Velvet Sky Airlines Case Study

Introduction:

Velvet Sky airways is an airline meant to provide cheap flights around South Africa. It’s based in Kwa-Zulu-Natal, Durban, and primarily offers flights between Durban, Johannesburg, and Cape Town. With the main aim of satisfying customers, Velvet Sky airways has leased an aircraft and planned to lease two more to cover the golden triangle. Velvet Sky airlines launched on the 18th of March 2011, however, it was liquidated in June 2012.

Competitor Reactions:

Competition in the airline industry is highly intense; therefore the introduction of Velvet Sky airlines into the industry would likely concern other airlines targeting the same market, the golden triangle. This will influence marketing decisions in existing airlines. Competitors

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.

1time being a low cost airline may use this as a mean of reaction to the introduction of Velvet Sky into the aviation industry. They may drop prices and expenditure to maximise profits and market share.

These flyers generally don’t seek comfort and are unable to differentiate between the different flights available. This market would benefit from the entrance of Velvet Sky as it would provide cheap flights and more options for the flight option for the consumer to choose from.

Urgent travellers are individuals that require flights with short notice. The entrance of velvet sky would mean more aircrafts endeavouring to Durban, Johannesburg and Cape Town which means travellers are more likely to obtain flights to their desired destination and time. 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