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Comprehensively evaluates the current state of the airline industry
Overview of the airline industry
Overview of the airline industry
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The airline Industry in Australia is struggling to make profits, and this is seen by the market performance of Qantas Airlines. In fact, for a number of years, Qantas Airlines is struggling to make profits, and it faces a decline in the share of its market. Certainly, the airline industry in Australia is struggling to be profitable as a whole. On average, the airline companies in Australia are making about 1-3% in terms of profit. Of course, it is not only ion Australia that the airline industry is on a decline. The decline is witnessed all over the world, even in the United States, where the market is established. For instance, the average profit that American airline companies are making is 5%. This percentage profit is very low, compared …show more content…
A pricing policy that benefits the company is one that does not lead to losses, or low profits that cannot sustain the organization. It is important to note that in a s much as cost leadership strategy, is one of the most efficient strategies that can lead to profitability of the organization, the company must provide high quality services, to be guaranteed of customers. This is because customers are prepared to pay a significant amount of money for a quality service. Furthermore, the BlueJet must know the demand elasticity of the different market segments, as this is an important factor that determines the pricing policy of airline …show more content…
Because of these policies aimed at capturing customers, there is an intense competition in the airline industry. Indeed, entry of low cost airlines has shifted the advantage to these airline companies. In fact, a company such as Tigerair is emerging as a leader in offering low cost air services in Australia. Other potential competitors include Airnorth, Rex Airlines and Jetstar. BlueJet has to study the pricing and managerial policies of these competitors, for purposes of ensuring that it comes up with the best marketing strategy that will give it a competitive edge over these rivals. It is important to denote that without information about these competitors, BlueJet may initiate policies that may not be effective in penetrating the market segment held by these
Mason, K. J. (2001). "Marketing low-cost airline services to business travellers." Journal of Air Transport Management 7(2): 103-109.
Despite the growth in the market, Qantas International’s market share has been falling over the past 10years, from 34% in FY02 to 16% in FY13. The entry of Virgin Australia in 2000 in part explains this, however Virgin’s growth also coincided with the demise of Ansett in 2001 “… Virgin Blue will initially increase capacity on existing routes while evaluating what c...
The industry for Qantas Airways Limited is a company that guides a long distance in airline, which is in international and domestic location. Qantas Airways Limited is a company that established as a world airline that comes from Australia.
...leader. Certainly, it has to take into account the implications of completion from both the direct and the indirect competitors. That is why EasyJet centers on the cost management strategy and the differentiation strategy (Hanlon, 2007). Through an analysis of EasyJet Airplane company strategies and performance, it is clear that they are ambitious and strive for the best. They not only survive in an industry that is intensely competitive, as shown through the analysis by Porter's Five Forces, but also succeed in terms of offering their customers the best that they have to offer in terms of value for money. The advantage this airline gains over its oligopolistic competitors stems from flexible ticketing and complete access to all primary routes. However, in keeping airline industry, there is room for improvement and growth as the analysis using Ansoff Matrix reveals.
One of the many influences that affect Qantas is the presence of globalisation, which has heavily affected the airline both positively and negatively. Globalisation is a process which refers to the increased integration between different countries and economies as well as the increased impact of international influences on all aspects of life and economic activity. Globalisation is responsible for the removal of many trade barriers and the increased level of competition that Qantas has been exposed to. The increased levels of competition has increased consumer sovereignty and forced Qantas to implement strategies to gain a competitive advantage in order to redirect consumers towards their business. Qantas has implemented a cost leadership strategy as a response to globalisation and the influence of cost based competition. One way that Qantas achieved this was by using Globalisation itself to the business’ advantage. Globalisation ha...
In my discussion I will use the Australian airline industry to present how oligopolies operate, and to show the different behaviours and strategies that arise from the interdependence of firms. I will mainly concentrate on the domestic airline market in Australia. The domestic airline market consists of a duopoly of two firms, Qantas and Virgin Blue. Since Qantas and Virgin are the only two Airlines supplying domestically in Australia, they account for all of the profits in the market and consequently they are in direct competition with each other. Because only two firms are competing, each firm must carefully consider how its actions will affect the other, and how its rival is likely to react. Thus, strategic considerations regarding the behaviour of competitors in this duopoly are essential in order for Qantas and Virgin to set prices.
