Operation Management Developing Low Cost Carriers

Question: Discuss about the Operation Management for Developing Low Cost Carriers. Answer: Introduction: Million in the year 2004. The number of projects of the company has increased from 21 million to 24 million within the year 2007- 2008. The business model that the company applies in its operations is however, much similar to the business model of Southwest Airlines in US. Lucky Air, being a domestic airline of China, operates on a small scale as compared to its major competitors. This makes the economical sense for the company of offering low cost and high efficiency to its customers. This low- cost tactic of the company, in the year 2007, has allowed it to double up its total amount of passengers (Guo 2015). As the company has more competitors therefore, the company decided to check on the possibilities of focusing on the E-Commerce and taking of the risk. With the help and the support of the parent company, Hainan Airlines, Lucky Air has been able to receive the access to one of the most used and used web portal of the Airline industry of China. However, the risk lies if this would be a better option for the company to use in order to compete with the other competitors. There is also a risk factor included in the digitalization of the services and the digitally enabled transaction. At present in China, the Airlines have a very high distribution charges. The fees that is paid to the travel agents, the reservation system cost, the direct and offline purchase staffs office costs, ticketing to government cost and the offline marketing and advertising of the company is included in the distribution cost that is paid by the company. The main reason behind the company behind the installation of the e-Commerce is to minimize the dependency of the people on the sales agents and computer reservation systems. Though this would decrease the dependency but would definitely increase the risk factor for the customer who fear of the debit card fraud would not use the system and this may also result in the extremely low level of e-commerce users of the company (Andrews 2013). The Yunnan Lucky Airs executive team has to look after many of the factors in order to promote the growth of the company. The executive teams needs to consider the following factors: Cost components: The executive team of the company needs to consider about reducing the cost components of the company. The four largest cost components of the Yunnan Lucky Air are the fuel, taxes, landing fees and the leasing cost of the aircraft needs to be used efficiently so that the costing could be reduced or adjusted. This would help in the growth of the company (Fu et al. 2015). Online ticket distribution system: By the end of 2007, there were around 210 million Internet users in China and the penetration rate was expected much more. However, the e-commerce sector of China remained unaffected even after having a rapid improvement of the technological infrastructure of the nation. The company needs to works on the awareness programs of the advantages of using e-commerce among the common public and lessen the risks of fraud in the online system. CRM: The company needs to works on the CRM development as this would help in building of trust of the customers on the company. The building of trust of the customers would help in the development an d flourishing of e-commerce of the company Growth strategies: The companys executive team knew that the strategy would work on the development of the both in travel and government policies. However, could not only be dependency on its strategy of low cost advantage. New ways and strategies are required by the company to implement (Ding 2014). The executive team of the Yunnan Lucky Air has experienced an increment of around double the amount of the total customers of the company during the period of low cost strategy application. The company, by implementing this strategy has gained the competitive advantage over other competitive companies. Moreover, the company has also experienced a preference by the consumers due to the low cost of the tickets and high service (ZHOU 2015). The experience of the other airlines for the fare drop results in South-West Effect. This kind of effect basically occurs when there is a drop of fare charges of n airline that serves in an airport where previously there has been no low fare carrier. This has now became a vocabulary part of the of the air transportation system. However, examples could be taken where some of the airlines that would pursue the low cost approach have endured and prospered on large basis. Moreover, the question remains that whether it happened due to this approach or because of a better business model of the company (Alnuaimi 2015). References: Alnuaimi, Q.A., 2015. Aviation Accidents: CRM to Maintaining the Share of Airlines. Case Study on Accidents Airlines in China.Journal of Education and Practice,6(30), pp.6-19. Andrews, R.C., 2013.Under a Lucky Star-A Lifetime of Adventure. Read Books Ltd. Ding, P.S., 2014.A grammar of Prinmi: based on the Central dialect of Northwest Yunnan, China. Brill. Fu, X., Oum, T.H., Chen, R. and Lei, Z., 2015. Dominant carrier performance and international liberalizationThe case of Northeast Asia.Transport Policy,43, pp.61-75. Guo, Q., 2015. Exploring the Impact Factors for Developing Low Cost Carriers: Cases of Japan and China. ZHOU, M., 2015.Comparacin de los modelos de negocio de las tres aerolneas estatales chinas Air China, China Southern Airlines y China Eastern Airlines(Doctoral dissertation).