...UNIVERSITY Southwest airlines: staying ahead in the pricing game ASSINGMENT NO: 3 NAME: RIFFAT AL IMAM ID: 1030234530 COURSE: MKT 202 SECTION: 1 SUBMISSION DATE: 8-3-11 SUBMIT TO: M.A. SADAT SHIMUL ANS TO QUESTION NO 1 Southwest airline is one of America’s most successful air lines. It started its journey in 1970s.From the very beginning it has paid special attention to its pricing strategy. Southwest’s traditional pricing strategy has been low price strategy. When southwest airlines started their business, most of the people did not give it much of a chance. Southwest airlines strategy was completely different from other airline companies. They opted for “point to point” theory rather than “hub and spoke” theory. As a part of this theory they did not serve the major airports dominated by major airlines. They wanted to serve second tier destinations which cut down their costs. They served no meals, only snacks. It did not charge passengers fee to change tickets. It had no assigned seats. All of these ideas not only cut down costs but also helped to attract a particular group of passengers. It had no electronic entertainment, relying on humorous flight attendants. It not only had a low cost but innovative pricing strategy for passengers but it also had a unique plan for their employees. The airline did not offer a retirement plan: rather, it offered a profit sharing plan, thus keeping its fixed cost low. These strategies proved to be really...
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...Easy Jet and Ryanair; pricing strategies Flying high with low prices Introduction Easy jet and Ryanair and the two largest low cost airlines in Europe, they dominate the industry. They introduce low prices to entice customers; the earlier the customer’s book, the cheaper the price. By introducing these prices, Easy Jet and Ryanair have forced other airlines such as British Airways and Lufthansa to lower their prices. Both airlines have copied the American ‘South West airlines’ business model and introduced it to Europe. Easy Jet and Ryanair are able to provide the low prices by maintaining low costs. They cut costs in areas such as administration. With the online booking system, this saves them thousands of pounds every year. While cutting costs, the service given on board flights is not as good as the superior companies such as British Airways and Virgin Atlantic. It doesn’t have to be, as customers know that with the low prices comes low customer service. And for the cheap prices customers pay to fly with Easy Jet and Ryanair, they don’t mind. Ryanair Ryanair is the leading low cost airline in Europe. Founded in 1985 by the Ryan family they began with one flight and one aircraft flying between Waterford and Gatwick airport. Shortly after, they began flying regularly between Dublin airport and London Stanstead, competing with British Airways. ‘Carrying fewer than 700,000 passengers annually in its early years, the figures grew to 21.4 million years...
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...full-service airline British Airlines. The marketing plan will address the class of consumers who prefer to use full-service accommodations. The marketing plan will use many of the market strategies, such as advertising through the media, flyers and the company website. The marketing plan will extend for a 12 month period and following will be an evaluation plan to be used on continuous bases. Company Overview-British Airlines The full-service airline offers high level of fixed and operating costs. Full service airlines operate with fixed cost and fixed products and service (Smith, 2002). The airline provides different types of services such as in-flight meal, travel assistant, lounge access, and many others services. The full service airline has faced much competition from the many low cost airlines on the market which are airlines that provide limited service for in-flights they are able to lower their costs of travel. The airline comes with many services including two class segmentations, online or direct travel agent, and others services. The carrier being one of the oldest airlines in the world continues to support the full service model despite the many low cost airlines. British Airways is the elite carrier in the United Kingdom. The headquarters are located in the Waterside area in London Heathrow Airport. British Airways is the largest airline in the UK it is ranked high among the fleet of international flight destinations. The airlines just signed...
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...Southwest Airlines, Case Analysis Your name BUSN412 Business Policy August 7th, 2011 CASE ANALYSIS Southwest Airlines. COMPANY NAME: Southwest Airlines. INDUSTRY: Air Travel. COMPANY WEBSITE: (www.southwest.com) COMPANY BACKGROUND: Southwest Airlines Co. incorporated in 1967, is a passenger airline that provides scheduled air transportation in the United States. As of December 31, 2010, the company had 548 Boeing 737 aircraft serving 69 cities in 35 states (Southwest Airlines Company profile, 2011). Key officers include: Herbert D. Kelleher – Founder and Chairman Emeritus. Colleen C. Barrett – President Emeritus. Gary C. Kelly – Chairman, President & Chief Executive Officer. The Company functions primarily on point-to-point service rather than focusing on hub and spoke service. About 78% of the passengers of the airline travel on non-stop flights and the Company predominantly serve short-haul routes with flights operating highly frequent. (Southwest Airlines Company profile, 2011) SWOT ANALYSIS: Strengths: By far the biggest strength of Southwest Airlines is the ability of the company to offer reliable low-cost prices; they are also able to maintain lower operating cost which enhances its profitability. They were the first to introduce online booking, ticket less traveling, and no reserved seating, thus making it easier to turn around flights. The teamwork and efficiency within the company’s employees is widely recognized as one of the reasons...
