Business strategy of low-cost airline

Business schema of low-cost halolineCase summaryAllegiant airline business, a leading US company has implemented several(prenominal) evasive action in order to be a low cost airline. It entrusts low fees for checking baggages, boarding and seat assignment which encapable Allegiant Air to cope with other low-cost airlines. Even if Allegiant would provided services in Europe, it would be a dominant low cost airline and would easily overtake Ryan air in terms of lower prices. Regarding a comparison with other low-cost airlines, recent statistics show that Allegiant Air in-flight fees rose to 22.7% extra income from ancillary and on board purchases, which takes reward over Ryan air with 19.23% income from ancillary. Such extra charges during the in-flight service may be an inconvenience for the passengers, but they help keep the company aloft during the economic crisis.Allegiant Air is a low cost airline which occupies 80 aircrafts. The companys strategy also intends to achieve a nother 300 routes which include flights to Mexico and the Caribbean. Although the airline leases small air planes in order to save cost and to generate more profits, Allegiant avoids the main airports due to the fact that it is more economically expert and since they are not in competition with the big companies. Mr Gallagher, the chief exclusive describes how his company already partners with other business and provides packages, 30% of which are sold to customers. obligate Ian Wylie. (2009) Tactics of low-cost airlineFinancial Times Published October 18 2009 http//www.ft.com/cms/s/0/c031e712-baa1-11de-9dd7-00144feab49a.htmlCase commentaryThis article describes Allegiant Air tactics low fair service and explains how the company adjust to keep private-enterprise(a) with other low-cost airlines and ahead of. One of its goals is to sell flights from other airlines on Allegiants localise in order to increase customer awareness and keep their dominance as a low fare service. Regardi ng to Mr Gallagher speech Shortly, we should be identifiable to 100m sight throughout the US. At that point, we can leverage the brand name and arrange all your travel(Wylie, 2009).Gallagher is the CEO (managing director) of Allegiant Air and understands that because of the recession some(prenominal) changes were necessary. Which required analysis of their macro-environment. For example they take up used PEST analysis tool in order to scan the widely distributed and the competitive environment. To improve these general environment factors required constant and structured scanning and monitoring. (Understanding Strategic Management, Henry 2008).Using an analytical tool such as porters v forces, one is able to not only look into their external environment, but they are allowed the chance to exploit the powers of the Porters five forces by enabling them to basically understand what is needed to be changed in order to gain strategic advantages.The business method which companies su ch as Allegiant Air would have most probably used is Porters five forces. This is because they have to fully analyse their grocery segment of being a low cost airline and they also have set specific targets in order to gain competitive advantage over its rivals (Understanding Strategic Management, Henry 200869). For example if a new airline would have tried to enter into the grocery store service, it would have been very difficult to save unless the new airline had the ability to compete with the existing grater airlines such as Allegiant. Therefore, if a new airline tries to provide and offer their services, it will face the threat of entry and whether if enters to the market it will depend of the barriers to entry and the reaction of the existing competitors. It would be very difficult to survive because Alliance has an organized business plan and offers low prices tickets for its specific routes, as resulting, this will act the new airline to deter its services from entering t he market because it will be difficult to survive and compete. In terms of generic competitive strategy, Allegiant business strategy ensures a fit between its strategy and the (CSFs) Critical Success Factors of the industry and also strives for competitive advantage over its rivals. (Pathfinder 2006 119) Allegiant Air has identified the fact that in order to sustain their competitive advantage, it now offers another 300 routes and intends to fly to Mexico and the Caribbean. Their business strategy is to advertise their services on others companies and selling flights from other airlines on the allegiant site. Also, allegiant has write up to a pays short term contract basis and use airport employers on monthly leases. In case any specific service failing, due to short-term contract which Allegiant posses they have the ability to end it before making great losses. This will allows Allegiant to gain competitive advantage over its rivals since they can cut most of their costs in a sho rt amount of time. Because of the competitive pricing scheme used by Allegiant, they have made it a difficult task for new and upcoming businesses to enter their market. However the case study which I have chose to assess its purely found on the US market. Therefore the outcomes of the strategies and analytical models which they chose to achieve their targets would most probably differ if they were to evaluate or asses other markets such as the EU, Asia. It could be considered a good example because what can be derived from the above article in the organization can handle and keep low costs for its flights by gaining a competitive advantage against its rivals. Also, the short term contacts that are signed by the Airline contribute to business strategy and allow the company to immediately polish off its services in case profits begin to decrease. It is evident that this airline is capable of providing low cost tickets and also the airlines business strategy is effective decent to remain dominant and provides its services at low cost in order to survive and compete with rival companies. Weblinkhttp//www.ft.com/cms/s/0/c031e712-baa1-11de-9dd7-00144feab49a.htmlAccess 21/10/2009References* Author Anthony (2008) Henry Understanding Strategic Management* Author Robert M. Grant (2008) Contemporary Strategy Analysis6th edition.* Article Author By Ian Wylie (October 18 2009) Tactics of low-cost airline Financial Times http//www.ft.com/cms/s/0/c031e712-baa1-11de-9dd7-00144feab49a.htmlKey WordsTake advantage, short term contracts, competitive advantage, business strategy, comfortably define business plans, keep aloft in downturn, profitable business model, eventual goal sell flights from other airlines on the Allegiant site.