The Research Of Low-cost Carriers Cost Management

With the unprecedented boost of economy, the popularization of air transport has triggered the reform of the demand of air transport. After the advent of low-cost carrier, it has become predominant in the airway service realm thinks to the lower ticket price and prompt reaction. Along with this trend, a batch of airline companies have emerged in the past years, such as: Southwest Airlines, Ryanair Holdings, AirAsia and so on, and have formed unique management concepts and approaches of cost control which can suit themselves.Over recent years, the low-cost carrier industry develops quickly after the enforcement of a series policies issued by Civil Aviation Administration aiming to speed up the development of it. At the beginning of 2015, Spring Airlines become the first listed airlines company in Shanghai Stock Exchange. However, low-cost airline companies are still encountering with serious challenges: the constrains on the ticket price by National Development and Reform Commission; the purchase of aviation equipment, the system of aviation information and aviation oil manipulated by monopoly enterprise; airport fee and course fee set by government which cannot be adjusted freely; the high investment in the pilot training. All these factors obstruct the process of lowering cost. Under such adverse circumstance, airlines that are struggling for survival in Chinese market and trying to keep the dominance in the competition should build an impeccable cost management system.Cases are listed to analyze the approaches to the realization of low-cost airline cost management during the research in which the collection, calculation and comparison of data are adopted; theories and cases are combined in the analysis; the analysis tools are also used. In the first step, the development environment and competition of low-cost airlines are carefully analyzed with the tools such as PEST and Five Forces Model. Then the pragmatic measures are proposed in this article based on the analysis and comparison of both domestic and foreign companies in this field. Finally, a systematic and value-oriented framework of cost management is presented for Chinese local companies.The major conclusion of this research are as follows:(1) flexibility is the core of cost management as it is difficult to lower the cost due to the constrains from all kinds of regulations;(2) basic to manage the cost is the service value chain;(3) through the cooperation with suppliers the value chain of different parties could be optimized and the profits could be maximized.(4) through the cooperation with competitors, the resource they processed could be shared in order to control the cost and achieve win-win situation. Airline companies can analyze the service value chain and the causes of cost, optimize and recombine the process of business, and combine internal and external resources to build their own core competitiveness.This research is mainly concentrating on low cost airline companies, which, hopefully, can be of enlightening value to the entire Civil Aviation Airlines.