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...THE DOMESTIC AIRLINE INDUSTRY OF INDIA Submitted by: Akshata Shirodkar ePGP-02-002 This term paper explores the rational economics behind the demand and its affect on dynamic pricing in the domestic airline industry in India, where both of these vary often with time and units available. Based on the learning gained during microeconomics course, this paper analyses the current pricing strategies and norms practiced by the airline industry. Managerial Economics Term Paper Demand in the Domestic Airline Industry of India CONTENTS 1. INDUSTRY OVERVIEW ............................................................................................................................................... 3 1.1 MARKET SHARE ................................................................................................................................... 3 1.2 INDUSTRY GROWTH ............................................................................................................................ 4 1.3 CAPACITY VS DEMAND ........................................................................................................................ 5 2. AIRLINE INDUSTRY CUSTOMERS ............................................................................................................................... 5 2.1 CUSTOMER SEGMENTS ....................................................................................................................... 5 2.1.3.1 LOW COST CARRIER BOOM ...
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...INTRODUCTION Air blue is a private Pakistani airline based at Jinnah International Airport Karachi. It started its operations on May 24, 2004. It was the first private carrier of Pakistan to operate the Airbus A320 when it initially started. Air blue has been expanding rapidly despite experiencing competition from the other three airline operators in Pakistan. The airline mainly flies on domestic routes plus internationally to Dubai International Airport and also has plans to fly to the Gulf, UK, and USA. MISSION STATEMENT Air blue will be recognized as the most progressive enterprise in the transportation business. We will offer our customers cost effective transportation service within geographical areas and market segments that can benefit from our services and will insure a return on investment and growth rate consistent with current management guidelines. VISION STATEMENT Our vision is to make Air blue the most admired airline in the world. * Ensuring safety comes first * Providing Service Straight from the Heart * Encouraging product leadership * Delivering superior financial returns * providing rewarding career opportunities SWOT ANALYSIS of AIR BLUE: The SWOT analysis is the process of analyzing organizations and their environments based on their strengths, weaknesses, opportunities and threats. This includes the environmental analysis, the process of scanning the business environment for threats and opportunities, which is considered...
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...give a brief understanding of strategic commitments, the rationality of predatory pricing and the extent to which predatory pricing strategies are used in the global airline industry. DATE: 5th March 2015 Introduction This report aims to give a brief understanding of strategic commitments and the rationality and extent to which predatory pricing strategies are used in the global airline industry. The Airline industry, being highly competitive, offers many examples of both Strategic Commitment making and Predatory Pricing strategies. What are Strategic Commitments... The commitments that firms make are two pronged, having direct and strategic effects. The direct effect is the clearly identifiable aspect of the commitment. The strategic effect of the commitment is more subtle, as it is the influence and response which the commitment generates from the competitors in the market in regards to their intended short/medium term tactical plans. Strategic commitments can be described as a form of strategy that firms have at their disposal, in which information on plans or intended actions by the business are publically released with the purpose of influencing the actions of other key market players. To be considered a strategic commitment the announced plan/action must have visibility so that those it is intended to influence can observe it, and it must be difficult to reverse, due to costs or other factors such as potential damage to a firm’s reputation etc. and finally...