Airline and travel industry profitability has been strapped by a series of events starting with a recession in business travel after the dotcom bust, followed by 9/11, the SARS epidemic, the Iraq wars, rising aviation turbine fuel prices, and the challenge from low-cost carriers. (Narayan Pandit, 2005) The fallout from rising fuel prices has been so extreme that any efficiency gains that airlines attempted to make could not make up for structural problems where labor costs remained high and low cost competition had continued to drive down yields or average fares at leading hub airports. In the last decade, US airlines alone had a yearly average of net losses of $9.1 billion (Coombs, 2011).
The purpose of this report is to show how Qantas was affected by global financial crisis. Qantas is the second oldest airlines in the world. It is one of the tough competitors for other airlines. But Qantas was affected badly during the crisis, the tickets prices went up because the fuel prices went up. I have suggested few recommendations for Qantas to bounce back , what can be done without laying of the employees and have also spoke about cost cutting.
JetBlue’s marketing strategy focuses on offering a high-quality customer attentive low-cost product that provides amenities other airlines are unwilling to provide on their low-cost fares. The goal is to attract new customers while retaining current customers and to bridge the gap between low-cost fares and quality air travel, which JetBlue believes need not be mutually exclusive (JetBlue Airways Corporation, 2015). Overall this strategy has been very successful, attracting new customers and earning repeat customers through its innovative additions to its aircraft and by having more free amenities than any other airline. Additionally JetBlue Airways has been ranked highest in customer satisfaction among low-cost carriers in North America by J.D. Power for the last 11 years in a row (JetBlue Airways, n.d.).
Jet Blue’s strategy to use a combination of cost leadership and differentiation strategies at the same time in an integrated way helps Jet Blue to overcome any major drawbacks and risks associated with any of the standalone individual strategies. The components and enablers for Jet Blue’s low cost strategy and differentiation strategies are complimentary to each other and they mutually reinforce Jet Blue’s overall integrated combined business level strategy. This combination of low cost and differentiation strategies enables Jet Blue to provide a high quality low cost differentiated customer service experience. This helps Jet Blue create a unique value and also provides a unique competitive advantage for Jet Blue to outperform its competition and achieve long term
There are few things that are impressive about Southwest Airlines first one is how they treat the employees. For Southwest Airlines employees are first and customers are second. If the employees are treated well that will bring in happy customers. Next is that Southwest is not only with their low prices but is able to create a competitive advantage by offering a fun and humorous experience when flying. Finally another impressive fact is when Herb Kelleher’s retire from CEO position yet remained a Southwest employee till July 2014. Even after the retirement he was still active with the Southwest Airlines that reflected his enthusiasm and dedication for the
Analysis of AirAsia’s Cost Strategy Influenced by the low cost carrier concept from Southwest Airlines in the United States and Ryanair in Europe, AirAsia began its business and finally it turns out that this concept has worked out. Obviously, AirAsia’s competitive strategy is cost leadership strategy, having the lowest costs in its industry and aimed at broad market. According to the book “Fundamentals of Management”, this strategy can be best exhibited in several dimensions, comprising highly efficient, overhead kept to a minimum, does everything it can to cut costs, product must be perceived as comparable in equality to that offered by rivals or at least acceptable to buyers. (Pobbins, Decenzo, & Coulter, 2015)The following discussion will illustrate the corresponding, specific performance to explain these dimensions.
When a business aims to be as successful as possible in selling its products and services, it must examine in detail whether or not the products will be attractive and necessary; if the price is optimal; if the product is being distributed in the best locations; and finally, how interest and awareness can be created for the products. In order for a business to target all of these elements to the right people at the right time, it must employ the right type of marketing mix: Product, Price, Place and Promotion. In a dysfunctional time for the airline industry, most airlines, especially major carriers, are adapting the concept of "doing less with more." One low-cost carrier, JetBlue, is changing the domestic aviation landscape in this regard and is defying the odds. Here is a company that has examined each marketing mix elements carefully, has adapted them to its customer’s needs, and is succeeding because of this approach.
When an airline does not have a sustainable competitive advantage, it does not have any properties of differences from there competitor and turns to a dangerous price war. The sustainable ...
Product Strategy of the British Airways 1.1 Introduction to product strategy Product is the most important component in an organization. Without a product there is no place, no price, no promotion, and no business. Product is anything that can be offered to a market to satisfy a want or a need. It is the core ingredient of the marketing mix and is everything favorable and unfavorable, tangible and intangible received in the exchange of an idea, service or good (Kotler 11th edition, 2003). British Airways is a business offering service products, flights across destinations, in the transportation industry.