1. What are Yunnan Lucky Air’s best options?
Luck Air had a great business model, and that was to follow the same model as Southwest Airlines in the United States. Because Luck Air is considered a domestic airline in China they operate on a small scale compared to major competitors and so it made economical sense to offer low-cost, high-efficiency to their customers. In 2007 Lucky Air was able to more than double the amount of passengers from the year before by using a low-cost tactic. However other airlines have also caught on to offering low-cost fares for domestic routes to their passengers. With more competitors Lucky Air has decided to look at the possibility of taking a risk and to focus on e-commerce. Backed by their parent company Hainan Airlines, Luck Air has access to one of the most advanced web portals in the Chinese airline industry. But is e-commerce a good and viable option to compete with other airlines? Taking a look at what exactly e-commerce is important to grasp the understanding of how a business can operate, stay competitive and obtain a profit in a digital world. E-commerce involves digitally enabled transactions between and among organizations and individuals. Digitally enabled transactions include all those mediated by digital technology such as over the Internet, the Web and or via mobile apps. (Laudon & Traver, 2013, p. 55). Currently Airlines in China have high distribution costs which are fees paid to travel agents, the cost of staffing offices for direct offline purchases of tickets, the cost of a reservation system, offline advertising and marketing and ticketing fees to the government. The idea behind e-commerce for airlines is to decrease their dependency on sales offices or agents and computer reservation systems. The risks are consumers who fear credit card fraud and the extremely low percentage of Internet users