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Each airline is a complex system that lives from the interaction among the various parts of
the system: aircrafts, airports, passengers, aviation policy. In the recent decades the LCCs
become important players in air transport around the world especially in Europe and Asia. In
this paper the method for establishment and development of Low Cost Carrier is discussed. To
achieve this goal, the system engineering system development models are used. There are three
classical process and development models in system engineering: Vee, Waterfall and Spiral.
These models define the relation between the requirements, specifications, components and
operation for each system. So the target of this paper is to determine the best model which is
better matched for Low Cost Airlines. The strengths and weakness of using each model are
discussed. Also the best model to form LCC is present at last. Vee model is a constrain system
and hard to change. The waterfall can change but not easily and fast. But the Spiral model is
easy changeable, real-time model that can grow. By this model, the company can start in an
ambiguous environment and step by step defines the requirement or change them. Besides, it
can start with little budget and in the outer cycle expand its activities. So according to the
nature of LCCs, the suitable process model for the LCC is Spiral model. Also as the spiral
model is suitable for establishing a LCC it can be used for breaking up a LCC and it can
happen in outer loop of the model.
1 Introduction
In the current century, airline industry is fundamentally different from that it was
prior to 1978 in the USA and prior to 1993 in Europe. At those times, the industry
controlled by government agencies and they determining the routes each airline flew
and controlling the prices which were charged by the airlines. Now, the demand of
customers determining the levels of service and price. The historical trends of market
changes and business flourishing within the developed countries as well as recently in
the developing countries show that in some extend, Liberization is a result of
Deregulation which itself comes from Privatization in the whole market.
Before deregulation, airlines have had no tendency to minimize the time costs due to
constraints on pricing and the market was the domain of Full Service Carriers. After
deregulation, airlines have enjoyed greater freedom to set fares and open new routes.
By this time, a new kind of airline created, called Low Cost Airline (LCA) or Low
Cost Carrier (LCC). LCC is an airline that offers generally low fares in exchange for
eliminating many traditional passenger services. The source of this concept is
Southwest Airlines, USA.
After the deregulation in Europe the Low Cost model spread to Europe, where two
successful LCCs formed in 1990s, Ryanair and Easyjet. After the downturn in the
beginning of the new century, this concept penetrates subsequently to much of the
rest of the world. The term originated within the airline industry referring to airlines
with a low - or lower - operating cost structure than their competitors.
There are numerous variations across LCCs (for example, between Ryanair and
easyJet, or between Southwest and Jet Blue). The standard LCC model may be
characterized by a combination of some of the following attributes [Evangelho, F.,
2005]:
1. Distributionnot always based on travel agents with commission payment;
electronic ticketless systems becoming common
2. In-flight serviceno class differentiation, high volume, no seat assignments, no
hot meals; to reduce costs of cleaning cabins, the logistics of supplying the aircraft
and the time on the ground
3. High flight frequencies
4. Minimum delays
5. Low tariffs and simple operations, lacking partnerships with other operators
6. Aircraft of a single type (Boeing 737 with four variations for Southwest); high
utilization (over 11 h/day)
7. Routesdirect short haul routes (averaging below 800 km)
8. Airportssecondary with little congestion, leading to turn around times for aircraft
as low as 1520 min
The LCC model becomes a threat for the traditional FSC model of service delivery in
the airline industry. Also this threat increased by a rapid growth in the number of
LCCs in air travel markets around the world. These new players take the Southwest
Airlines business plan as their basic operating model, and then tune and/or expand it
to fit their regional environment, such as:
In the US, AirTran and Jet Blue,
In the UK, RyanAir, EasyJet,
In Malaysia, Airasia,
2 LCC Characteristics
There are many studies that analysis LCC model; but usually are focused on LCC
business model. In the following the system characteristics of the LCC are presented:
streamlined process [Hansson et al., 2003; Franke, 2004]
quick process [Hansson et al., 2003; Franke, 2004]
minimal complexity in products [Hansson et al., 2003; Franke, 2004]
Simple product [Graf, 2005]
Simple pricing system [Graf, 2005]
Simple growth concept [Graf, 2005]
Usually no competition with each other [Binggeli, 2003]
Simple organization Centered around flight operations [Graf, 2005]
Restricted horizontal cooperation [Graf, 2005]
They usually are market maker and also market taker
Dynamic corporate culture [Graf, 2005]
Increase efficiency where possible [Graf, 2005]
Market with high complexity
Fast reaction to changes
Also the differences between individual LCC and offshoot LCC are:
Offshoot LCC is financed by a FSC but the individual one need to absorb
finance.
It supported by its FSC in airport services, maintenance and etc.
Its target is to compete with individual LCC.
The risk function in these LCCs is different.
Now by defining the characteristics of the LCCs and differences between offshoot
and individual LCCs, we can discus about the system engineering methodology in
which can be used for establishing a LCC.
Test
Maintenance
Determine objectives,
alternatives,
constraints
Evaluate alternatives;
identify, resolve risks
Risk analysis
Risk analysis
Risk analysis
Develop, verify
next level
The main goal in spiral model is to identify risk and focus on it early. In theory, risk is
reduced in outer spirals as the product becomes more refined. Also as Cost/time
increases, it causes reducing in risk [Gonsoulin, R., 2001].
The Spiral Model addresses the problem that both Waterfall and V-Model suffer from
an unrealistic modeling of timing of phases [Kuiper R., Luit, E.J., 2001]. It
recognizes that development is often iterative and graphically depicts this by
providing multiple instances of the phases from these models and ordering these as a
spiral. Thus, a more realistic representation of timing is provided.
Define System
Requirements
Allocate System
Functions to
Subsystems
Detail Design
of Components
Full System
Operation and
Verification
Verification of
Subsystems
Verify
Components
Integ
ra
tion
and
Verif
ic
ation
Sequ
e
nce
Dec
omp
ositi
on
and
Defi
nitio
n
Seq
uenc
e
Spiral
No
No
Yes
No
Yes
Yes
Vee
No
No
No
Yes
Yes
No
the Vee model is not suitable at all. This model is suitable for the system which will
not vary in the long period of time. So, this study focused on the waterfall and spiral
model after this conclusion.
Characteristics
High Priority
Team
Time
Complexity
User feedback
Flexibility
Process Speed
Resource
Changeability
Initial
Requirements
Scalable
Sequence
Conservative resources
Unstable team composition
Project requirements can be
stated unambiguously and
comprehensively
Not conclusive
According to the previous description, which discussed above, it is obvious that the
Vee model and the Waterfall model are not suitable for a LCC. Vee model is a
constrain system and hard to change. The waterfall can change but not easily and fast.
But the Spiral model is easy changeable, real-time model that can grow. By this
model, the company can start in an ambiguous environment and step by step defines
the requirement or change them. Besides, it can start with little budget and in the
outer cycle expand its activities. So the spiral model is suitable for this purpose.
4 Conclusion
Based this study and according to the nature of LCCs, the suitable process model
for the LCC is Spiral model.
To use spiral model for offshoot LCC, the following data should be known:
LCC cooperation with its holding company
Risk function of establishing offshoot one should be analyzed
Main differences of offshoot and individual are in the investment and
resources that the first one is supported by a FSC and the first second one
need to absorb finance.
As the spiral model is suitable for establishing a LCC it can be used for breaking
up a LCC. It can happen in outer loop of the model.
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