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...Full-Service In this essay I will create a nine-component marketing plan on flying full-service business class with Delta opposed to flying with a discounted low-fare carrier like Southwest. As the economy struggles and air travel becomes more competitive it is not easy to establish the best niche market strategy for an airline. Teplensky defined (as cited in Parrish, Cassill, & Oxenham, 2006) niche market strategy as, "an emphasis on a particular need, geographic, demographic, or product segment" (p. 695). Therefore, it would be ideal for Delta to seek a more specific niche in air travel and differentiate by precisely satisfying customers’ needs; rather than attempting to generalize broad niches that only partly satisfy customers’ needs as a whole. Company Overview/ Description of Location Delta Air Lines Inc. has their corporate headquarters in Atlanta Georgia. However, Delta Air Lines Inc. has a vast worldwide airline system. Delta serves over 160 million customers annually, and offers 356 destinations in 65 countries. Additionally, Delta has over 80 years of passenger service, more than 80,000 employees, and 700 aircraft that spread across six continents. Packed with an array of good services, Delta offers more than 13,000 daily flights, SkyMiles rewards (frequent flier plan), the world's largest airline loyalty partnership, over 50 Sky-Clubs, and an award-winning BusinessElite program (Delta Air Lines Inc., 2011). Description of Product or Service Focusing primarily...
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...Read the following case study and answer the questions Pegasus Airlines Until 1982, Turkish Airlines was the only airline company in Turkey, and it had no domestic competitors. Over the past 20 years, Turkey experienced a number of financial crises, as well as political turmoil. Pegasus was created in 1989 as a charter airline partnered with the Irish airline Aer Lingus to create all-inclusive holidays. In 2005, the airline changed from charter airline to a low-cost airlines. The Airline became the best private airline better than any other local airline. What is the secret to the airline’s success? Quite simply, it involves making sure Pegasus is continually developing to meet passenger expectations and priorities. Pegasus has put in place a yield management strategy for ticket pricing, using the strategy of Southwest Airlines of North America as an example. Supply and Demand as well as time are taken into account in the ticket pricing strategy; for example, if a customer book early (60+ days) they receive further savings while those who book later pay the maximum current fare offered by competitors. The system is complemented by an electronic ticket policy whereby passengers receive their information via email and SMS. Pegasus has also developed a credit/loyalty card, which offers customers a range of benefits including insurance rate reductions. Although airlines can’t often control flight delays, Pegasus has developed a specific customer satisfaction guarantee policy...
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...TURKISH AIRLINE INDUSTRY OVERVIEW June 12, 2011 · by AC · in Aviation. · Today, I would like to provide brief information regarding the marketing and survival strategies of the airline industry, both locally and internationally. I should probably stress that the airline industry is too global to be considered as only domestically so a marketing analysis ignoring the international market situations would be off balance and superficial. The airline industry in Turkey was first constructed as a monopolistic market. The major and the only company was the government-owned THY. This situation has changed within the EU standardization and privatization process. After the deregulation, many carriers came into the airline industry to compete against the market leader with the goal of taking advantage of the areas where THY was seriously lacking. Government Regulation used to be the main barrier to entry in the airline industry. However, due to the oil shock, the growing public dissatisfaction and the regular shifts in political opinions, the decision to deregulate was taken. The major barrier to entry was broken, leading to a price war with the entry of many low-price and no-frills airlines. Every carrier could enter and prices were not regulated. The cost of customer switching was very low. Thus THY had to develop “frequent flyer programmers” to retain customers by issuing free tickets and upgrades on basis of number of miles flown, raising the level of offered services and lowering...
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...THE AIRLINE DEREGULATION EVOLUTION CONTINUES The Southwest Effect [pic] Prepared by: Randall D. Bennett James M. Craun Office of Aviation Analysis U.S. Department of Transportation May 1993 Table of Contents Major Findings 3 Southwest 4 Industry Structural Changes 5 The Southwest Effect 6 The importance of new entrants 8 Appendix A: Charts 10 Chart 1 10 Chart 2 10 Chart 3 11 Chart 4 11 Chart 5 12 Chart 6 12 Chart 7 13 Chart 8 13 Chart 9 14 Chart 10 14 Chart 11 15 Chart 12 16 Chart 13 16 Chart 14 17 Chart 15 17 Chart 16 18 Chart 17 18 Chart 18 19 Chart 19 19 Chart 20 20 Chart 21 20 Chart 22 21 Chart 23 21 Major Findings: The principal driving force behind dramatic fundamental changes that have occurred and will occur in the U.S. airline industry over the next few years is the dramatic growth of low-cost Southwest Airlines: • A return to profitability hinges on developing lower-cost services in short haul markets and increasing fares in longer-haul markets: • Other major airlines are giving up competing with Southwest's low-cost service for market share. Southwest's continuing expansion will force other airlines to bring about a major change in their cost structures by developing new, low-cost services in short-haul...
