ANALYSIS OF DISCOUNT AIRLINES AND THE EFFECT ON THE MARKET FOR INCOMING EVOLAVIA

 

 

 

 

 

 

To:

Global Competitiveness Faculty Members

University of Ancona

Ancona, Italy

 

 

 

 

 

From:

Stacey Britt

Lindsey Romes

Allison Ross

Margherita Santarelli

Lucia Calamita

 

Business Consultants

University of Ancona

Ancona, Italy

 

 

 

                                                                                                                 

 

 

 

 

 

June 26, 2002

 

 


TABLE OF CONTENTS

 

 

 

TABLE OF CONTENTS. 2

EXECUTIVE SUMMARY.. 3

Services. 3

Pricing. 3

Operational Expenses. 3

Radius Area. 3

BACKGROUND.. 4

PROBLEM DEFINITION.. 5

INTRODUCTION.. 5

SERVICES. 6

Southwest Airlines. 6

Ryanair 7

Buzz Airlines. 7

Go Airlines. 8

EasyJet 8

PRICING.. 8

Southwest 8

The Basics of Ticketless Travel 9

Security Concerns. 10

RyanAir 10

Other Discount Airlines. 10

Effects of Incoming Low Cost Airlines. 14

OPERATIONAL EXPENSES. 15

Strategies Used to Reduce Operational Expenses. 16

Reservations. 16

Airplane Choice. 16

Ground Time. 16

Cost Reduction. 16

Southwest Operational Expense Comparison. 16

RADIUS AREA.. 16

Evolavia Area of Influence. 18

TOURISM... 19

RECOMMENDATIONS. 21

CONCLUSION.. 22

APPENDIX A: 26

Service Comparison Between Top 5 Low-Cost Airlines. 27

APPENDIX B: 28

Operating Expenses Comparison Chart Between Southwest Airlines and Midwest Express Holdings. 29

 

 


EXECUTIVE SUMMARY

 

We have been asked to conduct a consulting project for the company Evolavia.  Our job, as consultants is to research many different aspects of the low cost airline industry, and then summarize what we have found and form recommendations and conclusions. We researched five different airlines: Southwest, Ryanair, Gofly, Buzz, and EasyJet. Through combined research and hard work, we have put together a detailed paper that explains the path Evolavia should take to become a leader in the low-cost airline industry. 

 

Services

This section of the paper describes the services that low-cost airlines offer to their customers.  The following services are discussed in this section of the paper:



 

Pricing

This section touches upon the many different aspects of the pricing strategies that a low cost airline uses to reduce their fares to different destinations.  It also overviews the following pricing strategies: point-to-point traveling, destinations at smaller airports, flexibility, 30 minute check-in time, and 15-20 minute turn over time. Charts are also included displaying the train fares to Ancona and Barcelona.  We looked into traditional airline airfares, along with other discount airline rates.  We then compared the difference in money terms of what a customer will save when flying with Evolavia.  We also did similar comparisons with Paris and Madrid. 



Operational Expenses

It is important to research ways in which low cost airlines cut their operational expenses. The following topics are discussed in greater detail throughout this section in the paper:



 

Radius Area

This section includes extensive coverage of the area of influence that Evolavia can have on the surrounding areas.  Throughout this section train prices are monitored to see the draw of potential customers to the Ancona airport.  This section also has a detailed map of Italy which is broken down into regions and outlines the possible target market for Evolavia. 

 

Tourism

This section covers the incoming traffic to Ancona and the Marche region.  People travel into this region by many different means of transportation.  Here, prices and destinations of these different means of travel are covered.

 

Recommendations and Conclusion

Finally, we will conclude the paper by offering recommendations for the success of Evolavia.  These recommendations are based upon our research of the five dominant low cost airline companies in the airline industry, as well as our personal input on the project.  We would like to thank you for this opportunity and we wish you the best of luck with Evolavia.


 

BACKGROUND

 

The president of Ancona’s Airport, Carlo Amicucci, recently decided to form a business called Evolavia.  This company will begin providing low-cost airfare from Ancona to Barcelona at the start of July.  Unlike other low-cost airfares such as RyanAir, Southwest, and EasyJet, Evolavia does not own its own planes.  Instead, it rents both planes and crew from SpanAir and focuses solely on the booking of reservations via the Internet and through a call center.  By October, Evolavia hopes to expand its business to other major cities including Paris and Madrid.

