The Air Industry and the Airline Marketing and Pricing - Admission/Application Essay Example

The Air Industry and the Airline Marketing and Pricing Introduction The airline industry has evolved rapidly over the decades. It has seen many ups and downs. During the early days, air trips were expensive and technology too, was at a primitive stage. Through a tenuous path the present day air industry took form. During the Cold War, advancements in the field of aviation technology were made by leaps and bounds. With the lapse of time, improvement in the construction technology helped in constructing airports in even the most inaccessible places. People have to rely heavily on the airlines when the have to go to geographically inaccessible places like Hobart. With the end of Cold War, air routes became busier across the Eurasian continent and as soon as the East European countries welcomed capitalism, airline industry touched new horizons across the world. However, the present millennium has come with several serious challenges like epidemics, terrorist attacks, fluctuations in oil prices, etc. (Jones, 2008). The global recession too, played a significant role in increasing the uncertainties in the airline industry. Therefore, a close scrutiny of the international airline market becomes an imperative in the contemporary scenario. Executive Summary A Singapore-based company is to be advised on venturing into the airline industry. The company has been able to secure US$ 500 million as the capital investment. The drawback is that the company has little experience in the field of aviation. The company is making cautious advancements and the management is concerned about the current economic environment, demand for air transport, and the services that are being offered by the existing airlines. The advisor has to address certain crucial questions and clear the doubts of the management. Also, the advisor has to advise on the structuring and organization of the new airline company. What is the Market Demand for this New Airline Business? The 9/11 terrorist attacks on the United States had affected the airline industry drastically. The security systems had to be restructured and re-standardized. Lots of changes took place in the realm of security management of the airports and the aircrafts. Later, outbreaks of epidemics like those of Bird Flu and then Swine Flu hard hit the industry. Air industry depends proportionally on the global tourism and business trips, which have been frequently threatened by terrorism and health concerns during the last decade. The global recession was also responsible for the bad patch of the industry. The national policies towards different business entities are being scrutinized in all sectors (Aldonas, 2009), and the air industry is no exception. However, the evolution of the global airline industry has survived many sluggish periods all during the recent history (Morrison & Winston, 1995). Globalization has increased the pace of life. It is becoming increasingly important all over the world that longer distances are covered in shorter time periods. Not only the tourists, but also the business executives are being compelled to depend on faster ways of transport. Fortunately for the air industry, aircrafts remain the fastest means of transport in the contemporary world. Rapid evolution of the jet technology has provided us with long range passenger jets, which have proved to be a boon for the airline industry. In order to save precious time, people are increasingly depending on the existing airlines. Therefore, the possibilities associated with the airline industry do not appear to be limited. Technology is still playing a crucial role behind the working of the airlines. Safety and reliability are the prime concerns in aviation today. The airline must deploy agile security staffs and comply with the modern security standards. Not only the terrorist threats, but also health concerns are very important in regards of making air journeys secured. Catering, sanitation, and passenger comfort are the primary concerns to prevent diseases like flu. The market demands ample arrangements for safer air journeys. Moreover, reliability remains a big issue. It is the changing lifestyle due to globalization that has helped the airline industry in these hard days. People want to be punctual and save time. Events like delayed flight and change in routes can cause serious irritation among the passengers. The airline company needs a responsible crew and experienced pilots to ensure timely take offs. Frequent cases of delayed flights can prove to be extremely harmful for the reputation of the airline company concerned. In the case under consideration, the management can remain assured since the company is based in Singapore. In terms of the net volume of the passengers, the air route between Singapore and Bangkok is one of the busiest air routes in the world. Also, the route from Singapore Changi International Airport to the Heathrow Airport, London is a very busy intercontinental route. The new airline company can decide the routes of its flights according to these facts. Arranging flights along the busiest air routes can be a brilliant strategy to meet the existing market demands. Also, certain routes through Singapore count for high numbers of flights. For example, the route between Singapore Changi International Airport and Jakarta Soekarno-Hatta Airport is perhaps the busiest one in the region. There are 480 flights every week along this route. Also, Kuala Lumpur International Airport is an important destination from Singapore since it has 450 flights every week. If the new airline company is able to exploit the rush in these busiest international air routes, then there are bright business prospects in this region. How should the Airline be Marketed? Marketing is a job that is multifaceted and depends on lots of things. The public attitude towards a corporation is what marketing affects most. Public policies in regards of a company can be improved a lot if correct marketing strategy is adopted (Heggestad, 1988). These days, soft skills play a crucial role when it comes to marketing. Marketing can be enhanced to a lot of extent by behavior skills of the staffs. Retaining the customers is an important aspect of marketing. In this context, hospitality becomes crucial in the airline industry. Winning hospitality can be a nice strategy to retain the existing customers and impress the new ones (National Research Council (U.S.), Transportation Research Board, 1998). Advertisement campaigns are very important. The new airline company should be strategically advertised through different electronic and print media. Television and Internet are the most important media of advertising. Moreover, entering in collaborations with travel agencies can give good results. By offering a reasonable share of the profits, the travel agencies can be turned out as winning partners in this field. Proper seating arrangements and handling the passenger volumes can ensure more frequent and efficient ticketing, which can turn out to be a winning practice in the business. Also, telemarketing can be a very productive way to optimize marketing operations. Easy availability of the air tickets of the new airline company can attract lots of busy