Song Airlines Case
Song airline was a low cost carrier subsidiary of Delta airlines that started in 2003. It was formed to compete with JetBlue and other low cost airlines for the Florida market. The market environment at the time of the case was extremely difficult with the rising costs of fuel, increasing security requirements after 9/11 and customers' expectations of lower fares. It has forced many big players in the airline industry into bankruptcy. The operational costs which include gate fees, ground operational costs etc. were increasing causing even more problems for the airlines. The fares in the Florida route were decreasing while the costs were ever increasing making it difficult to remain operational in that space.
The basic marketing strategy of Song Airlines was to reduce cost and increase volume through operational efficiencies and hence increase profits.
The company's main market strategy included:
1. Reducing unit costs and increasing the volume of units. By changing the airplane fleet to have bigger planes they increased the volume of seats by 70%.
2. Increase the utilization of the resources (planes, employees, gate space). They optimized the operational logistics and activities to give more operational hours and hence increasing the volume again. Employee working hour policies were changed to reduce overheads by eliminating hotel stays for flight attendants
3. Value pricing strategy with fares that are simple and transparent
4. Create new marketing segment and customer targets. Song realized based on extensive market research that women are the key decision makers in leisure travel initiative. And hence the created a marketing campaign that heavily targeted women by offering healthy food, vibrant colors for the plane interiors, leather seats, personable flight attendants and great in flight entertainment.
5. Extensive use of low cost channels of distribution primarily internet.
6. Better customer service by employing personable flight attendants in designer clothing. Song wanted to present an image of a high end airline so that the customers are not compromised on service while paying lower fares.
7. Used novel techniques by opening concept stores in Boston and New York to attract customers.
Song Airlines spent a lot of time analyzing the past data and did a lot of market research to come up these various strategy points. And I think, it clearly shows that they used experience curve techniques to analyze and use the data like gate utilization, flight attendant working times, seat usage, and flight route scheduling etc. to optimize the operational aspects of running the overall operations.
According to our chapter, the Service Value Model has six components that focus on customer value. The quality of JetBlue flights is a perception based on the expectation that the customers have before they actually try out the service. The comfortable leather seats along with the discount price, for example, are a perception that the customer has towards this airline, but value is created when the customer expectation is exceeded. Another component adding value to JetBlue is Intrinsic Attributes. This airline chooses its supplementary service very carefully; as mentioned earlier the full service meals are eliminated, how...
Spirit Airlines has long been considered an unorthodox airline. They, of course, address all four P’s in their marketing strategy; however, they focus a large amount of their effort on price and promotion. They focus on cutting price through “unbundling”. They focus on promotion through taking advantage of social issues and breaking news. Many advertisements and deals promoted by Spirit have given the public a definite shock-factor. Spirit has made two objectives very clear: they are furious at getting the customer the lowest fare possible by any means necessary, and they will similarly use any means necessary to get those potential customers to notice those fares. Such a blatant marketing strategy works. Even going up against some big competition, Spirit finds ways to be competitive and successful in flagrant fashion.
In 1971 Southwest Airlines started their operations with a vision of being a low cost/low fare carrier for passengers traveling between San Antonio, Dallas and Houston. After early legal battles and struggles gaining market share, their fighting spirit, integrity and will to succeed paid off. Over the course of the next 40+ years, Southwest has become the world’s largest low-cost carrier, while carrying more domestic passengers that any other U.S. airline (“Southwest Corporate,” 2015). Their culture, values and operating practices are what have driven this company to its current success and will continue to do so for the foreseeable future.
Even though Southwest offers no-frills, there is still a high degree of customer satisfaction that continuously builds customer loyalty for the company. As mentioned, Southwest offers low prices on their airplane tickets. Also, Southwest is renowned in the airline industry for its short turnaround time on arrivals and departures. And since people's biggest concern nowadays is money and time, having low price airline tickets to cater their traveling needs in a shorter period of time will surely satisfy them. Moreover, aside from the low prices offered, what attracts to customers is Southwest’s way in dealing with them. The employees of the airline treat their customers well and really listen to their needs.
Since 1987, when the Department of Transportation began tracking Customer Satisfaction statistics, Southwest has consistently led the entire airline industry with the lowest ratio of complaints per passengers boarded. Many airlines have tried to copy Southwest’s business model, and the Culture of Southwest is admired and emulated by corporations and organizations in all walks of life. Always the innovator, Southwest pioneered Senior Fares, a same-day air freight delivery service, and Ticketless Travel. Southwest led the way with the first airline web page—southwest.com, DING, the first-ever direct link to Customer’s computer desktops that delivers live updates on the hottest deals, and the first airline corporate blog, Nuts About Southwest. Our Share the Spirit community programs make Southwest the hometown airline of every city we serve.
