Session Long Project. Thank ! Case 1

¶ … session long project. Thank ! Case 1 Let's start assignments class examining structure passenger airline market. Market structure analysis requires a supply demand side market, case, airline passengers airline companies.

Airline industry

Identify key external factors that affect the passenger airline industry and explain how that impact occurs

The airline industry is affected by a number of cultural and economic factors. The price of fuel has an obvious impact upon the input costs of airlines, and will affect their ability to slash prices. Cultural factors include the fears about travel after 9/11 and also seasonal variation in demand, such as the sharp upturn in travel during holidays and vacations vs. slow seasons. Other cultural factors include changes in technology: business travelers are traveling less because they can often conduct their operations online, versus in face-to-face meetings. Environmental factors like major weather events also affect the airlines. Internal factors such as labor disputes have had a major impact upon many airlines. And regulation, most notably the deregulation of the 1980s, substantially expanded competition in the marketplace (Structure of the airline industry, n.d., avjobs).

Briefly explain segmentation, targeting, and positioning

Many different market segments travel. Traveler profiles span from the ultra-wealthy who are capable of traveling first class, to economy travelers who are very budget-conscious. Segmentation is also affected by passengers' reasons for traveling. Frequent business travelers must travel on specific dates, often during the week, while vacationers have more flexibility. Price-focused marketing when engaging in 'target marketing' is obviously more impactful upon specific segments such as a family seeking a budget vacation, versus an image of comfort and luxury which might attract someone who is very wealthy or whose corporation is paying for the trip with a deep-pocketed expense account. The image and positioning of the company will be affected, based upon the client base they wish to serve. The frequency of travel of the consumer will also determine the degree to which marketing campaigns are based upon frequent flyer programs. But segmentation can be very idiosyncratic. "Certain airlines possess a unique service quality profile and are not strongly associated with other airlines; such unique firms appear as isolated points on the perceptual map" (Wen & Yeh 2010).

Identify the major airline market segments

The 'major' market segment includes large, dominant international carriers like American and Delta. Nationals are more regionally-based but still provide a great deal of cross-country and international service such as Aloha and Midwest Express. Regional airlines are almost entirely regionally-based and serve specific communities (Structure of the airline industry, n.d., avjobs).

What are the target markets for first class vs. business class vs. economy class?

First class targets passengers can afford to pay more money for greater amenities such as more comfortable seats (or seats that totally recline on long flights), food, and bonuses like specialty drinks. Comfort, luxury, and privacy are prioritized by first class travelers. Business class is often a second-tier class and its name implies it is populated by businesspeople traveling on the company dime. These travelers fly frequently and want additional amenities, particularly those that speed their travel time and waiting in line. "International airlines are locked in a technology-led competition to provide the best business class seats and win the largest share of big-spending corporate travelers" (Rothman & Jasper 2011). Economy class is the cheapest of all three, and is populated by travelers who are at least somewhat budget-conscious.

Contrast Jet Blue vs. Southwest Airlines in terms of the following two aspects:

(1) Compare and explain the impact of key external factors on each company, e.g., economic conditions and the growing consumer interest in leisure travel.

Both Jet Blue and Southwest are regional carriers who offer budget services. Given that travelers are growing increasingly price-conscious, both carriers have capitalized upon the misfortunes of the major carriers to some degree, as even the nationals are forced to offer fewer services such as meals but have not slashed prices. Jet Blue and Southwest have never offered many amenities but always offer cheaper prices.