           

In order to be a successful business, Evolavia must model its company off of other low-cost airlines.  These airlines, including RyanAir, GoFly, EasyJet, and Southwest, are able to offer such low costs due to their unique infrastructures that Evolavia is looking to adopt.

           

The problem that Evolavia is facing became an issue for the company the moment it came into existence.  In order to alleviate such concerns, Evolavia is looking for solutions that will reduce the probability of failure.  Studying a variety of resources is necessary to determine these solutions and when implemented, it is hoped that these strategies taken will attract new customers and steadily expand the business. 


PROBLEM DEFINITION

 

The most difficult aspect of this project has been the task of defining the problem we have been assigned.  The first two days of the project were spent conquering our problem definition.  The first day we went to the Ancona/Falconara airport and met with the president.  Though his expectations were unclear from the start, we thought we had an understanding of what he wanted.  However, we were wrong.  The next day was spent in another meeting in attempt to clear up confusion from the previous day.  Finally, we concluded what work needed to be done to complete our assigned task.  While it took much time to discover such a small part of this project, we believe that this achievement has proved to be one of the most challenging tasks that have been overcome throughout these past two weeks.

           

There are three main parts to this project that will be discussed below.  Lastly, recommendations will be given revealing our opinion on the success of the company and what actions we believe are necessary to expand the business.

 

Given that Evolavia is a service-based business that has yet to become available to the public, having a complete understanding of other successful, low-cost airline strategies including areas such as pricing, services, and operational costs will allow Evolavia to base its business around the success of these prominent companies.  This research on these low cost airlines will give Evolavia the background needed to successfully compete in the marketplace. 

 

Following the study on other low cost airlines, we must focus on the travel industry in Ancona.  The amount of traffic in Ancona at any given time during the year will have the ability to enhance the operations and demand for these low cost airline flights.  By advertising Ancona and the surrounding area, the attraction to the region will be enhanced, therefore encouraging travelers to visit Ancona. 

 

The last bit of research that we will conduct will be a comparison of pricing between traditional airline costs with that of traveling to Ancona by train, then flying the low cost option.  This comparison will show that by using the low cost airline, the passenger can save money.

 

Finally, we will give a set of recommendations to our client.  These suggestions will merely serve as a reference for our client to follow throughout the growth of Evolavia. 

 

 

 

 

 

 

 

 

 

 

 

           

 

 

INTRODUCTION   

 

It has been estimated that the market for low cost airlines inside the European Union will grow from the current 20 million passengers a year to 125 million by 2015.  This outstanding number gives evidence to the fact that traditional, as well as discount airlines will continue to flourish.  There are many aspects to an airline company that allow them to be successful.  By researching the market for discount airlines, it is evident that by utilizing the right marketing mix, a discount airline will successfully find its niche. 

 

We will discuss the services offered by these airlines (Southwest, Buzz, RyanAir, GoFly, and EasyJet), their pricing strategies, and their operational costs.  Also, the travel industry throughout Ancona will be researched and presented to give evidence to the importance of advertising within the region.  Finally, we will compare costs of traditional airlines with that of low cost airlines and the travel expenses associated with them (i.e. train fares, etc.). 

 

To begin, it is important to point out that Evolavia’s pricing strategy will be very successful in the airline industry.  When comparing prices it is obvious to see that the savings with Evolavia are incomparable to that of traditional airlines.  This company is bound to be successful in the industry because it is able to offer exceptionally low prices to its customers, and supply a desirable schedule of destinations.  In the following paper, we will show how truly effective the pricing strategy of Evolavia is and how strong the demand for these low-cost flights are.  

 

SERVICES

           

The services that an airline offers play a large part in the ability to attract customers.  The “no frills” tactics of discount airlines very often cut their services offered to a bare minimum.  While this limits the number of in-flight meals, and cuts out the travel agency, it appears to bring in customers from all over.  The following segment describes the services offered by low cost airlines both in-flight and through their websites.  Please refer to Appendix A for a comparison chart between all five airlines. 

 

Southwest Airlines

Southwest Airlines was voted the country’s number one favorite company in the March 2002 edition of FORTUNE magazine.  To receive such a prestigious award, the company had to not only focus on low fares, but excellent service too.  They offer their customers low prices, along with a strong customer commitment and an array of benefits and rewards. 

