1. SOLUTIONS
1.1 PRICING & PRODUCT OPTIMIZATION
Air France is currently confronting problems in its pricing policies, especially in its LCC subsidiaries. Pricing issues hinder its LCC subsidiaries’ competence inside a market of intensified competition, since customers of LCC are relatively more price-sensitive than those of schedule airlines, and the scenario leads to a loss in the revenue. When this issue is combined with brand equity building and internal communication, it also incurs a negative impact on the group’s brand equity and internal conflicts such as strikes. The first step to cultivate a healthy and profitable LCC subsidiary is to resolve this issue.
1.1.1 Lower Price with Intensified Cost Control
An easy and effective approach
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It contributes to maximising revenues for the airlines and decreasing the cost per seat; however, all at the expense of the service quality. Players have been implementing the method. For instance, LCCs’ A321 usually accommodates 220 persons while their scheduled airline rivals hold around 185.
De-seasonalization
De-seasonalization of the winter-summer schedule is another approach that helps to save costs when not achieving high yields. LCCs have much more flexibility with fares as a direct response to demand levels and can establish better price structures with this approach.
Fleet cost control
Fleet cost is one of the major costs for LCC players, thus fleet control is very effective in reducing cost. By including more fuel-efficient aircrafts, grounding underperformance planes, and introducing fleet homogenization, LCCs achieve lower maintenance and fuel cost
1.1.2 Ancillary Price Options & Hybrid
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Ancillary fees exclude cost for extra service from the unit ticket price thus leading to a lower price for consumers in a price sensitive market, while customers can choose extra service they want by paying extra. For instance, in 2010 the US airline Spirit introduced an overhead bin fees as an effort to unbundle every aspect of an air tour, so customers can decide which service they want to pay for and become satisfied. Spirit has the historically highest growth rate of revenue in ancillary that year.
Embrace wifi
The world population are getting more used to technology. People will be appreciated if they can use on board WIFI. It will be instrumental in targeting a variety of consumers, from the tech-savvy to business travellers. Heavy investment in on-board facilities means that on board WIFI may become an industrial standard. According to a report, some 38% of all domestic flights in the US offer Wi-Fi, 9% are in the process of introducing it, while some 53% of flights remain Wi-Fi free.
Ancillary fees for service from third
The competition between Air Canada, a traditional carrier, and West Jet, low cost carrier is rigorous in Canadian airline industry. Though Air Canada is Canada’s domestic and international airline and has dominant hold in the Canadian market, West jet is giving the airline tough competition with its effective price point, profitable routes with greater focus on domestic market. The rivalry competition is moderate to
Wireless networks exist everywhere in now day society,
The organization is concerned about the cost reduction in other parts of the business because there was no control on the fuel costs that increased for years. Cost reduction was a very important that
Introduction The restaurant industry in the United States had annual sales of $ 631.8 billion and employs 12.9 million people in 2012. Even in times of recession there is little evidence that this industry has seen a decline especially in its fast food and quick service segment. But with a depressed economy with no immediate upward trend in the near future, majority of the customers indicated that they would either curtail their spending on eating or best maintain its current level which is certainly going to affect the future of many restaurants in the industry. Chipotle is part of the fast casual segment of the U.S industry with over 1,600 restaurants.
It also has given Lufthansa the opportunity to reduce cost of resources, thus leading to higher market profits. It has also greatly reduced the barriers of market entry including
This enables Delta Express to operate point-to-point service that is not part of mainline operations. Delta Express gains leverage from being offer Delta SkyMiles frequent flier points. They introduced seasonal fares and constantly keep costs down. Even though the industry remains intensively competitive now, most the carriers have a route system well suited to their individual strengths, and fewer carriers have a route system well suited to their individual strengths, unlike fewer carriers are on the verge of bankruptcy or struggling to maintain the turnover. Most airlines pursue the total market strategy that is an attempt that is meant to provide services for significant parts of the business, leisure and freight segments.
Lincoln, to move from his one-room factory from fourth floor to a three story building, held symbolic visionary meaning that LEC would be a strongly knitted, passionate, and well coordinated endeavor. The absence of the warehouse at its main-plant’s premises at Cleveland and flow of materials directly from a half- mile dock represents LEC’s diligence and efficiency which further illustrates how the firm conducts its operations which vigorously minimizes its cost, to the optimum levels possible. It demonstrates the observer how it has been able to transfer the minimum costs, in the form of prices, to the firm’s customers.
The pricing strategy must align with an organization’s marketing objectives. Accordingly, Dyson should institute premium pricing and avoid discounting—to reinforce the firm’s value and market position. 4.5 Distribution and Supply
bargaining power of buyers in the industry is high due strong as low switching costs and plethora of options in the market. Now, e-ticketing has improved the chance and flexibility to search for different airlines companies leading to down word cost pulls and upward services push. Furthermore, it eases of switching between different airlines companies. Therefore, for airlines they need to keep customers in the fold by providing air miles system to gain customers' attention and retain them.
But in choosing one out of the two, the differentiated strategy is preferable. Virgin can use the differentiated strategy to increase growth by product differentiation to better develop their brand which allows them to stand out from their competitors such as Qatar, British Airways. “Virgin’s minimum level of quality for differentiation also creates threshold pricing”. However, Virgin using the differentiated strategy can create value for Virgin Atlantic because when Virgin uses this strategy that concentrates on the cost value of the product or services as opposed to similar products in the industry of their rivals, it builds a perceived value between potential customers and
In addition, open more stores in crowded location, particularly on big cities such as Tokyo, London, Hong Kong. Pop up stores in festivals/carnivals in those particular cities would increase more attention from the customers. Product The product must target on an all age range of the customers with high quality. The company should have product that meet the demand of customers, group product for couples, families, friends would be a great way to increase the production line.
Delta created its separate subsidiary in response to competitive threat of low-cost airlines. In addition, its subsidiary used pilots of its parent airline with independent decision-making authority. Does song have an effective strategy? Evaluate strategies by using three tests of effectiveness? Low-cost airline: Faster growth of low-cost aviation industry with homogenous service makes this industry fragmented across the United States.
With a rise in fuel prices and environmental factors (such as terrorist threats) reducing air travel, airlines continue to struggle. In union environments, where staff (like pilots and flight attendance) is heavily unionized, the industry has not been able to cut their labor costs. New low-cost industry entrants are adding to the pressure the traditional
For instance, with the global financial crisis and later the Eurozone crisis, the number of travellers has significantly reduced due to economic hardships. This has affected the profit levels of the airline as well as slowed down its growth prospects. The airline also faces intense competition from other low cost airlines forcing it to extensively invest in product differentiation to counter the competition. This is an expensive
2.0 Inputs - Transformation Process - Outputs 2.1 Inputs Operations management concerns with the conversion of inputs into revenue-creating outputs through the transformation process (Mahadevan, 2010, p.5). Slack et al. (1995 cited in McMahon-Beattie and Yeoman 2004, p.30) mention that inputs are divided in transformed and transforming. Transformed are those that are transformed in some way and transforming inputs are those that are used to carry out the transforming process.