"Low Cost" companies begin to fit the market
Results of Irish RyanAir and Brazilian Gol forcing companies to review strategy
by Mario Teixeira
There was a time when low cost/low fare airlines had a perfect scenary, as we say in popular slang. With much lower rates and the elimination of some services, such as food on board, passing the charge for snacks as well as charging for baggage handling, helped popularize aviation. Here, as in all continents, has become more affordable air travel to face long hours by bus.
In all the world they came with stunning force, over these last 20 years have transformed the profile of aviation, helped cannibalize some companies and today they are face of your processing cycle. The great challenge that requires all airlines to low cost/low price in the world is the need to adapt their fleet to market realities. With the multiplication of business and competition, especially in the American and European markets, the cake ended up being much divided.
The Irish airline RyanAir, one of the leading European aviation, announced on Monday a loss in its balance of 2012, whose fiscal year ended in March 2013, 44.4 million euros. In Brazil, Gol Airlines, the largest low-cost company in Latin America, also found negative in the last year. Both point to the decreased volume of passengers as a major reason for the decline of its revenues.
Although the balance to mean "a headache" for companies, also pointed to urgent solutions, at the risk of, forgetting the rules of the market, end up increasing the list of companies that fell by the wayside. Some airlines went bankrupt and ceased all its customers in soil. However, despite the gray backdrop, in a competitive market such as Europe, the number of firms grows every year. Even the traditional giants airlines such as Air France-KLM has decided to invest in this segment, launching this year's Hop!, A fusion of regional branches of Britair and Regional, with the airline Flybe.
Even signaling that there is still space to be occupied, these companies create new expectations for passengers and for the market. In the first case, the best deals and new routes to be explored, offering a differentiated service and having the rear reliable companies. For the market, however, means that the number of passengers of those companies who can not provide an immediate response can further decrease. At that time, more strategic decision is to expand your market through partnerships such as code share system, which has been practiced between Gol and Delta, expanding the service capacity of both.
According to a Gol Linhas Aéreas public relations, the company has invested in operational efficiency, making it the most punctual of the Brazilian market, with an index of 95% of matches in time; investing in check in in machines or by smartphones, which reached 60% in first quarter of 2013, and implementation of a new air mesh. The partnership with the Brazilian Football Confederation (CBF) to transport the Brazilian national team until 2016, appointed as a big business and a special marketing case, can help jumpstart the domestic market, which has shown decline.
Company data show that, in the first quarter of 2013, the supply and demand of domestic industry declined by 7.9% and 1.3% compared to the first quarter of 2012. The effect of supply reduction was the 5% increase in occupancy of aircraft. The company made a reengineering strategy, mainly due to the decrease of 15.7% of domestic supply in the first quarter of the year, due to the closure of operations of Webjet. In the international market, the creation of new routes, such as linking Brazil to Santo Domingo, Miami and Orlando, with daily flights from the end of 2012, contributed to an increase of 34% over the same period last year.
Despite the net loss of R $ 1.512 billion recorded in fiscal year 2012, the company has sought answers to reverse the situation. The speed of response to new global economic scenario and the pursuit of equations for the expansion of the market with cost reduction are essential to the health of companies. Speed, in all senses, will be the mark of successful company.
