NO FRILLS
...MA, the company is said to have high consumer demand for low cost travel (Travel and Tourism Intelligence, August 2002). All the carriers are claiming to have very competitive pricing structures, Michael O’Leary, chief executive of Ryanair is quoted as saying ‘Nobody but nobody, will match our airfares. And, if they do, we’ll simply lower ours straight away’ (Appendix 1- Calder, 2002). GO has been quoted as saying ‘These fares are very competitive with those offered by no frills carriers – the difference being our customers get more for their money’ (Travel Industry Monitor July 2001). No-frills airlines fly the same expensive pieces of metal at the same speed as the traditional carriers. But they cut costs wherever they can, for example, by plastering the reservations phone number or Internet address on the side of planes to save on the marketing budget (See appendix 2). September 11th had a major impact on all industries, but it especially on the airline industry. It affected the big transatlantic carriers in a big way. But the low-cost, short-haul carriers have instead jumped in, pushing bargain ticket prices and sending out the message that they are still flying. Outspoken boss Michael O’Leary of Ryanair, offered £9.99 seats. Marketing Week, 2002) and (Appendix 3 Calder S, 2002). The low-cost airlines have spotted the gap in the market and are busy telling the public that it is safe to fly. Takeovers have happened within the low-cost airline industry. On August 2002, Easyjet completed its takeover of Go Fly, the low cost airline. British Airways created Go 3 years ago in response to the growth of low cost carriers such as Easyjet and Ryanair. (Hammond, Andrew Business Review, 2003). As both airlines have similar business models (low cost, low frills, value for money) the task of integrating the two should be relatively straightforward. The combined airline will operate from Luton using a shared reservation and management system, using the single brand identity of Easyjet. This was the first consolidation among the low cost carriers – a sector that has remained buoyant since the September 11th terrorist attacks and subsequent downturn in the long haul travel market. (Marketing Week, 2002) Ryanair followed suit by completing a takeover of Buzz early this year. A spokesperson for Ryanair says, ‘Our policy is to keep down costs and fares, and this will be reflected in our scrutiny of Buzz in the next few weeks’ (Johnson B, 2003). But the Buzz route closures are a sign that no-frills growth is slowing fast. The ‘no frills’ bubble has burst, according to the chief executive of the Air Transport Users Council (ATUC). Simon Evans, speaking to the ‘Daily Telegraph’s travel section on 4th March 2003’, following the news that RyanAir is to close down many of Buzz’s routes after taking its rival over, said we have seen the ‘strongest signals yet that the rise of no frills flying, should be coming to an end – or at least slowing down fast’. He told the newspaper the bubble has to burst at some point. After an extraordinary growth period the market has matured, particularly in the UK’. As well as the Ryanair/Buzz story, there have been various other signs that Evans is right; Easyjet admitted recently it has dropped its fares by 6% in order to fill more seats and while lower fares are generally seen as good news for passengers, they are not likely to last into the summer, according to Evans. But despite this I believe that the future for low-cost/no-frills airline carriers looks optimistic. A new low-cost airline with a difference launched on March 11th 2003, offering equal fares for all passengers. ‘Now’, the name of the new airline, will offer fixed fares according to destination and season, so that all travellers will pay the same amount for their seats on that flight. The first flight will depart from Luton to Rome in Summer 2003. (The Times online, 2003, http://www.timesonline.co.uk) Two more low-cost airlines were launched before Now. The UK tour company My Travel is launching a new no-frills airline also, intensifying competition in the budget airline sector dominated by RyanAir and Easyjet. The new airline MyTravelLite began services on 1st October 2002. Based in Birmingham airport, MyTravelLite will fly to European destinations. (BBC news, 2002, http://news.bbc.co.uk) The other airline launched was Virgin Airlines’ low-cost carrier Virgin Express, based in Brussels, which flies to Eurpoean destinations also. (See Appendix 4 – Calder, 2002). Another Flybe, the low-cost incarnation of British European, launched ten new schedules services from Southampton airport this year. By the end of January 2003, the carrier had 56,400 reservations for the first wave of new services, while bookings for France topped 6,000 within 24 hours of going on sale! (Travel Industry Monitor, March 2003). Popularity of the Internet has given a helping hand to the low-cost pioneers also. According to Travel and Tourism Intelligence (April 98), travel products booked over the Internet will grow significantly over the next five years as competition in the market increases and mill...