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Low Cost Carrier Model in India: Sustainability Challenges

20 Pages Posted: 21 Jan 2010 Last revised: 10 Sep 2016

Manisha Gupta

D'Amore-McKim School of Business

Date Written: January 19, 2010

Abstract

Difficult market conditions since 2008, including oil price volatibility, slump in air travel demand, and economic downturn have had a spiraling effect on the airline industry, leading to a record number of airline insolvencies across the globe. Despite the situation, the low cost carrier model has proven to be a fairly popular business model internationally, owing to the cheap air fares. However, the model is yet to acquire a competitive pricing position in the domestic Indian market. Limited infrastructure and lack of favorable regulatory policies are among the primary reasons for low market penetration. This paper reviews existing aviation industry literature to reason the policy challenges, including the policy of fee waiver cap on aircrafts with less than 80 seats/or weighing less than 21 tones. The paper concludes that the environmental cost of local air pollution around the airport is a function of an aircraft’s seating configuration and the maximum seating capacity demand on the given air route instead of the size of the aircrafts.

Keywords: Low Cost Carrier Airline, LCC model, Environment, Gas emissions, Environmental cost, Policy

Suggested Citation

Gupta, Manisha, Low Cost Carrier Model in India: Sustainability Challenges (January 19, 2010). Available at SSRN: https://ssrn.com/abstract=1538704 or http://dx.doi.org/10.2139/ssrn.1538704

Manisha Gupta (Contact Author)

D'Amore-McKim School of Business ( email )

Boston, MA 02115
United States

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