           

Southwest has an effective and efficient website that displays all of its promotions and services in a very detailed manner.  They begin with their customer service commitment and mission statement by saying, “The mission of Southwest Airlines is dedication to the highest quality of customer service delivered with a sense of warmth, friendliness, individual pride, and company spirit.” This mission statement portrays Southwest’s true mission, to please its customers. 

           

Southwest offers a ‘Rapid Rewards’ program, that allows customers to receive a free ticket based on the number of times they fly with the company.  By making 8 round trips or 16 one-way trips, the client receives a free round-trip ticket that can be transferred or used by anyone.  This promotional offer is very attractive to customers who fly frequently for business or pleasure.  Southwest also has a program called ‘Frequent, Frequent Flyers—Companions Travel.’  This program allows members who make 50 round-trips a year to designate one individual the ability to fly with the travel partner free of charge for one full year. 

           

Southwest Airlines has a very extensive online travel booking center.  A client has the ability to choose a car rental or hotel rental reservation online.  This center is accessible and lets passengers thoroughly plan for their trip.  They may utilize discount rates on hotels based on certain limitations and choose the type of vehicle that they will drive when reaching their destination.  Southwest has a relationship with four of the main car rental companies throughout the country:  Alamo, Budget, Dollar, and Hertz.  These companies offer car styles from economy to sport utilities to full size vans.  Having this option available online for the customer to use is very appealing.  It once again follows Southwest’s “no frills” and easy access model.  Although there are many policies and procedures on car rentals, the ability to offer the customer an easy answer to the hassle of travel is valuable. 

           

Southwest Airlines does not offer any in-flight meals.  The idea of “low fares, no frills” follows the guidelines of offering only the bare minimum to its customers.  This does not include food.  However, they do offer complimentary juices and cold drinks and nuts during the flights.  This helps them to cut down on their costs, in turn, offering the customer lower rates. 

           

On the website, Southwest includes a section on packing tips.   These tips are strictly for the convenience of the passenger, helping them to more thoroughly prepare for their trip.  The section includes tips on baggage purchase, packing techniques, and advice on carry-on items. 

           

Southwest Airlines uses a ticketless check-in technique.  The passenger only needs confirmation number and photo identification.  This assures safety and comfort of all customers.  Southwest offers online booking for their customers which is a safe and easy way to register for a flight.  The customer simply enters the destination and starting point and the dates they wish to depart and arrive, and the system displays all available options.  The client chooses the best available option and proceeds to online payment by credit card.  This system has been very effective and safe and allows the customer to control their trip. 

 

A passenger wishing for a refund from Southwest can submit for one on the website.  This offer is only available when the ticket is unused.  Southwest offers many different ticketing options through their booking center.  They offer a fare that is considered refundable and changeable at any point in time up to the departure.  This fare is often more expensive than other “discount” fares, but this is solely because it offers more security in the event of unexpected circumstances. 

           

Seating options through Southwest are open.  When the passenger arrives at the check-in desk they are issued a boarding pass. This is based on a first come, first serve basis.  This boarding pass serves as the customer’s timeframe to get onto the plane. 

 

Ryanair

Over the past few years, Ryanair has become the most prominent discount airline company in Europe.  By basing their company and website around the “no frills” tactics of Southwest, they have shown that by offering their customers low prices, they are a very attractive company to fly with. 

           

Ryanair also follows the ticketless confirmation system.  The passenger must have their confirmation number as well as photo identification to confirm and board the plane.  This requirement of photo ID is strictly to test the validity of the person checking onto the flight.  The online booking system is taking hold in Europe, and Ryanair offers this online reservation through their website.  This system has led Ryanair to announce in May of 2002 that they experienced a 44 percent growth in seat sales. 

           

Ryanair does not allow refunds.  The passenger has the ability to change their reservation flight time up to three hours prior to departure, but no other information located on the reservation booking.  This change in time may also include an increased price, in which case the passenger will have to pay the difference.  This is because fares rise as the flight approaches.  This is for the safety of the passenger and confirmation that their ticket and seat are secure. 

           

Seating through the company and flight are open and based on the personal preferences of the passenger themselves.  This policy once again follows the “no frills” tactics of the company. 

