The price may have very little influence of these consumers; therefore brand reputation plays a minor role. Frequent flyers are leisure related; these individuals would be slightly price sensitive but would seek some comfort. The introduction of Velvet sky would allow these customers a greater variety of flights to select from whilst still being aware of their price limit. Frequent flyers are usually affected by customer service, therefore if velvet sky can adhere to a high standard of service delivery and customer service it would appeal to this market. for example if Velvet sky is charging 1000rands from Durban to Johannesburg, that will also force 1time airways to reduce its price to maybe 1100 since they are targeting the same
The only differences between airlines industry is only in terms of their package deal and offering. For example, if the customer does not intent to take travel agencies they might look for AirAsia services whereby AirAsia provide holiday packages that comprising flight ticket, accommodation and travel guides. But the most crucial thing that customers look forward is the place of destination offered by the airlines which indicates the high bargaining power of purchasers. Apart from that, it can be seen that there are low changes costs as the price offered does not have much distinction and it will lead customer to pick the airlines that suit with their time schedule. Another factor is the amount of consumers that purchase airline tickets came from middle class income.
In the same time, our company is moving towards a performance management system as other organization. Hence, I recommend new strategy that call “new world” strategy. Since our company is doing on low-cost airfare and high quality facilities to make passengers satisfy and also increase the popularization of status. Our company also makes available a service which can provide customer to make privilege card at our company in order to collect privilege points to redeem the flight ticket in the following flight booking. While customer needs to get this free privilege card they need to purchase our company airfare RM300 above.
As a consequence, the firm can compete in price and can set any level of price that Nok Air prefers. Another key advantage that Nok Air has is the offering more weight of baggage. This is what Nok Air can offer better than its competitors. However, the disadvantage is the current Nok Air’s operating cannot generate enough profit. Since Nok Air positions itself as “premium low-cost airline”, the firm is now facing the high cost.
And Virgin is no different, which is clearly seen in the cost of running an airline where almost a third of the cost is fuel, so every bit of technology that can help improve the fuel consumption, improves profits. Quality expectation… this is a fundamental task for all companies ensuing they are delivery on their promise. For Apple they just simply known to be the best at it. Just having the best supply chain distribution and logistical model and process will mean nothing if the quality expectation is not met. This is no different for Virgin, whilst they could get away we some quality issues as a low cost airline, when they became a full service airline expectation, quality and the consistency of that quality was paramount.
However, these budget plane tickets and hotel packages might not be appropriate for everybody, as people their very own preferences about accommodation, location from the hotel and chair offered in-flight. New Methods Numerous methods and price cuts happen to be introduced to be able to allow it to be readily available for a bigger portion of the society. One particular
In addition, the availability of information is really high and with the emergence of travel portals who guarantee that they can search for the lowest fares out of all the options available and book it for the client with just a click which even provides the ease of purchase, the bargaining power of the buyer is increasing Frequent flyer programme and online duty free purchase services can create customer loyalty and reduce the threat of customer switching over to other airlines to some extent. Low buyer concentration can also reduce the power of buyers. Competitive Rivalry (High
However, when one airline serving a particular route cut its prices, its competitors, desperate to cover their fixed costs, quickly followed. This “price competition war” among the aviation industry enable consumers can switching to any airline companies whose offer the cheapest price. This is because consumers at that period is more concern about cost driven rather than the quality and services after the September 11 attacks. This shows low profitability as US airlines is compete more for business due to downfall of economy, by cutting down fare to attract customers and add services at lower costs to lure people into using their
Brand name has made the customers stick to Ryanair as it fulfills all their needs and wants. Even though this company has suffered severe financial crisis in 1990, after restructuring in which they adopted the Southwest Airlines business model, Ryanair became the pioneer of the low-fares model in Europe. On the other hand, another strength that can be highlighted from this airline is that they are charging for ancillary services. Ryanair also has been categorized as the “Ancillary Revenue Champs’ by the 2010 Amadeus Guide to Ancillary Revenue. Although they charged for the services, these attract more customers as they are available at single platform.
Profitable industries magnetize new entrants, which limits profitability. Unless the entry of new firms is barred, the rate of profit will decline to its competitive level. The principle sources of barriers to entry are, economics of scale, capital requirements, access to channels of distribution, governmental and legal barriers, and retaliation (Dobbs, Michael E., 2012). Airline industry has a higher barriers to entry and the requirements to begin an airlines company are difficult, so the threat of new entrants has reduced. For example, Kuwait Wataniya Airways which started its services on 2009 and provided flights from Kuwait to destinations across the Gulf's countries, wider Middle East and Europe.