Determining the marketing strategy for a massive airline, like United Airlines, is fairly difficult and extremely complex. Why? Because each city, season, route, and time of day will have some minor to major difference in how the airline presents itself. The difficulty in marketing and advertising for an airline is harder than other industries because each airline is selling thousands of different products. At first glance, United is selling flights, and that seems to encompass one product. However, selling a flight from Denver to Tokyo on a Monday is extremely different than selling a flight from Cleveland to Cincinnati on a Saturday night. The people flying that route, the cost, the airplane flow, the services provided, and the frequency/length of the flights all vary greatly from route to route, and the marketing strategies will fall in line with those difference. Although it would be impossible to determine an exact strategies, we will attempt to determine what United attempts to focus on, where they attempt to focus, and what their goals, both long and short ...
Southwest Airlines has effectively used a variety of promotional elements in its integrated marketing communications, making it one of America’s largest airlines with 3,300 flights a day to 72 domestic cities. Southwest Airlines has used all four possible elements of the promotion mix: advertising, public relations, personal selling, and sales promotion, but has focused primarily on advertising and public relations to add value to the product offered to customers. Its focus on advertising and public relations is directly related to its large size and it’s nationwide reach. Also, advertising and public relations are the most cost-efficient methods of promotion, and an airline as large as Southwest is forced to have promotional elements that benefit from economies of scale.
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).
If the short haul passenger was the backbone of Southwest Airlines success, then their 737s were the lifelines that supported it. By choosing the 737 as the airplane for all of Southwest's flights, the company saved time and resources in training its employees. The crew could be easily substituted for one another due to the extensive training on the 737. Low costs and, therefore, low fares are an enormous competitive advantage, when combined with their high-quality and loyal workforce. A very unique culture was found at Southwest Airlines among all of its employees.
Delta Airlines has been a vibrant company in the airline industry, with great success over the years. Delta airlines started as a crops dusting company to serving more than 572 destinations, in 65 countries on six continents (Allan, H., David. H. ,2012). Delta airline moved its headquarters from Monroe, Louisiana to the city of Atlanta, Georgia. The great management strategies have portrayed from time to time to be fruitful even in the verge of a recession. With these consistency in delivery of services, it is clear that the company is out to outdo its competitors and turn out to be the greatest airline in the world.
The mission of Southwest Airlines is a dedication to the highest quality of service delivered with warmth, friendliness, individual pride, and company spirit (Mission…, 2007). The company also provides opportunities for learning and personal growth to each employee. Creativity and innovation is very important and highly encouraged, for the purposes of improving effectiveness. Employees are to be provided the same concern, respect, and caring attitude within the organization that the employees are expected to share with the customer. Southwest Airlines was initially created to be a low-cost alternative to high price of intra-Texas air carriers (Freiberg, 1996). Southwest’s fares were originally supposed to compete with car and bus transportation. It was a little airline, and it would withstand the test of time. As a discount, no-frills airline, it would provide stiff competition for larger airlines. Their strategy was to operate at low cost, offering no food, no movies, no first class, and no reserved seats. They created their own market and provided increased turnaround times at the gate, by avoiding hub-and-spoke airports and opting for short-haul, direct flights. Through this market approach, Southwest has a majority of market share in the markets they serve.
The Airline industry is a capitally intensive industry, and because of this companies within the Airline industry focus greatly upon cost, as well as revenue generation. If costs increase beyond control, profitability will soon decrease. Southwest were quick to learn that if they were going to run their company in a profitable manner they had to first establish their market, and then make every effort to keep costs low. In the early 1970’s soon after their inception, Southwest established the ten-minute turn. This was the ability to unload and reload passengers, refill the plane with gasoline, and make all the necessary checks, all within a ten-minute window. They had to keep their planes in the air as much as possible, because of their low price, high frequency market niche. “Part of the great strength they’ve had, is that they have consistently followed a pattern of keeping costs low in every place they have gone.” (Freiberg, 1996, p35)
Several weaknesses in airline operations were identified as the causes of the RM1.3 billion loss. These included esclating fuel prices, increased maintenance and repair costs, staff costs, low yield per available seat kilometer ("ASK") via poor yield management and an inefficient route network.
With regard to Product, JetBlue is cornering the marketplace with its productivity, in-flight features, and customer service. Due to the fact that the company only purchases new planes of a single type, maintenance downtime is reduced and it is able to keep its planes in the air. In fact, JetBlue maintains the highest in-air average in the industry. Additionally, JetBlue employs an "operational recovery tool" technology that allows planners to minimize flight cancellations and delays. On board, JetBlue prides itself on treating all customers as equals and providing more comfort than other airlines. Features that draw customers in include assigned seating (contrary to its competitor, Southwest Airlines), leather seats, more leg room, and superior on-board service. Furthermore, JetBlue is one only a few airlines that offers each passenger free Direct TV and XM satellite radio entertainment. Finally, with regard to customer service, JetBlue focuses intently on attracting and motivating a talented workforce. The company gives each employee a sense of ownership in the operations. This value and respect bestowed on each employee translates into a motivated, productive workforce that focuses on customer satisfaction and exceeds consumer expectations.
There are other ways in which airlines customers are segmented. The airline services are divid...