Management of Competition in Airlines - Coursework Example

Name : xxxxxx Tutor : xxxxxxx Title : MANAGEMENT OF COMPETITION IN AIRLINES Institution : xxxxxxx @2009 Management of Competition in Airlines Executive Summary The aviation industry is very competitive. It is an industry that demands the stake holders to incorporate appropriate strategies. With reference to the Singapore airline and the British air ways, a number of aspects are elucidated on the need to have appropriate strategies. Singapore airline is not only the leading airline in Asia but also a leader in air industry innovations in the world. The British air ways on the other hand was once a leading air line in Europe but is currently under too much strain to earn a competitive advantage. Competition is an aspect that is common to all business set-ups. The Porter’s five forces model of competition describes how a number of forces influence competition. This paper compares the strategies employed by the Singapore airline and the British air ways. This is in line with how the porter’s five forces model of competition has been applied in the Singapore airline system. Introduction The Singapore airline is thought to have come in to operation in 1947. By then, it went by the name Malayan that was later made in to Malaysian Airline. The British airline on the contrary has been implicated in a number of scandals that have heavily impacted on its progress. A number of strategies employed by these two airlines may appear similar. However, the degree to which the strategies are fostered in both airlines is an outstanding measure of the level of success. The Singapore airline seems to be better place in its marketability than the British airline. There are a number of aspects that emerge in line with the success of the Singapore airline. The factors implicated in the dwindling performance of the British airline are also highlighted. The marketing strategies employed by the Singapore air line. Singapore airline is credited for having heavily invested in the brand recognition. The Singapore girl is an image that distinguishes this airline from the rest. In an effort to stay on top of the competition in the industry, the top leadership recognizes the need to emerge in innovations. The airline takes the lead role in enhancing new technologies in the aviation industry. This is a strategy that makes it hard for its rivals to over do it. The background of the airline dates back to a very competitive age and the company has made it all along to emerge as the best. The marketability of the airline is heavily boosted by its first hand technology, quality customer service provision and innovation. The airline has for ages maintained the brand recognition through leading in innovation. The company has the best types of aircrafts with the most excellent staff. It is credited for being the first to launch new plane models like the Boeing 747 and 777. It is thought to have been the first one to launch the airbus jumbo jet A380 in the year 2006. This is one of the strategies geared at distinguishing the company from its close rivals (Triant 2006). The marketing strategy revolving around the use of new technology is also geared at increasing cost efficiency. Such strategies include the launch of non stop flights between Los Angeles and New York in 2004. “The move is said to have attracted mass publicity for the airline” (Nigel 2002, p.67). With the same move, the firm manages to use the most sophisticated air crafts on such routes in an effort to further build the brand recognition. With the realization of how first an innovation diminishes on being adopted by many, the airline invests heavily in new technologies. This is a move that greatly distinguishes it from its close rivals. In an effort to own an image that would effectively distinguish the airline, was the adoption of the Singapore girl. The airline approached a renowned French designer to help in the design of ideal attire for its crew. The Singapore girl is now a very powerful marketing tool that translates in to the Asian culture of hospitality and tender care. For effective customer service delivery, the crew on all the flights receive adequate training. This is a move that is geared at fostering consistency in service delivery. The slogan adopted in line with the Singapore girl image “Singapore airline a great way to fly” is yet another strategy that passes the message. In order to effectively over do its close rivals, the airline has focused on the brand recognition through the image of the Singapore girl. This is unlike most of its rivals that focus on communicating a number of aspects at a go (Triant 2006). Marketing strategies employed by the British airline The airline has successfully managed to advertise itself to the world. This is implicated in its slogan “the world favourite airline” that was coined in 1989.To keep on top of the competition; the airline had to drop the slogan to a more realistic approach. This was done in 2001 on being beaten by the Lufthansa. The later seemed to have managed to lure a number of prospective clients in the aviation industry towards itself (Heidi 2003). The British airline interpreted this as a major challenge in the business. In 2007 the airline adopted yet another slogan to help win the competition” Upgrade to British