Masteroppgave
Total Page:16
File Type:pdf, Size:1020Kb
Masteroppgave TRA950 Samferdselsplanlegging (Erfaringsbasert) Comparison between Legacy and Low Cost Airlines on the Norwegian Aviation Market Furat Gebory Totalt antall sider inkludert forsiden: 85 Molde, 12.12.2013 Obligatorisk egenerklæring/gruppeerklæring Den enkelte student er selv ansvarlig for å sette seg inn i hva som er lovlige hjelpemidler, retningslinjer for bruk av disse og regler om kildebruk. Erklæringen skal bevisstgjøre studentene på deres ansvar og hvilke konsekvenser fusk kan medføre. Manglende erklæring fritar ikke studentene fra sitt ansvar. Du/dere fyller ut erklæringen ved å klikke i ruten til høyre for den enkelte del 1-6: 1. Jeg/vi erklærer herved at min/vår besvarelse er mitt/vårt eget arbeid, og at jeg/vi ikke har brukt andre kilder eller har mottatt annen hjelp enn det som er nevnt i besvarelsen. 2. Jeg/vi erklærer videre at denne besvarelsen: • ikke har vært brukt til annen eksamen ved annen avdeling/universitet/høgskole innenlands eller utenlands. • ikke refererer til andres arbeid uten at det er oppgitt. • ikke refererer til eget tidligere arbeid uten at det er oppgitt. • har alle referansene oppgitt i litteraturlisten. • ikke er en kopi, duplikat eller avskrift av andres arbeid eller besvarelse. 3. Jeg/vi er kjent med at brudd på ovennevnte er å betrakte som fusk og kan medføre annullering av eksamen og utestengelse fra universiteter og høgskoler i Norge, jf. Universitets- og høgskoleloven §§4-7 og 4-8 og Forskrift om eksamen §§14 og 15. 4. Jeg/vi er kjent med at alle innleverte oppgaver kan bli plagiatkontrollert i Ephorus, se Retningslinjer for elektronisk innlevering og publisering av studiepoenggivende studentoppgaver 5. Jeg/vi er kjent med at høgskolen vil behandle alle saker hvor det forligger mistanke om fusk etter høgskolens retningslinjer for behandling av saker om fusk 6. Jeg/vi har satt oss inn i regler og retningslinjer i bruk av kilder og referanser på biblioteket sine nettsider Publiseringsavtale Studiepoeng: 30 Veileder: Odd I. Larsen Fullmakt til elektronisk publisering av oppgaven Forfatter(ne) har opphavsrett til oppgaven. Det betyr blant annet enerett til å gjøre verket tilgjengelig for allmennheten (Åndsverkloven. §2). Alle oppgaver som fyller kriteriene vil bli registrert og publisert i Brage HiM med forfatter(ne)s godkjennelse. Oppgaver som er unntatt offentlighet eller båndlagt vil ikke bli publisert. Jeg/vi gir herved Høgskolen i Molde en vederlagsfri rett til å gjøre oppgaven tilgjengelig for elektronisk publisering: ja nei Er oppgaven båndlagt (konfidensiell)? ja nei (Båndleggingsavtale må fylles ut) - Hvis ja: Kan oppgaven publiseres når båndleggingsperioden er over? ja nei Er oppgaven unntatt offentlighet? ja nei (inneholder taushetsbelagt informasjon. Jfr. Offl. §13/Fvl. §13) Dato: 12.12.2013 Acknowledgements This master thesis marks the end of my study in the master course in transport planning at Molde University College. The choice of the topic has been made, based on my curiosity, interest and current job related involvement with the developments on this exciting market. Writing this master thesis was a learning experience for me, which I have enjoyed. I have been able to complete it thanks to the assistance of some people, to whom I would like to extend my gratitude. On the first place, I would like to thank my supervisor - Professor Odd I. Larsen from Molde University for the excellent guidance and support provided to me during the thesis preparation. During this period I could always count on his expert advice, constructive feedback, and guidelines. I would also like to thank Associate Professor Harald M. Hjelle for his guidance and coordination during my whole study period in Molde University College. Finally, I would like to thank my wife for her support and understanding during my whole course of study and especially during the period of writing this paper. Preface This master thesis discusses issues, related to the comparison between Legacy Airlines (LA) and Low Cost Airlines (LCA) on the Norwegian aviation market. The objective is to try to provide a picture of the market and the positions of these types of airlines on it. The first chapter represents an introduction to the topic, which contains formulation of the main research question and sub questions. The second chapter provides a description of the evolutionary development of the aviation market until its present state. For a long while the competition in the aviation has been characterized by limitations, related to pricing, market entry and optimal output. Gradually, the European market became liberalized. New airlines appeared on the scene, following a low cost business model of operation and offering new opportunities for cooperation with the already