 

Ryanair does not offer meals on their flights.  Instead, they offer a full bar that allows their customers to purchase whatever drinks and snack s are available at an affordable price.  By not offering a meal to flyers, they reduces costs and in turn, prices.  

           

Ryanair offers a very extensive website.  They present their customers with many opportunities to further plan their journey with services including:

 

The company website has a link to present urgent flight information to travelers, including such things as flight restrictions and closed flight areas.  This link also includes an active flight board that displays all flights concerning punctuality and cancellations.

 

Buzz Airlines

Buzz Airline is a company that is taking a strong hold in the European discount airline industry.  Buzz Airline markets their company’s strategy simply by saying, “a low cost airline that believes in making a flyer’s experience simple, enjoyable, and affordable.”  Buzz follows a “pay as you go” type of program offering no in-flight food, and high class lounges for customers. 

 

Buzz is a ticketless airline that merely requires a confirmation number that is received through email after making a reservation. Also, as with all other airline reservations and ticketing, photo identification is required. By promoting online ticketing, Buzz creates the perfect formula for a successful discount airline.  The sight is easily accessible and allows customers to utilize the online registration and booking features with ease.  If a flyer wishes to change their reservation, they may do so for a fee, however, no refunds are given.  When the passenger arrives at the airport, they will be given a seat number. 

 

When it comes to assisting customers in planning their trip beyond the air flight, Buzz Airline offers a thorough amount of information regarding places to stay, car rentals, and links and travel times to other various forms of transportation.  Specifically, the website includes:

 

Concerning onboard meals and offerings, Buzz has a café that offers a selection of salads and sandwiches that are prepared on a daily basis.  One also has the option of joining and attending the lounge to buy more upscale drinks. 

 

Go Airlines

GoFly Airlines is yet another airline that has taken hold in the discount airline industry in Europe.  They are a ticketless airline requiring a photo identification at check-in, at which time passengers will also receive their seat.  

 

GoFly offers two different types of standard tickets, as well as promotional fares.  A customer can receive a refund on all regular tickets, but not on the promotional fares. 

 

After conducting research concerning the five most prominent discount airlines in the industry, we have come to conclude that most services offered by the airlines are the same.  These companies have outlined their strategies to be similar in nature.  Please refer to the information provided on Southwest, Ryanair, and Buzz to further understand the services offered by GoFly. 

 

EasyJet

EasyJet, too, is like other companies in that they offer similar services.  EasyJet has a very extensive online shopping service that offers the ability to apply for credit cards, shop, and make other reservations.  Please refer the information on the other companies for services offered by EasyJet. 

 

 

PRICING

Pricing is the most important feature of the low-cost airlines.  It is the most important because price is what attracts the customers to airlines services.  Many people throughout the world are increasing their travels and using airlines to arrive at their destinations.  Southwest was the first company to pioneer this low cost, no frills campaign.  This company was a success because their fares are comparably lower in cost to other American airlines. 

 

Many European companies have used Southwest’s success as a benchmarking point to evolve their business.  Europe has a growing market for customers who are interested in flying around Europe and the surrounding areas.  This is why it important for Evolavia to get ahead now and create its own marketing niche before the market becomes saturated with many other low cost airlines.  Throughout this section, we discuss the main low cost airlines:  Southwest, Ryanair, Buzz, Go-fly, and EasyJet.  We also looked into how their pricing strategy works and the different techniques that are used in order to make the low pricing of these fares a success. 

 

Southwest

Southwest is America’s number one low cost airline.  Their low cost airfares create a large attraction and appeal to customers who are looking for a fast, easy, inexpensive way to travel around the United States.  By following Southwest’s success story, Evolavia will be able to successfully begin its company by providing low cost pricing air fares. 

 

One of the main factors that helps keep Southwest prices low is that the plane returns to the port of departure during the night.  Other planes that return in the middle of the night are not full of passengers, so Southwest generated the idea of offering even lower prices, half off, throughout the night.  For example, during the day a normal ticket would cost around $26, but if you wanted to travel in the night, it would only cost $13.  This deal was a complete success. 

 

Another reason why Southwest can keep such low prices is because of the flexibility of their pilots.  These flights are offered multiple times, consistently throughout the week.  This makes the availability of flying to many different places around the United States more convenient for the passengers and the pilots. 

