They can increase expenditure by advertising more or by executing promotions. Therefore existing airlines would innovate in order to maintain or increase their market share, such as encouraging loyalty by providing perks such as frequent flyer miles. Examples of positive reactions are such as: Mango airlines increasing their advertising expenditure in order to increase their market share Negatively: Whereby entities reduce their expenditure, airlines may reduce advertising and other operating expenses to become more efficient in order to reduce their prices in order to maintain or gain market share. The aviation industry requires huge amounts of capital, it’s for this reason that Velvet sky initially only had one leased plane. Knowing this, firms may try to restrict velvet sky from obtaining a market share by reducing prices and innovating ways in which to persuade customers to remain or join them.
Due to the ageing population, the agency offers travel insurance to ensure their customers are protected if they fall ill while travelling. Political factor: This factor can have a great influenced in the change project. External politic refer to those which the stakeholders have no control over such as tariffs, government regulations and tax policies that the firm must comply with (http://www.brighthubpm.com/project-planning/51754-components-of-a-pestle-analysis/ ) these factors increases the business cost reducing the agency revenue. However, The Government benefits from increased revenue, they protect the rights of the consumers and encourages political
Most of the airline industry is composed of two categories of buyers, which are (i) single flyer, (ii) travel agencies and online portals. For the travel agencies and online portals, buyer power increases because they purchase a large portion of the airline industry’s total output. Both of the two categories of buyers have low switching costs because most of them choose the flight based on ticket price. For the period of 2001-2004, the US airlines began cutting prices to try to maintain their passengers’ loads in the face of declining demand. However, when one airline serving a particular route cut its prices, its competitors, desperate to cover their fixed costs, quickly followed.
Passengers will attempt to make complaints with airline industry about the flight delayed problems. Normally, they will think that they already paid for the service tax and they actually can acquire good service from airline industry. From customer perspective, the major factor of negative outcome of waiting is waste their time. They do not want to wait when the flight is delayed and they do not know it will take how long time to wait for the flight time (Wong, McCain, and Liu,
What sets competitors apart in the airline industry is how they get their customers to their destination. When coming out ahead of their competitor’s airline companies must focus on three areas; competitive differentiation, service quality and productivity. When an airline company focuses on improving in these three fields they can increase their outreach and customer preference. The airline industry is also known for its nonlinear pricing because they sell economy, first class, business class etc. tickets and at different prices before a flight.
Millions of people rely on the airline industry to travel quickly and efficiently between cities in the United states and throughout the world. Since 1978 where, when laws were put in place to promote competition in the market, the nation has relied on competition among airlines to promote affordability, innovation and make service improvements. The constant improvement of airlines and airplanes would in theory lead to lower prices for consumers. In recent years, however, the major airlines have raised some of the fares and the quality of the service has decreased. Competition is essential in any market as it avoids a high market concentration which consequently almost leads to higher ticket prices to be cheaper and always causes prices to increase and consumer surplus which is defined as the difference between the total amount that consumers are willing and able to pay for a good or service and the total amount that they actually pay to decrease.
As the business of Ryanair is growing across EU, so it has become a concern to minimize the carbon footprints in order to protect environment. Even Ryanair aircrafts need to come up with new technology and equipment to better handle the heat waves and CO2 emissions. Legal Factors: As UK is leaving EU so it has created a great impact on Ryanair airlines by restricting their flights from EU to UK and vice versa. After the hard Brexit, Ryanair airlines will have to come up with negotiations for using UK airports (because most of the airports are government owned while some isolated airports are privately
Individual Assignment 5: Pricing and Distribution Tong Tsz Hin (A0143135R) 1) a) Airline ticket prices Airline ticket prices are significantly influenced by branding. For example, Emirates and SIA charge premium prices for arguably the world’s best in flight services. Conversely, after MH17 and MH370 disasters, Malaysia Airlines slashed their prices when their reputation is tarnished, due to the loss in consumer confidence. Another factor is the demographics of the customer, such as income level and purpose for travel. Most airlines have pricing tiers like economy and business class, tailored to customers willing to pay more for additional services like food and entertainment.
Since Nok Air positions itself as “premium low-cost airline”, the firm is now facing the high cost. The costs include fuel engine price, the premium onboard service, foods and beverages, the cost of offering high weight of baggage, and so on. Also, as Nok Air has to hedge fuel engine from Thai Airways International Public Company Limited, it mainly drives Nok Air to have the higher cost, and it results in decreasing the profit (“Broken Wing Nok Air,” 2008). However, the firm cannot increase passenger ticket price. Otherwise, it will be inconsistent with Nok Air’s position.
Another factor is the amount of consumers that purchase airline tickets came from middle class income. Due to individual earning, they will tend to choose airlines that offer cheap and affordable ticket fees compared the one who sell it in expensive and indirectly it will lead to high bargaining power of buyers. Next, nowadays with the advancement of technology and social media make the consumers easily to access the current information regarding the tickets, package, promotion, discounts and others from airlines. They will keep getting the notification and will be alert regarding the airlines. Of course the power of buyer will be