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Business strategy of low-cost airline

Case summary

Allegiant airline, a leading US business has implemented several tactics in order to be a low cost airline. It provides low fees for checking out baggages, boarding and seat assignment which allow Allegiant Air to contend with other low-cost airlines. Actually if Allegiant would presented services in Europe, it will be a dominant low cost airline and would easily overtake Ryan air when it comes to lower rates. Regarding a comparison with other low-expense airlines, recent statistics show that Allegiant Surroundings in-flight costs rose to 22.7% extra income from ancillary and on board purchases, which takes advantages over Ryan weather with 19.23% cash flow from ancillary. Such extra charges through the in-flight service may be an inconvenience for the passengers, nonetheless they help keep the business aloft during the financial crisis.

Allegiant Air is a low cost airline which occupies 80 aircraft’s. The business’s strategy also intends to achieve another 300 routes such as flights to Mexico and the Caribbean. Although the airline leases small surroundings planes in order to save cost and generate more earnings, Allegiant avoids the primary airports because of the fact that it is more economically useful and since they are not in competition with the big corporations. Mr Gallagher, the chief exceptional describes how his enterprise already partners with other business and provides packages, 30% which can be purchased to customers.

Article: Ian Wylie. (2009) “Tactics of low-cost airline”

Financial Moments: Published: October 18 2009 http://www.ft.com/cms/s/0/c031e712-baa1-11de-9dd7-00144feab49a.html

Case commentary

This article describes Allegiant Air strategies low fair program and explains how the company adjust to retain competitive with various other low-cost airlines and before. Among its goals is to market flights from various other airlines on Allegiant’s internet site as a way to increase customer awareness and hold their dominance as a minimal fare service. Relating to to Mr Gallagher speech “Shortly, we should be identifiable to 100m people throughout the US”. “At that point, we are able to leverage the brand name and arrange all your travel”(Wylie, 2009).

Gallagher may be the CEO (managing director) of Allegiant Air and realizes that due to the recession some alterations were important. Which required evaluation of their macro-environment. For example they have employed PEST analysis tool so as to scan the overall and the competitive environment. To improve these general environment factors required constant and organized scanning and monitoring. (Understanding Strategic Management, Henry 2008).

Using an analytical instrument testmyprep.com such as porters five forces, one is able to not only consider their external environment, nonetheless they are allowed the opportunity to exploit the powers of the Porter’s five forces by enabling them to basically know very well what is required to be changed to be able to gain strategic advantages.

The business approach which companies such as for example Allegiant Air would have most probably used is usually Porter’s five forces. This is because they have to fully analyse their market segment of being an inexpensive airline and they likewise have set specific targets in order to gain competitive gain over its rivals (Understanding Strategic Management, Henry 2008:69). For instance if a new airline would have tried to enter into the market service, it could have been very difficult to survive unless the brand new airline had the opportunity to compete with the existing grater airlines such as for example Allegiant. Therefore, if a new airline tries to provide and provide their services, it’ll face the risk of entry and whether if enters to the market it will rely of the barriers to entry and the result of the existing competitors. It will be very difficult to make it through because Alliance comes with an organized business plan and offers low prices tickets because of its specific routes, mainly because resulting, this will act the new airline to deter its offerings from entering the marketplace since it will be difficult to survive and contend.

In terms of generic competitive approach, Allegiant business strategy ensures a match between its technique and the (CSFs) Essential Success Factors of the industry and also strives for competitive benefit over its rivals. (Pathfinder 2006 :119)

Allegiant Air has identified the fact that so that you can sustain their competitive gain, it now gives another 300 routes and intends to fly to Mexico and the Caribbean. Their business strategy is to market their solutions on others companies

and providing flights from various other airlines on the allegiant webpage. Also, allegiant has signed up to a pays short-term contract basis and make use of airport employers on regular monthly leases. In the event any specific assistance failing, due to short-term contract which Allegiant posses they have got the opportunity to end it prior to making great losses. This will allows Allegiant to gain competitive advantage over its rivals since they can cut the majority of their costs in a brief timeframe.

Because of the competitive prices scheme utilized by Allegiant, they have made it a hard task for fresh and approaching businesses to get into their market. However the case study that i have chose to examine its purely predicated on the US market how to write a scientific research paper. Which means outcomes of the strategies and analytical models which they chose to gain their targets would most probably differ if indeed they were to judge or asses other markets such as the EU, Asia.

It could be considered an example because what could be derived from the above document in the organization can handle and keep low charges for its flights by getting a competitive advantage against its rivals. Also, the short term contacts that will be signed by the Airline donate to business strategy and allow the company to quickly stop its services in the event profits begin to decrease.

It is evident that airline is with the capacity of providing low priced tickets as well as the airline’s business strategy is effective enough to stay dominant and its services at low priced so as to survive and compete with rival companies.

Weblink

http://www.ft.com/cms/s/0/c031e712-baa1-11de-9dd7-00144feab49a.html

[Access 21/10/2009]

References

* Author: Anthony (2008) “Henry Understanding Strategic Supervision”

* Writer: Robert M. Grant (2008) “Contemporary Strategy Analysis”6th edition.

* Article: Author: By Ian Wylie (October 18 2009) “Tactics of low-price airline” Financial Occasions: http://www.ft.com/cms/s/0/c031e712-baa1-11de-9dd7-00144feab49a.html

Key Words

Take advantage, short-term contracts, competitive advantage, business strategy, well define organization plans, keep aloft in downturn, lucrative business model, eventual target – “sell flights from different airlines on the Allegiant site”.