Budget Airlines Essay Example

organisation.

Positive or negative media attention on an organisation can in some cases make or brake an organisation. Consumer programs on TV like BBC’s Watchdog with a wide audience can have a very powerful and positive impact, forcing organisation to change its tactics. I Customers are flying more than they ever have. LCCs are now the major operators on some routes offering affordable ticket prices. According to the Civil Aviation Authority (CAA) survey in 2006 the number of travellers using the UK regional airports continued to grow and it is expected to increase even more in the coming years (Appendix 2). Stability of fuel prices and airport duties are crucial for budget airlines and their increase will have a negative impact on LCCs.

The airport charges are approximate? 10-? 15 per passenger. However, some operators have reversed this, and are paid by local governments to land at some airports, as they expect to gain economic benefits from this. Media has a great impact on customers’ choices. Budget airlines have recently been mentioned by the Media as the least environmentally friendly way to travel. In society concern with ‘green issues’ budget airlines may need to switch in close future their marketing focus from rock bottom fares to environmental responsibility.

Key microenvironmental issues likely to occur in next 3 years: Continuation… The success of budget airlines forced traditional operators to lower their prices by adapting internet sales and yield management techniques. However they still struggle to compete with low prices offered by the LCCs. Further reductions in traditional airline ticket prices are expected. The railways are likely to remain dominant for short journeys as most of the LCCs use small

airports, which are often difficult to reach without a car.

Rail operators are also improving offered services and cutting down their ticket prices by selling through the internet and allowing passengers to find lower fares when booking in advance. The LCCs are a serious threat to regular airlines. British Midlands responded to the competition by launching its own budget airline ‘bmi baby’. Following its success more traditional carriers may decide in future to launch their own ‘no frills’ airlines. New technologies, like e-mail or video-conference, can reduce the number of business travelers. Macroenvironment is known as a PESTLE factor: political, economical, social, technological, legal, and environmental.

Another important factor is interest rates. During this year we have had several increases in interest rates and further increases are expected in the coming years. That will have a negative impact on LCCs future investment plans. Social: Our life style is changing as a result of growing prosperity and leisure time; an increase in the demand for more frequent air travel has occurred.However society is becoming more concerned about the environment and may prefer to pay more for an environmentally friendly plane ticket or prefer to choose a more ‘green’ method of transport. It is expected that by 2025 half of the UK’s population will be obese.

This may force the LCCs to increase the space for a single passenger. Technological: The Internet revolutionized the distribution channels for travel and helped to reduce cost, and the LCC uses it as a main tool to communicate with its customers. It is expected that the development of electronic forms of communication may reduce the number of business travelers in the future. Key macroenvironmental

issues likely to occur in next 3 years: Continuation… European Commission top targets:

1. reducing the congestion in the skies and airports;
2. protection of the environment
3. safety policy;
4. protection of passengers
5. air regulations
6. enhancement of international dimension Air travel has a reputation for contributing to environmental ruin.

It is predicted that ‘green issues’ will have a significant impact on budget airlines in the coming years. The future evolution of the LCCs depends on the way regulators direct their policies. European Commission has set the following targets for the future:  A country aware of its congestion problem, can subsidies secondary airports in order to reduce the air traffic.  New planes will have to comply with lower noise level and emission.  Creating common policy by European Aviation Safety Agency (EASA).

There are many ways that segmentation can be considered. The most general bases include: Geography – where in the world was product bought Psychographic – lifestyle and beliefs Socio-cultural factors – such as class Demography – such as age, sex and so on Behaviour – refers to why product was purchased Context marketing is a new approach to segmentation strategy.It analyses what people are actually doing rather than trying to predict what they might do. The UK is a leader in a number of international flight routes with a 22% share in the market; second place is Ireland (21%), followed by France and Switzerland (13%).

Comparing the market share from previous years, the highest growth was noticed in the new EU countries like Czech Republic, Poland, Hungary and Slovakia. (4) Budget airlines may be perceived as a way of transport for those who travel on a budget; however, CAA survey shows

that its customers are as wealthy as those using British Airways despite paying lower prices for their tickets.According to the survey, LCCs are attracting huge numbers of business travellers, especially from small and medium businesses, who are increasingly price sensitive. Leisure remains to be the main reason for travel with low fare airlines (Appendix 4). By focusing on the context of passenger flights, LCCs are able to segment those who want to travel quickly without paying for extras. This approach to segmentation was in previous years successfully implemented by easyJet.

Targeting After the market has been separated into its segments, the segment or series of segments are targeted.Supplier SEG 3 SEG 1 Supplier SEG 2 SEG 3 Brand A SEG1 Supplier Brand B SEG2 Brand C SEG3LCCs offer economy class flights to most tourist destinations targeting the leisure market. By offering frequent connections with other European cities LCCs are also targeting price-conscious business passengers, who help to fill the planes all year round, not only during weekends and holiday periods. Positioning is one of the simplest and most successful tools to marketers. After segmenting a market and targeting customers, the product needs to be positioned within a market.

The term ‘positioning’ refers to consumer’s perception of the product in relation to its competitors. For successful positioning following questions should be asked: What position you currently own? What position do you want to own?