Among many means of transportation, airways have been regarded as the most appealing ones judging by its superiority in speed, quality of services and safety standards for its goods and passengers carried. Despite these strong points, its expensive freight has discouraged a considerable number of potential travellers and made airports to be the destination to only some people, not all. Aware of this situation, some airlines, especially Singaporean ones, have now offered annual cheap flights with a view to attracting more loyal customers and exerted certain effects on national tourism yield. In the first part of this paper, basic knowledge of low cost airlines, which are illustrated by a specific one in current operation in Singapore, would be presented. The second part is designed as a general analysis into the consequences of low cost airlines on Singapore’s tourism industry from both consumers and providers perspectives in economic, social and environmental aspects. Recommendations for further development and suggestions for ways of surmounting obstacles and difficulties would be presented in the final part.
Low cost airlines (LCAs) known as no-frills, discount or budget carriers or cheap flights, refer to airway companies that draw attention to passengers by lowering travel costs in exchange for removing traditional in-flight services. There are some distinct features characterizing LCAs from full service carriers (Callaghan, 2006):
- Attach special importance to minimizing fare and maximizing productivity
- Lower costs passed on to consumers as lower fares
- Mainly employ point-to-point services instead of hub and spoke model
- Immediate flights between regions
- Primarily utilize secondary and local airfields
- Work on newer...
... middle of paper ...
...mand. To ensure stable growth, one should not only take good care of domestic market but also need to brainstorm practical schemes to extend its activities into global scale; however, the choice of potential market and strategies of penetration have to be rational enough to achieve certain success.
Customers’ satisfaction must also taken into account, judging by the fact that stressing too much on cutting services can push travellers out of the business with LCAs. Insensitivity towards customers’ feelings may put an end to their relationship with any airway company however low tickets they advertise in the market. As a result, Customer Relationship Management (CRM) methodology need to be underlined accompanying with low cost mock-up. LCAs have to flexibly combine cheap price and tolerable service to retain passengers and attract loyal fan for long-term business.
The following value chain, which focuses on Spirit Airlines, is representative of most of the firms in the Ultra Low-Cost Airline industry. Spirit is the industry leader in many areas such as operational efficiencies/cost structure, aircraft fleet management, brand/network and growth. The firm, however, trails industry foes in areas such as customer service and operational reliability and recoverability. While most in this segment pursue the cost-leader competitive strategy, Spirit has demonstrated the most effective model to date – whether the model is the most sustainable remains to be seen.
Mason, K. J. (2001). "Marketing low-cost airline services to business travellers." Journal of Air Transport Management 7(2): 103-109.
1. Issues 2. American Airlines’ objectives 3. The airline industry 4. Market 5. Consumer needs 6. Brand image 7. Distribution system 8. Pricing 9. Marketing related strategies 10. Assumptions and risks
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.
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).
Ryanair was founded with the intent of breaking up the air travel duopoly held by British Airways and Aer Lingus at the time (Ryanair, 2013). There isn’t a doubt that the goal was accomplished and continues to evolve. However, a new competitor has entered the market and threatens their “lowest fare anywhere” motto. EasyJet, founded in 1995 (Spotlight falls on, 2013) has emerged as another low cost carrier (Wensveen, 2011) and is keeping competition fierce as they try to exceed Ryanair customer service by providing “speedy boarding”, more flexible fares, guaranteed seats and better food service (Low cost airlines, 2013).
The aviation industry has undergone big changes in a short period of time. The major change appeared in this industry is the generation of low cost carriers over the past two decades. A low cost airline is an airline that provides the cheapest airfare to different destinations in different parts of the world. The low cost airlines play an important role in the airline industry. It is very useful to the passengers as they are getting air tickets for affordable prices.
The future of the industry is in JetBlue’s “cheap chic” style. Airlines need to maintain a cost effective price point while also not appearing cheap. Small conveniences like the ones offered through Southwest and JetBlue allow for brand with a perception of quality at a reasonable price. Firms of higher cost airlines need to work toward brand differentiation at the very least lowering price points.
