The airline industry had experienced a revolution since the deregulation conducted by the governments thought the world. The deregulation allowed companies to operate with fewer constraints than before and created many new opportunities. However, while the major big companies pursued "hub and spoke "strategies, and global alliances, a different approach or concept emerged and that is the no-frills airlines which used regional airports. (Piercy, 2000)
Following the terrorist attack on September 11, 2001, a number of major airlines filed for bankruptcy, including companies such as Swissair, Sabena, U.S. Airways, United Airlines, and most recently Lufthansa. Major Airlines were faced with rapid cost cutting initiatives in order to survive the rapid change in the business environment. On the other hand the low cost segment of the market remained strong, and the no-frills concept survived and actually achieved growth (Please see Appendix 1.) (A.T. Kearney and the Society of British Aerospace Companies, 2003)
In the past five years , globalization issues, structural changes in the world economy, technological breakthroughs, and also the threat of terrorist attacks, had create significant changes in the airline industry, affecting all the aspects of their operations, and strategies.
Airlines responded differently to these changes in the environment, the new model of value chain structure and low-cost-carrier business design with its key components (please see Appendix 2.) for no-frills airlines emerged, which proved to be efficient and profitable. (A.T. Kearney, 2002)
EXTERNAL ENVIRONMENT ANALYSIS
2. KEY ECONOMIC FEATURES
2.1. Market size and market growth
This section provides some summary data to illustrate the size and growth of European market industry as well as future market forecasts based on IATA organization survey. The actual market size for the airline industry in general can be established by the actual number of passengers transported in the EU market. In...