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...Low cost airlines Definition of low cost airlines Ryanair is a low cost carrier, well-known in Europe which started in 1991 as a ‘no-frills’ service airline between Ireland and the UK. By 1995, Ryanair spread to more European countries. Nine years later it carried 20 million passengers and 10 years after that, in 2010, the number of passengers doubled to 45 million. This low-fare short-haul airline was no\t the first airline was not the first airline with these characteristics. It was Southwest Airlines, an American airline which was introduced in 1967 and still going strong in 2016. (Quintano, 2015) Low cost airlines can be defined as being practical in a way that different low cost airlines offer different services. Some low cost airlines...
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...Transferring low-cost marketing practices from air to rail services: The Ouigo case Paul Chiambaretto a,b, Anne-Sophie Fernandez c a b c MRM-Groupe Sup de Co Montpellier Business School, 2300 Avenue des Moulins, 34080 Montpellier, France Ecole Polytechnique, PREG-CRG, Bat. Ensta, 828 Boulevard des Maréchaux, 91762 Palaiseau, France MRM-ERFI, University of Montpellier 1, Espace Richter, Rue Vendémiaire, Bât. B, CS 19519, 34960 Montpellier Cedex, France a r t i c l e i n f o Article history: Received 24 October 2013 Received in revised form 11 May 2014 Accepted 12 May 2014 Available online 29 May 2014 Keywords: Low-cost High-speed train Replication strategy Intra and intermodal competition a b s t r a c t More and more airlines have adopted a low-cost business model and many scholars have studied the characteristics of such marketing strategy. While other transport modes have decided to copy and adopt this strategy, we investigate how they replicate this business model. To do so, we in-depth study the operational and marketing characteristics of Ouigo, the new low-cost offer launched by the French rail operator SNCF in 2013. Based on interviews and secondary data (press articles, reports, etc.), we analyze how the rail operator has adapted the low-cost model used by airlines to the high-speed rail industry. We first begin by explaining why rail operators need to implement low-cost strategies and we analyze the characteristics of these low-cost strategies...
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...EasyJet- The ‘Easy’ Ways to Succeed Question No.1: With the acquisition of Go. Easyjet become the biggest low cost airline in Europe. What is the mission of Easyjet? Analyze the growth of Eastjet as a successful low-cost airline and its business model. Also discuss the nature of the competition faced by Easyjet and the competitive advantages of the airline over rivals? Answer: The misson of Easyjet is “ safe , good value, point to point air services”. It targeting the leisure and business markets on a range o European routes. Easyjet growth in passenger number increased immensely from the year 1995 to 2002. In the year the annual total passenger were 30000 where in 2002 the total passenger were 11400000. So it clearly depicts the growth of Easyjet as a low-cost airline in terms of passenger. We also see that the revenue amount in 2002 was 861.50 million where in 2001 it was 525.70 million and in 2000 it showed 385.8 million dollars. Easyjet’s net income was 76.5 million in the year 2002 where in the year 2001 and 2000 the net income were 56.20 and 41.9 million respectively. So from the above analysis we can clearly observe that the growth of EasyJet in the low-cost airline industry in Europe. EasyJet borrowed its business model from United States carrier Southwest Airlines. EasyJet has adapted this model for the European market through further cost-cutting measures such as not selling connecting flights or providing complimentary snacks on board. The key points of this...
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...EWMBA 299 – Competitive Strategy Southwest Airlines Introduction The domestic US airline industry has been intensely competitive since it was deregulated in 1978. In a regulated environment, most of the cost increases were passed along to consumers under a fixed rate-of-return based pricing scheme. This allowed labor unions to acquire a lot of power and workers at the major incumbent carriers were overpaid. After deregulation, the incumbent carriers felt the most pain, and the floodgates had opened for newer more nimble carriers with lower cost structures to compete head-on with the established airlines. There were several bankruptcies followed by a wave of consolidation with the fittest carriers surviving and the rest being acquired or going out of business. Analysis of the airline industry To determine the profitability of the airline industry, we will do an industry analysis using Porter’s five-forces framework. This industry analysis will help us in understanding the size of the Potential Industry Earnings (PIE), and how much of this the different participants can extract. Rivalry among competitors There is intense rivalry among different airlines. In the pre-deregulation days, airlines competed mostly on things like service, meals and in-flight movies etc., since prices were mandated by the Civil Aeronautics Board. In the post-de-regulation era, this rivalry has taken on the form of severe price competition, with airlines ruthlessly undercutting each other...
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