Air Deccan has recently launched India's first discount airline. The domestic airline company has launched its service connecting Bangalore, Tirupati, Hyderabad, Rajahmundry, Vijayawada, Belgaum, Hubli, Mangalore, Cochin and Madurai. The Unique Selling Proposition (USP) is its low air fare, which is 50% lower compared to the established airline companies such as Jet Airways (Jet), Sahara Airlines (Sahara) and Indian Airlines. The airline has its business model on the lines of South West Airlines of the US and Ryanair of Europe.
South West Airlines of the US pioneered the discount model in the 1980s. The airlines following such model are termed as low-cost carriers. The model became a success, as it was able to differentiate from the other business model, hub-and-spoke, followed by the large or network carriers, such as United Airlines, British Airways and others. Part of the low-cost carriers' strategy is to identify underserved niche markets where though the passenger density is high, the connectivity is less or fares are overpriced. South West till now does not fly to either Sarasota or Sacramento in the US, because of low traffic. The low-cost carriers with their low fares aggressively move in to capture such markets. In 2002, the low-cost carriers' one-way ticket fare for international intra-European routes was between 50 and 85, compared with 180 to 200 for network carriers such as British Airways. As a result, the low-cost carriers are always focused to keep their costs as low as possible. South West's cost per passenger mile is only 6.33 cents, compared to 12.45 cents of US Airways.
To keep costs low, these airlines fly point-to-point between secondary airports, which are generally away from the city centers, and largely ignored by large carriers. The landing and ground-handling fees of these smaller airports are much lower, compared to that of the main airports. Ryanair uses secondary airports, such as Beauvais, which is 80 km north of Paris, and even get paid to land there, because of the trade it brings to that region, rather than having to pay high airport usage charges. Due to less congestion at these airports, the turnaround time of the aircraft is also very less which maximizes aircraft use. The standard turnaround time of the low-cost airlines, including the cleaning up operation is around 20 minutes. EasyJet, another successful low-cost carrier in Europe, flies on an average 12 hours a day. Commercial planes generate revenues when they fly and not when they are idle. The fleet of planes essentially are entirely of one type, which also helps to keep down costs. |