existing companies. As a result the number of passengers rose significantly and the started deregulation left the market open for new entrants. The third chapter deals with the impact of the macro-economic environment on the airlines. The global economic situation has always had a big impact on aviation. When the economic development is good, the aviation activities are positively affected. The period 2000 - 2005 was a period of deep global crisis. In 2000, the dot-com bubble burst out, causing economic decline and the demand for air transport almost immediately collapsed. In 2001, the SARS virus and the 9/11 attacks in USA contributed to the further decline in the demand for passengers’ transport. The market somehow managed to recover, but the latest economic crisis broke out in 2008. The profits went down and the market was overflown by bankruptcies, mergers, acquisitions and strife for market consolidation. The fourth chapter focuses on the business models, followed by the Legacy Airlines and the Low Cost Airlines. The Legacy companies follow a “hub-and-spoke” network model and use different strategies to differentiate their product from that of the other airlines. On the other hand, the Low Cost Airlines follow a cost minimization strategy and try to achieve their competitive advantage through operational efficiency. They achieve this efficiency, applying a “point-to-point” network model and operation, involving using one fleet type and not offering any free-of-charge services – i.e. in contrast to the Legacy Airlines there are no free meals, beverages and luggage. They also save on airport charges (using secondary airports) and on ground handling services. The fifth and sixth chapter contain analysis of the most important airlines in the Norwegian market, based on their business models. Two airlines are selected for this purpose – i.e. Scandinavian Airlines (SAS) and Norwegian Air Shuttle1 (NAS). SAS is classified as a Legacy Airline, while Norwegian Air Shuttle can be defined as following a low cost strategy, but including some elements of the model, followed by a Legacy Airline. The seventh chapter contains findings and conclusions. 1 The new established Norwegian Long Haul (NLH) will not be discussed in this thesis. Comparison between Legacy and Low Cost Airlines on the Norwegian Aviation Market Table of Contents Chapter 1: Introduction and Problem Definition ........................................................................ 9 1.1 Problem Definition ........................................................................................................... 9 1.2 Research Questions ........................................................................................................ 11 1.2.1. Main Research Question ........................................................................................ 11 1.2.2. Research Sub-Questions ......................................................................................... 11 1.3. Research Methodology .................................................................................................. 12 Chapter 2: Liberalisation of the Aviation Sector ..................................................................... 13 2.1. Introduction ................................................................................................................... 13 2.2. Initiation of a New Market ............................................................................................ 13 2.3 Development of the Norwegian Aviation Market ..................................................... 18 2.4. Creation of the European Single Market ....................................................................... 23 2.5. EU-US Open Skies Agreement ..................................................................................... 24 2.4.1. The First Phase ....................................................................................................... 26 2.4.2. The Second Phase ................................................................................................... 27 2.6. The Effects from the Creation of the European Single Market ..................................... 28 2.6.1. Network Development ........................................................................................... 28 2.6.2. Market Consolidation ............................................................................................. 28 2.6.3. Rise of the Low Cost Airlines ................................................................................ 29 2.6.4. Global Economy and Aviation ............................................................................... 29 Chapter 3: The Impact of the Macro-Economic Environment on the Aviation Market .......... 31 3.1. The aviation market during the