 

The only type of catering services that Southwest offers its customers throughout the flight is peanuts, coffee, juices, cold drinks, and nuts.  They do not serve meals while in flight, but they welcome passengers to bring their own meals on board for their own pleasure and convenience. 

 

Southwest also reduces the ticket fares by flying into smaller airports.  For example, the main airport in Chicago is O’Hare, but instead, Southwest will fly in and out of Chicago Midway Airport.  Another example is when Southwest flies in and out of New York.  The two main airports in New York are LaGuardia and Newark, but Southwest will fly into Long Island or Buffalo airport instead.  This reduces the overall costs of departure and landing. They can also move faster through these airports resulting in an increase of flight frequency.  This is because there is less traffic in these smaller airports and they can fly in and take off faster than a larger airport.  As a result of this technique, Southwest, can save money in the long run and offer its customers the lower ticket fare. 

 

Pilots consistently worked 60 percent more than the other airlines, but their salaries where 50 percent less than other pilots.  To make up for the difference, Southwest offered these employees the opportunity to take part in owning shares in the company, therefore these workers had the same benefit and were being equally compensated for their work.  The airline began this profit-sharing plan in the United States airline industry in 1974.  Through this plan, the employees currently own around 10 percent of the company’s stock.

 

Southwest keeps their fares low because they are able to clean the planes in a 15-20 minute time period rather than the normal one hour time span that is often used by many other airlines.  This is important because instead of the plane leaving for departure every hour, the plane can leave approximately every half an hour instead. Because of this efficiency, more flights can leave resulting in more money coming in from ticket sales, which ultimately leads to the ability of offering the customers lower ticket prices due to the profits being made.  

 

Another main feature Southwest offers is ticketless travel, which means the reservations can be made online with a confirmation number.  The ticketless confirmation started in 1979 by Southwest. In the following few paragraphs different features of the ticketless online system Southwest currently has will be discussed. 

 

The Basics of Ticketless Travel  

One of the most important aspects of pricing is the availability for customers to purchase their tickets over the Internet.  This is a major factor in reducing the ability to offer its customer a lower fare. This is because it reduces the amount of time spent when booking flight reservations and also reduces the amount of labor services required to handle the booking processes.  The cost of booking a flight online is around one dollar, when booking a flight through a travel agency or through an airline company can range anywhere from $6-8 per booking.  

 

When entering the ticketless travel area of Southwest’s website, the following questions are asked:

 

After this information is gathered from the above questions, Southwest can display the flights that have available times, seats and fares for their customers requests and desires.  Once the customer selects the exact flight that fits their needs the best, the screen will display an itinerary and the exact costs of travel for all of the passengers that are traveling to the specific destination.  All possible restrictions of the flight will also appear on the screen for the customer’s knowledge of any provisions that might incur with their specific flight.   

 

Once this information is taken care of, then the customers name, billing address, and payment information is collected.  Once this information is clarified then a confirmation number will appear on the screen for the customer to print out or write down.  It is vital for the passenger to keep their confirmation number because it is used during check-in at the airport on the day of departure. The best advice is to print out the screen that displays the confirmation number.  If the passenger is having trouble with the reservations after purchasing their tickets, a 1-800 number is displayed at the bottom of the screen for the needs of the customer.  If the confirmation number is lost, your information can be brought up again by simply letting the representative know the first flight in the trip, dates of travel, and the last name of the passengers.  Also, a mail confirmation of the tickets purchased will be sent to the billing address entered. 

 

Ticketless confirmation is an important aspect of the whole low cost pricing strategy, because in the long run money will be saved from the costs of printing the tickets.  This will allow Southwest to offer their customers lower prices due to cut backs in technical aspects such as this one.

 

Security Concerns    

Many people are hesitant when it comes to ordering items online by a credit card.  The following paragraph describes ways in which Southwest reassures and prevents customers from worrying when it comes to entering their credit card numbers into the online ticket ordering system. Southwest uses Netscape SSL (Secure Socket Layer) when sending the customer their personal payment information and final receipt.  The program, SSL, uses very powerful encryption, which makes it almost impossible for anyone other than Southwest to gain access to the customer’s data.  SSL requires that Netscape 1.22, or any other browser that supports SSL, to be used.  Netscape can be downloaded at anytime from their home site. 