Airways”. To help establish itself in the competitive aviation industry, the British air line sought to have the services of a renowned advertising agency called the Saatchi and Saatchi. This agency has been credited for enhancing the marketability of the British airline through the creation of highly competent adverts. The British airline has equally managed to adopt the latest technology in marketing its brand. The internet for instance has effectively been used by the air line in making known a number of its services. In an effort to market itself further, the airline has resolved to the promotion of a wide range of global activities. It is currently the sole sponsor of the Wimbledon championship in tennis and has partnered with the upcoming summer Olympics in the year 2012. The travel and tourism sector forms a large share of the market for this airline (Porter 2003).It is believed that in the wake of terrorism and the war in Iraq, the airline lost enormous profits as a number of travel bans were send around some destinations in the world. The marketability of the airline was greatly slowed with the hijacking of its planes for the September 11 attack. The airline was ever since forced to limit itself to only a small number of destinations and routes. The figure below illustrates a drop in the marketability of the airline since the year 1997 (Triant 2006). This implies that the marketability of the airline seemed to have dropped even before the terrorism attack in 2001. The market index of the airline has not been promising especially with the drop in the value of its shares (Egan 2004). Battling with stiff competition With the upcoming of the virgin Atlantic air line, British air ways was feared for losing a number of its most profitable routes and clients. This came with the grant of free access to the Heathrow airport to all airlines including virgin Atlantic in 1991. John king the chairman of the British airline at the moment was not happy with the move. This aspect forced the public relations director of the British airline David Burnside to resolve to dirty tricks by falsely implicating the virgin Atlantic airline in a publication in 1993. The publication claimed that the Virgin Atlantic’s interest to penetrate in to new markets including the Middle East was a mere publicity stunt (Gregory 1996). This later saw the airline being sued by the director of the virgin Atlantic airline for libel. It is feared that the British airline may not effectively recover from the wrangles facing its marketability. This is related to the emerging recession in the tourism and travel industry. Studies indicate a massive decline in the number of booking as early as in the year 1997. This was further enhanced with the terrorism attack in 2001. An aspect that might have contributed to the decline in the customer confidence in the airline is thought to be the low demand for the seats on the aircrafts on the airline. The two mainly affected segments of the airline include the business travel and the transatlantic travel. The company is thought to have largely concentrated on these two services (Payne 1998). Even with the former international status where the airline boosted heavily of being the best in international carriage, the limelight seems to be diminishing at a very rapid rate. This is an aspect that is attributed to the uncontrollable deterioration of its close partner the American airline. A number of flights that used to link up with the British airline from America are no longer in operation. It is feared that the marketability of the British airline is at stake owing to is heavy reliance on a fat cash inflow (Danforth 2007).The air line is at a further risk of the increasing costs implicated in the purchase of fuel and the maintenance of aircrafts. Bearing in mind that the airline was implicated in the September 11 attack, the cost of the fuel is far much likely to be influenced by the US response to the terrorism attacks. The tourism and travel industry is bound to shy away from the use of the British airline owing to the costs implicated with such inability to meet the cost of adequate security on its planes. This is related to the fact that the airline owns several planes and the cost of providing ideal security on all of the planes may be too costly for the airline The competitive advantage of Singapore air line over British air ways With the British airline facing a number of challenges in its brand recognition, it has not been able to attain any much recognition like the Singapore airline. The Singapore airline has for ages maintained consistency in its service delivery. Unlike the British air line the Singapore airline has never wavered from its brand image (Kuan 2000). The top management of the Singapore airline unlike their counterparts in the British airways have been able to formulate ideal strategies to enable the airline to survive in the wake of economic hardships. The management at the Singapore airline is known to design and enhance long term resolutions. The British air ways on the other hand adopts measures that can foster short lived resolutions which is an aspect that has heavily drained the image of the airline. With heavy reliance on its partner the US airline, the British airline is facing a big blow owing to a fall in the number of flight