Essay on Financial Consequences of Takeovers

675 Words Apr 7th, 2011 3 Pages
Group Project

3a. Since the 1990s the EU have been able to encourage the expansion of low cost carriers (LCCs). The EU has done this by offering cheap flights to customers with exchange for eliminating many passenger services. This has managed to attract customers and this allowed LCCs to successfully compete with other major airline industries such as British Airways. Many customers did seem more concerned about the cheap flights rather then the service they receive and this enabled the EU to expand LCCs. LCCs contain “low operating costs.- low wages, low air fees; low costs for maintenance; reduced unemployment (with much lower rates of number of passengers per employer); cockpit training and standby crews due to homogenous fleet;
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Low cost carriers have received a lot of clients and there have been a large extension in the number of civil airports. The impacts of low cost carriers are “increase in tropospheric ozone, decrease in methane, potential destruction of the ozone layer, particle release and cloud condensation, contrail formation and increasing amount of cirrus clouds. The strongly expanding activity of low cost carriers certainly increases the burden in these altitudes, in particular in regions of high population density”. [3]
Many industries have responded to the entry of no- frills airlines. British Airways wanted to cut prices by setting up a new budget carrier. British Airways also had discussions about the low cost carriers and clearly this was a response to the way in which they have been increasing. “The crucial challenge that no- frills carriers have posed for the full service airlines is with low one-way fares, breaking the convention that low fares must be hedged with conditions designed to frustrate their use by business travellers. Full service airlines have responded by creating their own no frills clones- British Airways Go (since subsumed into Easy jet). Easy jet sells the last seats on flights for as much as a fully flexible ticket with British Airways”. [4]
Some established airlines have had success after their responses to entry of no frills because some LCCs

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