In 1967 the lawyer Herb Kelleher sat with is client Roland King in the St Anthony Club of San Antonio. They were in the process of liquidating Kings failed Airlines business. But King did not want to give up without a fight. He grabbed a bar napkin and pen and wrote down the names of three boom cities Dallas, San Antonio and Houston. Then connected them into a triangle. Kelleher found he did not know what he just witnessed, the birth of budget air travel. The greatest revolution of recent aviation was devised on the back of a napkin. What is a strategy of low cost carriers?- A limited number of direct connections between important cities we should be a short as possible point-to-point connections.
- Avoiding hubs too expensive too time consuming and going secondary airports (Luton instead of Heathrow).
- Only one type of aircraft, short ground times (sometimes less than 30 minutes)
- Only one service class, narrow seat spacing, no service, no lounge (no frills concept)
- Higher turnover through a reservation of rental cars, hotel bookings, on-board sale of snacks (cross selling)
- Low ancillary wages costs, no trade union membership
- Low ticket prices
We know this strategy from discount supermarkets: dispense with everything that was once believed to be indispensable.
Innovation means cutting out the unnecessary
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