connections from US. This has forced the airline to adopt price reduction measures in an effort to attract more customers. This is an aspect that negatively impacts on price sensitive clients who now have a low opinion of the air line. Singapore airline on the other hand focuses on quality service delivery irrespective of the cost implicated (Payne 1998). The Singapore airline unlike the British airline has never resolved to any dirty tricks to earn the competitive advantage. It is able to effectively plan and invest heavily in technologies that its rivals have not attempted. The Singapore airline unlike the British airline that is unable to meet the maintenance costs of its planes invests heavily in new machinery and safety of its flights. Customers will still flock on a number of Singapore airline flights irrespective of the cost owing to the level of safety and quality of service. This is contrary to the case with British airline whose customers seem not to like the design of seats in the planes. The inability to meet maintenance, flueing and safety standards for the British airline is an aspect that has really downgraded the image of the airline (Rigas 2006). Both the two airline have marketing slogans. The British has the” Upgrade to British Airways” slogan while the Singapore airline has the “Singapore airline a great way to fly” slogan. However the Singapore airline seems to have made more use of its slogan as a marketing tool than the British air line. The Five Forces Model of Competition This is a frame work that analyses the economical impact of the nature of competition in a business set-up. The five forces implicated n this model illustrate the intensity of the competition in a market. These forces basically revolve around the profitability of the business investment and the fact that the competition intensity is not a chance aspect. This implies that the implicated magnitude of competition in any business is not related to good or bad luck. The influence of these forces on any industry is very instrumental (Porter 2008). The figure below depicts an illustration of the five forces. (Porter 2008, p.15). The model thus points to five forces of competition that include; the entry of rivals or competitors, the threat implicated by substitutes, the consumers bargaining power, the supplier’s bargaining power and the existing rivalry in among the players already established (Porter 2008) . The government is yet to be included as a sixth force in the model. Singapore airline seems to have effectively incorporated this model in each of its efforts to earn the competitive advantage. It has made it hard for rivals to enter the industry by adopting the most expensive technology. In an effort to win both the buyers and suppliers bargaining power, the airline offers very quality services that make it hard for buyers to switch to alternative service providers. This is yet an aspect that enables the airline to effectively evade the threat of substitutes. This is not the case with the British airline that is seeking to reduce its prices in order to effectively compete but at a low level. This implies that the British airline has equally tried to adopt such competitive strategies but at a very infancy level. Conclusion The competitive nature of the aviation industry calls for ideal strategies. Both the Singapore air line and the British airline have tried in different capacities to earn the competitive advantage. However it emerges that the Singapore airline is enjoying a greater advantage over the British airline. The battle to earn the competitive advantage over its rivals has seen the British airline implicated in a dirty game of tricks. The Singapore airline on the other hand has managed to effectively incorporate ideal competition strategies related to the Porter’s five forces model. This is an ideal mechanism of earning the competitive advantage in the aviation industry. The rate at which the British airline seems to be moulding towards the adoption of such a strategy is seemingly low. Such a mechanism can effectively be adopted by an airline that really wishes to attain the same recognition like the Singapore airline. The ability to plan towards cost efficiency determines how well such strategies can be incorporated. This explains why the Singapore airline does well irrespective of the cost of technology unlike the British airline that is currently unable to meet the cost of security and plane maintenance. Bibliography Danforth, P 2007, Frommer's England 2007, John Wiley and Sons. Egan, J 2004, Relationship marketing: exploring relational strategies in marketing, Prentice Hall, Washington. Gregory, M 1996, Dirty tricks: Biting hard on competition, Warner, England Heidi, S 2003, Frommer's Greece, John Wiley and Sons. Kuan, Y 2000, From Third World to first: the Singapore story, HarperCollins Publishers. Nigel, S 2002, Operations strategy,Financial Times Prentice Hall, New York. Payne, A 1998, Relationship marketing for competitive advantage: winning and keeping customers, Heinemann, London. Porter, D 2003, Frommer's Scotland, John Wiley and Sons. Porter, E 2008, On Competition Harvard Business Review Book, Harvard Business Press. Rigas, D 2006, The airline business, Rutledge, Washington. Triant, G. 2006, Aviation management, CRC Publishing Ltd, Washington. Read More