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
Southwest Airlines’ business model allows the lower priced flights by saving money on fuel at large hubs, and in short turnaround time. The company is one of
The logic behind the strategy was that the smaller aircrafts were suitable for the shorter runways at the regional airports, which were much smaller in size, while jet aircrafts o the trunk routes helped it to achieved higher capacity and carry passenger over a longer range than the ATRs. Lease with airbus. Cheap airlines usually entered into an operating lease with airbus, wherein the title remain with the aircraft owner, while the operator paid up rental payments, which were tax deductible and reduced not only the capital expenditure on the operator’s balance-sheet but also the operator’s exposure to uncertainty of the aircraft’s residual value at the time of its disposal. The lease payments comprised of a fixed base payment and a variable maintenance reserve determined based on the aircraft
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.
We also suggest that the company must work on developing its aircraft, renewing them a little bit, and working on clearing some problems such as seat comfort and cleanliness. Ryanair is very popular in europe due to its low prices, however companies should sell value also not price, and should persuade customers a higher price for the company’s brand is justified by the greater value they gain. Low prices is not always the solution, customers also search for added value in order to satisfy their needs and wants, ryanair try to work solely on promoting its low prices and on the other hand the company charges its customer extra fees on any other additional service rather than their ticket such as baggage fees, for example it eliminated its free checked-bag allowance and began charging 3.50$ per piece, infant fees, special assistance fees, priority boarding fees, name change fees, these basic services are offered free of charge by airlines all over the world, however ryanair can justify these fees by offering a very low ticket price compared to other airlines, but the problem is that sometimes customers feel that they are paying the money they saved by purchasing ryanair’s ticket on these fees, so they feel that it is the same as buying from other airlines, but that is not alway the case. An airline such as RYANAIR with all of its success must work harder on improving its SERQUAL model and to increase its Reliability, Responsiveness, Empathy, Assurance, and
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
2. Low fares For Ryanair, on a profitable basis, smaller costs facilitates to smaller fares. The average pricing at Ryanair is lower than any of its counter parts in Europe. Even after the inclusion of extra amenities like baggage costs, seat booking, on-board purchases and travel insurance, Ryanair 's revenue per passenger is lesser when compared to the other contenders in the European market. 3.
Low Cost Carriers (LCCs) emerged after deregulation and they became a new model of airline carriers in the airline industry. Nowadays, LCCs are popular carriers for travellers because their air fares are cheaper than traditional carriers and LCCs made air travel become common in the world. This essay analyzed the differences between the customer products offered by Network carriers and LCCs based on they have different business models that exist in the industry today, the analysis include low cost carriers products and full service carriers products, and low cost short haul and long haul low cost. Moreover, this essay evaluated how these models are being driven by market trends and global competition. First of all, this essay analyzed
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
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.