 

RyanAir

Currently, this is Europe’s number one low airfare line.  Ryanair has been a success thus far all throughout Europe.  Many other smaller companies are following Ryanair’s lead and creating low airfares across Europe as well.  The following few paragraphs display how Ryanair’s low airfares have been a success and the strategy behind these low priced tickets. 

 

In order to always offer the lowest fares these low cost airlines have established a “Low Fares, No Frills” service which is designed to be friendly and efficient.  The services that these airlines offer do not include complimentary meals, or drink services.  On the other hand, they do offer a full bar and duty free services, where drinks and duty free snacks may be purchased at the customers convenience.

 

Many of these low cost airlines are strictly point-to-point.  These airlines have a priority to offer their customers low fare air travel with the best on-time services to their destinations.  Ryanair has been noted to be the number one low cost airline with the best on-time service for the Dublin-London route and continues to carry on this tradition.  These airlines cannot transfer the baggage to other connecting flights, and often at times recommend that passengers do not book connecting flights. 

 

Along with these low cost airlines comes the no advanced seating policy.  The passengers are free to sit were they wish, and it is based on a first come first served.  This eliminates passengers to board the aircraft early, along with reducing passenger related delays.  Passengers are required to arrive at the check-in point 30 minutes before the departure of their flight.  Failure to do so will jeopardize the customer guaranteed spot on the airline.  This strategy helps these airlines be more punctual with their departure and landing procedures. 

 

Ryanair’s customers are also concerned about entering their credit card information into the computer when making their flight reservations.  Because of this reason, Ryanair also uses the latest Secure Socket Layer technology (SSL).  This is the current preferred method to securely transfer credit card and other sensitive information over the Internet.  The secure system can simply be in effect by clicking on the Secure Mode option when confirming the booking of your flight.  This will ensure that the information the customer has entered will remain secure.  When ordering the ticket online or making reservations by phone, it is important for the customer to print out or right down their confirmation number.  This is important because the confirmation number will be used during baggage check-in on the day of departure. 

 

The lowest fares offered by Ryanair are available for customers traveling during off peak hours.  Weekend fares are often more expensive than midweek fares.  The least expensive fares require an advanced purchase between 14-28 days.  The later the customer books their reservations, the high ticket price will be.  Ryanair also offers their customers automatic cheaper fares when ordering their tickets over the Internet rather than calling the airline to book reservations. 

 

Taxes, Fees, and Charges, all refers to the portion of the total air fare payable by each passenger and is drawn up by references from the government taxes and airport charges payable by the passengers traveling on a particular route on that particular itinerary.  These taxes may include the following items: government taxes, airport taxes, passenger service charges, insurance surcharges, and security charges. 

 

Other Discount Airlines

We also researched Go-Fly, EasyJet, and Buzz for further strategies on how these airlines reduce their fares and other pricing techniques they have.  It is important to take in every aspect of these airlines different pricing strategies.  Most of these airlines match each other techniques when it comes to offering their customers lower airfares.  It is important for these companies to remain competitive in this market so the customer can be pleased with the low airfare and at the same time make a reasonable profit.  It is important for Evolavia to generate ideas, and remain innovative in the creation of their pricing strategy techniques. 

 

Go-fly is a low cost airline that helps their customers save money traveling. Go-fly is a ticketless operation, and all the passenger needs to check-in at the airport is their passport.  This airline does not make seat reservations, but during check-in they can seat your entire party together.  Go-fly’s cheapest fares are always offered online.  Their website has the availability to book tickets 24 hours a day 7 days a week.  This is convenient for both the customer and the company, because the lowest prices can be offered to the customer at anytime.  Go-Fly has formed contracts and many other special deals for their customers.  These deals include not only an inexpensive ticket, but cheaper rates on local hotels, car rentals, and insurance.  All these pricing techniques help Go-Fly remain competitive with their low cost airfares. 