Singapore Airlines (SIA) was created in 1972 and was fully state owned. The company expanded rapidly, and with a strategy of concentrating on customer needs by providing exceptional in-flight service, the airline quickly became a noteworthy competitor in the market. During its formative period in the 1970s, SIA developed all the hallmarks that made it one of the most successful and consistently profitable airlines in the world. Through a constant investment in personnel skills and other sources, the company has achieved a sustainable competitive advantage, as well as a reputation for classy elegance.
For instance, global economic downturn aircraft leasing costs were reduce by about 40%. Creating an environment with lesser competition and enabled AirAsia to lease their aircraft at a cheaper rate and it will leading to cheaper ticket prices for customers. Last several year, economic growth rapidly resulted in a burgeoning middle class within Asia’s large population. Demand for air travel increased together with increased. More people were willing to compromise on food and other services in exchange for lower prices. The attractiveness of budget airlines is primarily their lower ticket prices, which can be as low as 10-20% of those charged by full-service airlines. This presents AirAsia with opportunities to differentiate itself with competitors by adding customer services or operation as full service airline with low fare. It give it a competitive advantage and corporate travel services with its own branded credit card by further increasing brand awareness and value for
International civil aviation has a major impact on contemporary world society. It shapes national economies as trade is carried out through aircraft and air routes. A small country like Singapore has achieved remarkable economic progress due to its formidable airline, Singapore Airlines. Tourism promoted by aviation has helped the economies of many countries.
This issue has great impact on Tiger Airways, many steps or tactics been taken by them to improve their reputation as well as gaining more profits and reducing losses. The consumer behaviour towards services provided by Tiger Airways was affected by some problems that seem to be risking the lives of their passengers. This explains the loss of immense profit that led them into losses. In gaining back the confidence of their customers, they made many promotions by offering much lower prices and deals which includes hotels as well. For example, their customers could rent certain hotels at cheaper price and save up their travelling expenses. In short, Tiger Airways is struggling to get out of the pothole after suffering three consecutive losses so that they do not have to end their business.
Tourism is an industry, with air transport becoming an indispensable factor. One major growing trend in airline industry is market globalization. People travel to other countries for both business and leisure purposes, leading to 7% increment in air travel per year. As a market is globalized, those involved will evolve into global customers who go in search of suppliers running on global base. This leads to a growth in business travel due to the global involvement of companies in terms of investments, production chain, supply and customers. Thus, the participation of air transport in facilitating the world trade is prodigious. Aviation implements another economic benefit of the air transport by providing consumer welfare to individuals while considering the environmental brunt such as the air quality, congestion and noise in the proximity of airports. Air transport being highly demanding has doubled the passenger numbers since the 1980s and over the last decade, it has increased by 45%. The huge growth and development of the aviation field has benefitted in heaps regarding
Tourism is a typical activity of fashion that the public participate widely and it has grown in importance over recorded human history. Innumerable articles refer tourism as “the world’s largest industry”; policy-makers, analysts, and scholars often speak of the size of the tourism compared to that of other industries (Smith 2004: 26). These series of misleading statement, together with the mass media’s reports (out of context), make the idea that tourism is a single large industry branded into many people’s minds. However, in this essay I will demonstrate that it is a simplistic and misleading idea, which should be replaced by the plural term, “tourism industries”. Moreover, tourism is not the world’s largest industry, but largest service sector.
Tourism and Hospitality has developed rapidly and becoming extremely important to economy in the world. The income that several countries in the world receive from tourism industry can be reached to $1billion per year. In addition, Marketing is one of the most important factors that help and effect to tourism industry in many positive ways. Marketing evolved in the tourism industry since 1980. It promotes tourism industry by encouraging the tourists to travel at their destination with the strategy that made up to the tourist satisfaction. However, a marketing strategy does not have to be complex, in fact it should be a easily understood which ensure the advantage of marketing of the products and services to the tourist business to obtain positive