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Airline Cost Control Strategy

Airline Cost Control Strategy

          
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About the Book

There are two basic business models in airline industry. They are network ( full service) and low cost ( discount) carriers. The network carrier model employs diversification strategy by increased domestic destinations, serving international routes, providing diverse seating arrangements ( business, economy and first class), maintaining a complex system of offering high quality service. Otherwise, low cost ( discount) airlines focus on lower air fares. To keep operating costs down, discount airlines offer shorter routes and provide point-to-point destinations rather than through sophisticated flights are primarily in domestic destinations. So, discount airlines operate a common model aircraft fleet, offer a single seating arrangement and cheaper flight services offered to compare network airlines. However, these two basic business models have their unique competitive abilities to provide any airlines existence in airline industry nowadays.In fact, natural resource of oil is decreasing in our earth. But as the same time, human demand is increasing and oil supply is decreasing, so it also causes the oil fuel price is increasing to supply to airline industry. It influences not only to airline industry, it also impacts of higher oil fuel price to tourism, such as expansion of airports are made based on expected demand increase. Tourism has been proven to many adverse events, including terrorism, flight disruptions. Beside, the bad natural climate change influences, such as the volcanic ash cloud event occurred in April 2010 year. So, airline industry need to concern climate change because it will cause high fuel prices indirectly. For example, the event occurred the extreme increase in operating costs for airlines in 2008 year, due to unprecedented prices for aviation fuel also meant, that despite the introduction of fuel charges, so this event causes the global airline industry recorded losses seriously. Even if alternative fuels become commercially available for airlines which are still likely to be more expensive than present aviation fuel. Thus, it seems that poor tourism will influence poor travel consumption and low airline tickets sale.Higher airfares in the future are likely to lead to reduction in travel and cause tourists to shift from more distant to closer destination. When some of the economic responses to higher oil prices are obvious assessing the overall economic impacts on tourism is difficult. However, long term changes in global oil price rises will be similar to global changes in other commodity prices, exchange rates and income. It is therefore important to consider the impact of high oil prices on tourism from a general equilibrium perspective rather than relying only on bottom partial equilibrium. However, I believe tourism and airline industries have close relationship, such as tourism and airline industries are likely to suffer in an environment of high oil prices. Given that tourism destinations receive tourists from a range of origins, it would be useful to understand of some countries are increasing oil prices than others. Such as the net oil importing countries are selling higher oil prices than oil exporting countries generally. For example, New Zealand is an oil import country to provide planes for international visitor arrivals, so its oil fuel price is usually higher to charge to NZ airlines because any NZ airlines need to pay to foreign countries to buy any oil more expensive price. So, NZ airlines usually charge higher airfares to its visitors to compare the other exporting oil countries' airlines.


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Product Details
  • ISBN-13: 9798721816840
  • Publisher: Independently Published
  • Publisher Imprint: Independently Published
  • Height: 254 mm
  • No of Pages: 62
  • Series Title: Knowledge Management
  • Weight: 190 gr
  • ISBN-10: 8721816840
  • Publisher Date: 14 Mar 2021
  • Binding: Paperback
  • Language: English
  • Returnable: N
  • Spine Width: 4 mm
  • Width: 203 mm


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