executives. Ticketing over the phone and reliable and polite handling of the customer queries can build a very positive impression in the market. Preferably, a dedicated call center to cater with the customer queries and telesales can help the new airline company achieve global standards. Last but not least, technology is the turning point in the air industry. The progress of the airline industry has been a lot due to the technological innovations in the field. The aircrafts must be ordered from a reputed aircraft manufacturing company so that the technological advantages can be properly showcased before the customer. For example, aircrafts from the A320 family of Airbus are a winning option. These passenger jets are equipped with state-of-the-art modern technology. The interiors of these aircrafts provide a magnificent experience to the customer. For instance, an A318 is equipped with touch-screen LCD powered panels for the attendants in the flight. There are novel lighting systems inside the cabin powered by LED technology. Backup Breaking Systems that are electrically controlled provide reliability to the flight. Usage of laser welding makes the aircraft extremely dependable (Aviationexplorer.com, 2010). Even simple facts like that the passenger can take a carry-on baggage up to 7kg can caste a positive effect on the potential customer (Australian Antarctic Division, 2010). Technological advantage is crucial in the current economic environment and appropriate marketing strategy needs backing of good technology selection. Selection of premium technology like that of the A320 family from Airbus would further offer fuel efficient passenger jets. In the case of A318, the lower Maximum Take Off Weight (MTOW) permits the aircraft to operate in the regional routes (Like those of Singapore-Jakarta and Singapore-Kuala Lumpur) more economic due to fuel efficiency (Airbus.com, 2010). In this way, the operating airline company can afford to give the customers seasonal discounts, which can be a very good marketing strategy and pricing policy as well. What Kind of Management Structure should be Put in Place and How should the Airline be Organized? The management structure of the airline company should be set up as per the conventions since experimentation at this level may not prove to be a healthy practice. The top level management and the board of directors should be supported with an agile middle level management consisting of dedicated professionals. A team should be there to look after the hospitality issues. It should be concerned with the hiring and training of the staffs like air hostesses and flight stewards who would show appreciable soft skills. Combination of contemporary Human Resource Management theory and practice can help in the critical management of the company. It can help in building better industrial relations too (Harvey, 2007). Moreover, another team must look after the telesales and customer care services. This team should be backed by a strong group of financial professionals who will decide the pricing schemes and seasonal discounts. For example, during the vacations of Christmas, a seasonal discount of 10% can be given on the price of the air tickets to top tourist destinations like Kuala Lumpur. The pricing policy should be professionally regulated because it decides the very turnover of the company. There should be appropriate departments for food and catering too. Also, proper sanitation is a healthy practice in air transportation. The most important part of the operating team is the team of pilots. The pilots must have proper certifications and their technical knowledge should be extensively tested. Pilots with high number of flying hours should be chosen. The ground staff is also important and aircraft maintenance engineers should be properly deployed. Time scheduling must properly be done so that the aircrafts can be examined before every take off with due care. A highly skilled technical team should be deployed for revenue management, network design, airline schedule planning, route planning, and optimized management of the air traffic flow. Real time crew management and crew pairing are also very important jobs of the operations (Yu, 1998). The company under discussion has a capital investment of US$ 500 million. This money is enough to create a fleet of powerful and reliable aircrafts along with a well paid operations team. The 107 passenger carrier two class configuration A318 aircrafts cost US$ 59.1 million on average each. The 124 passenger carrier 6700 km range popular variety A319 aircrafts cost US$ 70.3 million each. These aircrafts are better suited for longer journeys. Therefore, the company can buy three A318 aircrafts and three A319 aircrafts for its operations across the South-eastern Asia. The fuel efficient Airbus aircrafts will offer better functionality, economic trips, and most importantly, technical upper hand (Airbus.com, 2010). Apart from the cumulative cost of the six aircrafts, the company would still have enough resources for its other important operations like call center, food and catering, hospitality, etc. Conclusion The airline industry has suffered from several problems of late. Epidemics, terrorist attacks, globalization, global recession, etc. have changed the industry a lot. Challenges have increased and fluctuations in the oil prices have added to the difficulties. Yet, hundred of airline companies are operating throughout the world and the number of passengers in the air transport is increasing year after year. To combat market uncertainties and endure the increasing competition, the management of the new airline company must clearly know its mission and develop a straight forward strategy to increase the annual turnover. Fortunately, the new airline company would be based in Singapore, which has several important inter-city and international air routes. Strategic planning of airline schedule and proper route selection will definitely yield best results and help in optimization of the available resources. Reference List Airbus.com, 2010. A320 Family. Available: http://www.airbus.com/en/aircraftfamilies/a320. Last accessed 20 August, 2010 Aldonas, G.D., 2009. Globalization and the American Worker: Negotiating a New Social Contract. Washington D.C.: CSIS Australian Antarctic Division, 2010. Intercontinental operations :: Antarctica. Available: http://www.aad.gov.au/default.asp?casid=33742. Last accessed 20 August, 2010 Aviationexplorer.com, 2010. Airbus A320 Aircraft History Information Pictures and Facts. Available: http://www.aviationexplorer.com/a320_facts.htm. Last accessed 20 August, 2010 Harvey, G., 2007. Management in the Airline Industry. New York: Routledge. Heggestad, A.A., 1988. Public Policy towards Corporations. Gainesville: University Press of Florida. Jones, P.W., 2008. The Airline Industry: Facing the Challenges of the 21st Century. Available: http://ideas.repec.org/p/wpa/wuwpdc/0411013.html. Last accessed 20 August, 2010 Morrison, S. & Winston, C., 1995. The Evolution of the Airline Industry. Washington D.C.: Brookings Institution Press. National Research Council (U.S.), Transportation Research Board, 1998. Air Transportation. Washington D.C.: National Academies Press. Yu, G., 1998. Operations Research in the Airline Industry. New York: Springer. Read More