Business Case Studies, Industry Analysis Case Study, Cost Advantages of Low Cost Carriers in USA

print page
Tell A Friend

Case Categories

Share |

Industry Analysis Case Study

Case Title:

Cost Advantages of Low Cost Carriers in USA

Publication Year : 2004

Authors: G Saradhi Kumar, Sumit Kumar Chaudhuri Industry: Airline

Industry: Transportation


Case Code: INA0006

Teaching Note: Available

Structured Assignment: Available

Buy This Case Study

In the 1970s, the deregulation of the US domestic aviation gave rise to a new kind of airlines - the 'No-frills' or 'Low Cost' carriers. The low cost carriers had an entirely different business model from the regular or the traditional carriers. The first low cost carrier to start operations was Southwest Airlines in 1971. Since the 1970s, the low cost carriers have always clocked profits. Even in the aftermath of the September 11 terrorist attacks in the US, while traditional airlines had together lost $10 billion in 2002, Southwest earned $418 million for its 30th consecutive year. As the traditional airlines suffered from high operational costs for long, they also decided to enter the low cost game to sustain their profits and to regain the market share they had ceded to their low cost counterparts. On April 15th 2003, Delta Airlines launched its low cost arm, 'Song', followed by 'Ted' by United Airlines in late 2003.

Pedagogical Objectives:

  • To understand the low-cost carriers’ business model
  • To discuss the emerging scenarios in the American airline industry in the light of major carriers’ entry into the low-cost arena.

Keywords : Low cost carriers in USA; Cost structure in aviation industry; Regular carriers in USA; Losses in the US aviation industry; Deregulations in the aviation industry; Hub and spoke system; Market share of low cost carriers; Operating costs in the aviation industry; Industry Analysis Case Study; Business models of low cost carriers; Southwest Airlines; On-line air ticket reservation; Cost cutting measures at Delta Airlines; Cost cutting measures at American Airlines; Song and Delta; Big carriers fighting back

Recently Bought Case Studies

    Recently Bought Case Studies

    Executive Interviews

  • David ConklinDavid Conklin

    David Conklin, is a professor at the Richard Ivey School of Business
    Speaks on Government and Business
  • Lord Meghnad DesaiLord Meghnad Desai

    Lord Meghnad Desai, is an Indian-born British economist and Labor politician
    Speaks on Government and Business
  • Vijay GovindarajanVijay Govindarajan

    Vijay Govindarajan, is widely regarded as one of the world’s leading experts on strategy and innovation
    Speaks on Reverse Innovation
  • View All Executive Interviews»

Contact us: IBS Case Development Centre (IBSCDC), IFHE Campus, Donthanapally, Sankarapally Road, Hyderabad-501203, Telangana, INDIA.
Mob: +91- 9640901313,

©2020 - 25 IBS Case Development Centre. All rights reserved. | Careers | Privacy Policy | Terms of Use | Disclosure | Site Map xml sitemap