to be rapidly increasing every year. The appearance of low cost airline, like Easy jet and Ryanair, encouraged the passengers to travel by air and this is assumed as the most significant factor of the growth of airline industry. These low cost airlines are able to maintain their positions in the competitive market place, and this creates complications for other airlines. It is very important for rest of the airlines corporation to revise their strategies and update them with respect to the time and demand of market.

Discussion

For making the analysis of the airline industry in UK, the theories and work of Porter's 5 forces model on basic strategies seems to be very effective. With the continuous progression in business, the low cost airlines are now able to reduce their costs and transform the airline industry of UK in near future. This can be done by redefining the value chain designed by Porter's 5 forces model. They focused on the Porter's 5 forces model and implemented its significant theories to increase the rate of passengers travelling by air, and to gain important market share by taking the passengers from their competitors (Piga and Filippi, 2001).

In Europe the airline industry is divided into three categories, charter airlines, low cost no frills scheduled airlines and traditional full service full cost scheduled carriers. There exist the flag carriers including lberia, KLM and British Airways where as the non-flag scheduled carriers include Virgin Atlantic Under the traditional scheduled carriers. It has been observed that the low cost airlines generate much of their revenue from the traditional carriers and the average customer do not have to pay for the frills (Doganis, 2010). Customers are highly satisfied with the low cost services. This also effected on the thinking of various other traditional carriers to lower their prices in the competition. It has been observe that the customers are moving towards the low cost services of air line industry instead of the increased rate of shifts in passengers ...