Thursday, June 22, 2017

Wharton-Why Budget Airlines Are Flying High

Low-cost carriers are able to slash prices by keeping operating and labor costs low — flying newer and more fuel-efficient planes that can travel farther without refueling, executing shorter plane turnaround times to maximize flying time, avoiding expensive airports in big cities, hiring younger staff at lower pay, selling tickets directly to consumers online and other cost-saving moves, says Wharton operations, information and decisions professor Gerry Tsoukalas, who has studied airlines. “As long as this remains true [and fuel prices stay low], it shouldn’t be a surprise if these types of airlines can be successful and gain some market share. Legacy carriers either cannot or do not want to compete on all of these dimensions.”

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