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New Trends in Cost Savings of Low Cost Airlines

Summary/Abstract: Low Cost transportation, which is a business model that emerged with the developments in the aviation sector, means that airlines try to increase their revenues by saving cost by using some strategies. Low-cost carrier in the World and Turkey pursuing an important place in the industry, have been successful in ensuring the continuity of businesses increase profitability. In the low cost transportation business model, there is a focus on providing cost savings with strategic moves, reflecting this saving on price, generating revenue by flying with the highest occupancy rate in the market it focuses on, and increasing profitability with additional revenues. With the emergence of this business model, airlines have used many cost-saving strategies. Some of them are; calculated cost per passenger, more intensive aircraft use, lower flight crew costs, secondary airport use, uniform aircraft use, outsourcing, no catering, lower booking costs, lower management costs. However, due to changes in the factors affecting global competition, changing conditions of airports and technological developments, low-cost carriers can no longer achieve the desired savings rates in their previously cost-saving strategies. For this reason, they are trying to develop new strategies to create cost savings. In this study, low cost transportation business model will be explained and strategies used to create cost savings will be discussed. Although it has created cost savings in the past, the strategies that are used to create cost savings by low cost carriers are being researched by specifying the strategies whose effect is diminishing in the current situation. In the study, it was concluded that low cost carriers are turning to new cost savings through strategies such as digitalization, reducing advertising and promotional expenses by using social media, and measuring financial performance through leasing.

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