Understanding the Chaos of Airline Pricing By Alex Kons I. INTRODUCTION “The airline industry’s pricing system is a billion-dollar house of cards in which every customer is a futures speculator and Economics 101 is turned onto its head” (Fredrick‚ 1995). This statement highlights one of the most hidden frustrations that many air travelers feel. Airline pricing is so distorted that often a full-fare paying passenger is seated next to a passenger who paid more then three hundred percent less for
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Strategic Analysis Of JetBlue Airways Executive Summary This report on JetBlue identifies how they have become an innovator in the airline industry by targeting customers who value a low-cost‚ customer conscious airline. They have formulated strategies that have enabled them to operate in a highly efficient and effective manner while realizing the importance of aligning their strategies with their environment. The report thoroughly discusses the strengths and weaknesses that the company
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room on flights and use of out-dated inefficient processing systems. The airline industry became increasingly competitive with the arrival of the low-cost carriers‚ such as‚ JetBlue‚ Southwest‚ and Airtran. These competitors were taking customers away from the major airline companies. Delta projected that 40 percent of their customers chose low-cost carriers‚ which was a higher percentage than any other airlines. During 2002‚ 80 percent of Delta ’s New York to Florida market was taken away by JetBlue
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SUMMARY Tony Fernandes‚ as the Chief Executive Officer of AirAsia‚ decided to pursue his dream to start an airline with the following vision: “To be an airline that flies long-hauls with low fares with a corporate culture that is flexible and functional”. AirAsia has achieved its title as “The World Lowest Cost Airline‚” and was also one of the world’s most profitable airlines. This report provides an analysis and evaluation of internal and external of the company. Methods of analysis includes of
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New Entrant * The 1978 deregulation of the U.S. airline industry * The increasing of fuel price and labor costs * High competition * Brand loyalty The 1978 deregulation of the U.S. airline industry has attracted many new entries of low-cost airlines. However‚ as the competition in low-cost airline industry is very high‚ as well as the price of jet fuel and labor costs‚ many airline companies declared bankruptcy. Moreover‚ consumers start to have brand loyalty and are familiar with
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2.0 Research Client Research AirAsia Berhad is a low cost airline located near Kuala Lumpur. AirAsia covered flights to 22 countries with 100 destinations. Its main Terminal is KLIA2. AirAsia started with MYR 40 million in 2001 with 2 old aircraft. Back then‚ AirAsia face a lot of problems like global financial crisis due to the aftermath of the 9/11 disaster. AirAsia can make it till so far is because of their low fares‚ low cost aircraft and also high quality products and services. There are
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desired by customers. Cost structure of an airline’s operations – The costs of operations for an airline are a limit to how low airfares can be. Costs include maintenance‚ fuel‚ labor‚ fees and lease payments for operating in airports. Those airlines that are able to control costs can attract customers with lower fares and can improve overall profitability. (Site this web article here http://dallas.culturemap.com/news/travel/05-19-14-southwest-airlines-virgin-america-new-low-fares/) An airlines’
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priced seats offered to the passengers. Even though the company grew‚ the airline began to grow in the direction of the Southwest Airlines model‚ to become the first European provider of low cost and no frills airline. Ryan airs strategy was born form its objective of maintaining “its position as Europes leading low cost airline‚ operating frequent point to point short haul flights‚ mainly out of regional and secondary airports […] designed to stimulate demand‚ particularly from budget conscious leisure
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their business. Airlines compete more for business because the economy is in a downfall‚ so they decrease fares to attract customers and add services at lower costs to lure people into using their airlines. Q1. Use the competitive forces model to analyze the structure of the airline industry during 2001-2004. How well does this analysis explain low profitability of the industry? Answer: The competitive forces model focuses on five forces that shape competition within an industry. These five forces are:
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INDIVIDUAL ASSIGNMENT TWO SPECIFIC INSTRUCTIONS This assignment is based on AirAsia‚ one of the Malaysia’s low cost airlines. The case study below provides some basic background information. You are however encouraged to source more information about the low-cost airline concept‚ the Malaysia airline industry and AirAsia’s key competitors‚ Tiger Airways‚ Jetstar and Firefly. Ten marks (10) will be allocated for the technical quality of the assignment and students will be penalized if the
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