 

The next airline we looked into is EasyJet.  Passengers must check-in 30 minutes prior to the departure of their flight.  If the passenger fails to follow this procedure, they will be asked to forfeit their seats and no refund or credit will be given.  All personal information, including credit card data, is kept confidential through the use of a Secure Server Software (SSL).  This means that sensitive type of information can only be exchanged between the customer and EasyJet, and no outside party can gain access to this data. Easy-Jet also has a policy geared towards customer satisfaction that states if you book your ticket now, and in a couple of weeks or months the price reduces, EasyJet will refund the amount of money to make up the difference.  EasyJet also does not operate a connecting flight service, and because of this, the customer will need to check-in their luggage each time they change a flight. Again, these are more ways in which EasyJet can reduce the price of tickets, which allows them to offer their customers lower airfares.   

 

Buzz discount airline is the final low cost company we researched.  Buzz airline only flies point-to-point.  Because of this reason flights can depart and leave faster than traditional airlines that do not fly point-to-point.  Buzz airline also recommends that their passengers check-in at least two hours before the scheduled time of departure. The check-in desks will close 30 minutes before departure and if a passenger has not checked in by this time, the airline reserves the right to refuse boarding.  This discount airline operates as a ticketless company.  This means that the customer will not receive a ticket after booking the flight, only a confirmation number.  Lastly, Buzz uses the industry-standard SSL to secure their customers credit card details.  This system can guarantee their customers the safety of ordering their tickets online.

 

The following tables are examples that show current airline companies fares that go to Barcelona and Paris.  We have monitored these fares over a six day period and we noticed through our research only one low cost company goes to Barcelona.  The company is Virgin Airlines and they fly from Milan and Rome.  The lowest fare offered by Virgin for this route is 92.45 €, but we only came across this two times over the six day period.  We extended this research to two other airports: Pescara and Rimini, but they are not flights for these destinations.  Therefore, Evolavia has a monopoly over these destinations. 

 

We noticed through our research that the fares of traditional airline companies for the same destinations as the discount airline companies were very high. For example, when traveling to Barcelona from Milan by Iberia costs 465 € (one way, without tax).   If you leave by Virgin at the same airport you pay only 92,45 €.  This gap is due to different strategies adopted by the companies analyzed that we have just explained in the pricing paragraph.  Some prices are more expensive than others (look at British Airway’s fares) because there are not any direct flights for the destination established.  Another example is when a customer wants to travel to Barcelona from Milan and decides to travel by British Airways.  The customer will first have to travel to London and then take a connecting flight to go to Barcelona.  The cost of this flight, with British Airways would be 1171 €.  These tables show that Evolavia has a strong marketplace in Italy due to the lack of competitors for these destinations

 


 

Barcelona's fares

 

 

 

 

 

 

 

 

 

 

 

 

 

Barcelona 10th June

 

Barcelona 11th June

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Bologna

Firenze

Milano

Roma

 

 

 

 

Bologna

Firenze

Milano

Roma

 

 

 

 

 

 

 

 

 

 

 

 

 

AirFrance

N/A

487

465

N/A

 

 

 

AirFrance

N/A

487

465

N/A

Alitalia

N/A

N/A

N/A

N/A

 

 

 

Alitalia

N/A

N/A

N/A

N/A

British Airways

1171

1171

1121

N/A

 

 

 

British Airways

1171

N/A

1127

N/A

Iberia

493

N/A

465

465

 

 

 

Iberia

493

N/A

465

465

Lufthansa

493

493

465

N/A

 

 

 

Lufthansa

962

975

465

1012

(low cost companies)

 

 

 

 

 

 

 

(Low cost companies)

 

 

 

 

Virgin

N/A

N/A

92,45

92,45

 

 

 

Virgin

N/A

N/A

319,71

273,23

 

 

 

 

 

 

 

 

 

 

 

 

 

Barcelona 12th June

 

 

Barcelona 13th June

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Bologna

Firenze

Milano

Roma

 

 

 

 

Bologna

Firenze

Milano

Roma

 

 

 

 

 

 

 

 

 

 

 

 

 

AirFrance

550

487

465

627

 

 

 

AirFrance

N/A

N/A

N/A

N/A

Alitalia

N/A

N/A

N/A

N/A

 

 

 

Alitalia

N/A

N/A

N/A

N/A

British Airways

1171

1171

1127

N/A

 

 

 

British Airways

1171

N/A

1250

N/A

Iberia

493

N/A

465

465

 

 

 

Iberia

493

N/A

465

465

Lufthansa

525

975

497,12

496,5

 

 

 

Lufthansa

962

975

907

1121

(Low cost companies)

