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The proliferation of low cost carriers in the European airline industry is a living example of how the strategic directions of business organisations are strongly affected by the changes, trends, and developments and their external environment. Currently, it can be seen that traditional business class airlines are still in operation but budget airlines are in the limelight due to the strong patronage of customers…
The emergence of budget airlines is directly attributed to the transformation of the global business environment. The major drivers which facilitated this trend are: the deregulation of the European air travel sector; the establishment of the European Union; the 9/11 tragedy; the rapid technological advancement; and change in customers' lifestyle and preferences. It is irrefutable that the deregulation of the European airline industry primarily contributed to the rise of low cost carriers. It can be recalled that deregulation has lowered the barrier to entry in the industry as well as enhanced the competitiveness of the players which are previously receiving subsidy from the government. This, in turn, largely contributes to the cost efficiency of airline operators allowing them to charge lower prices to passengers. The establishment of the European Union affects the airline industry has the same effect like the deregulation of the sector. This has opened up markets and lowered operating costs, encouraging the proliferation of low cost carriers (Sorensen 2006). ...
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