Low Cost Carriers, Airline Management: Comparing Low Cost Carriers With Flydubai Case Study Examples

Published: 2021-07-07 17:35:05
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Category: Management, Business, Airline, Customers, Countries, Competition, Aviation, Dubai

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Flydubai had its start as a low cost airliner and was set up by the government of Dubai in 2008. Operating from the terminal two of Dubai International Airport, Flydubai expanded its operations rapidly around Dubai and currently serves Middle East, Gulf countries, Indian subcontinent, North Africa, Asia, Central Europe, and Eastern Europe. Flydubai serves 74 destinations in 35 countries as of 2014. That is a remarkable growth for any airline coming in a short period of 5 years.
Flydubai is a profitable, unlike many other low cost carriers, and its operating profit for 2013 was nearly 61 million US dollars, an increase of 47% over the profit for 2012. That is a remarkable achievement for a new airliner. These results are a direct result of its management’s strategic vision, niche market it serves, new aircraft requiring little or no costly repairs and dedicated workforce.
Comparing Flydubai to other low cost airlines
A comparative analysis of Flydubai to other low cost airlines can be carried out in many categories such as Fleet strength and age, Cost structure, Fare structure, customer satisfaction, return on money invested, management quality, on time arrival and departures, safety and overall star ratings by customers. Assembling the data relating to all these categories for Flydubai and several of its relevant competitors is beyond the scope of this report. Therefore, a simple analysis of comparing Flydubai to one of its competitors is performed and presented below.
Fleet: The Flydubai fleet consists of 34 Boeing 737 aircraft with an average age of 2.4 years. On the other hand, the fleet operated by Jet Airways consists of Boeing 737, 777, 787 and Airbus 300, totaling 114 with an average age of 5.4 years. The data for both the airlines come from early 2014. These airlines compete on routes operating from Dubai to several cities in India. Clearly, the aircraft operated by Flydubai is 3 years newer and having a shiny looking new airline has its advantages like customer preference, low maintenance, and safety.
Business Models: Most low cost carrier competitors of Flydubai operate a no-frills model targeting mostly economy class passengers. In contrast, Flydubai has adopted a hybrid model wherein they serve both economy as well as business class customers. Flydubai introduced the hybrid model in 2013. Naturally, serving business class customers has its advantages with one customer paying three or four times the cost of an economy ticket. Thus, the economic gain and the operating profits for Flydubai would be higher compared to its competitors.
Employees: Dubai being an international hub, the employee base of Flydubai represents more than 50 nationalities and they can speak several languages native to the countries the airline serves. On the other hand, most of Flydubai’s competitors hail from countries speaking English or a single language. In addition, they tend to employ individuals from their own countries. Airline passengers feel quite comfortable in dealing with familiar looking faces of their own kind and speaking the same language. Naturally, passenger satisfaction with Flydubai with international flavor of employees would be higher.
Cost Structure comparison: Checking the Cleartrip Web to figure the round trip cost to fly Dubai to Hyderabad (India) route generated interesting data for various low cost airlines serving the route (see Table 1). While the cost offered by Flydubai is not the lowest, it was in the middle and there was no wide variation in the price range available. This is because the number of flights available from it is few and the fare structure was tight. This may not attract passengers shopping for the lowest fare available, but it sure improves the bottom line for Flydubai.
Customer Satisfaction: Surveying various social network sites and airline travel sites for star rankings and comments on Flydubai and its competitors indicated no wide disparities. Flydubai and its competitors are lumped together by many customers as average to below average with one or no star rankings. It is not clear why no one particular airline is liked at three stars or above rankings.
Other Aspects of Comparison: Comparing Flydubai to other low cost airlines in terms of on time performance, management effectiveness, and safety is beyond the scope of this report. Nonetheless, the management of Flydubai must be doing something very well to be generating 47% increase in profits from 2012 to 2013.
Conclusion: Overall, Flydubai operations as a low cost airline compares very favorably to its competitors. Considering that, it has expansion plans involving an additional 100 Boeing 777 aircraft in the near term bodes very well for its future.

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