 

 

 

 

 

 

 

(Low cost companies)

 

 

 

 

Virgin

N/A

N/A

N/A

N/A

 

 

 

Virgin

N/A

N/A

319,71

273,23

 

 

 

 

 

 

 

 

 

 

 

 

 

Barcelona 14th June

 

 

Barcelona 15th June

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Bologna

Firenze

Milano

Roma

 

 

 

 

Bologna

Firenze

Milano

Roma

 

 

 

 

 

 

 

 

 

 

 

 

 

AirFrance

N/A

N/A

N/A

N/A

 

 

 

AirFrance

550

487

465

627

Alitalia

N/A

N/A

N/A

N/A

 

 

 

Alitalia

N/A

N/A

N/A

N/A

British Airways

1171

N/A

1250

N/A

 

 

 

British Airways

1171

1932

1127

N/A

Iberia

493

N/A

465

465

 

 

 

Iberia

493

N/A

465

465

Lufthansa

962

975

907

1121

 

 

 

Lufthansa

493

493

465

465

(Low cost companies)

 

 

 

 

 

 

 

(Low cost companies)

 

 

 

 

Virgin

N/A

N/A

319,71

273,23

 

 

 

Virgin

N/A

N/A

92,45

118,28

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Paris's fares

 

 

 

 

 

 

 

 

 

 

 

Paris 10th June

 

Paris 11th June

 

 

 

 

 

 

 

 

 

 

 

 

Bologna

Firenze

Milano

Roma

 

 

Bologna

Firenze

Milano

Roma

AirFrance

556

562

467

633

 

AirFrance

556

562

467

633

British Airways

1032

1032

988

N/A

 

British Airways

1032

1032

988

N/A

Iberia

1008

N/A

980

980

 

Iberia

980

N/A

980

980

Lufthansa

556

556

792

690

 

Lufthansa

556

640

792

690

(low cost companies)

 

 

 

 

 

 

 

 

 

 

Virgin

N/A

N/A

N/A

N/A

 

Virgin

N/A

N/A

N/A

N/A

 

 

 

 

 

 

 

 

 

 

 

Paris 12th June

 

Paris 13th June

 

 

 

 

 

 

 

 

 

 

 

 

Bologna

Firenze

Milano

Roma

 

 

Bologna

Firenze

Milano

Roma

AirFrance

556

562

467

633

 

AirFrance

556

562

467

633

British Airways

1032

1032

988

1301

 

British Airways

1032

1032

988

N/A

Iberia

1008

N/A

N/A

980

 

Iberia

980

N/A

980

980

Lufthansa

556

640

792

690

 

Lufthansa

556

640

792

690

(low cost companies)

 

 

 

 

 

(low cost companies)

 

 

 

 

Virgin

N/A

N/A

N/A

N/A

 

Virgin

N/A

N/A

N/A

N/A

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Paris 14th June

 

Paris 15th June

 

 

 

 

 

 

 

 

 

 

 

 

Bologna

Firenze

Milano

Roma

 

 

Bologna

Firenze

Milano

Roma

AirFrance

556

562

467

633

 

AirFrance

556

562

467

663

Britishairways

1032

1032

988

N/A

 

British Airways

1032

1032

988

N/A

Iberia

980

N/A

980

980

 

Iberia

1008

N/A

980

980

Lufthansa

556

640

792

690

 

Lufthansa

556

556

792

690

(low cost companies)

 

 

 

 

 

(low cost companies)

 

 

 

 

Virgin

N/A

N/A

N/A

N/A

 

Virgin

N/A

N/A

N/A

N/A

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The above table shows that for Paris there are no low costs flights from Italy, only from the traditional airlines.

 

 

 

 

 

 

The table below is an example of how much money a person can save when traveling by plane using the Evolavia airline.  The fares in the table, plane and train, are only for one-way.  We monitored these fares over a six day period of the four traditional Italian airline companies.  These companies include: Airfrance, Iberia, Lufthansa, British Airways.  We also studied one low cost company, Virgin airline.  In the table above, we used the lowest fares of each airline.  The fares were compared at the July 1st rate, and it is important to take into consideration that these fares are subject to change over time.  For the most part, the fares will not change drastically. 

 

Table

Airport

Traditional Fares of Italian Airlines

Cost of Train t