In the current scenario, aviation industries have survived global economic challenges through internal restructuring and rebranding (Franke, 2007). The face of the industry is changing as it is restructuring its routes and distribution channels, reducing staffing levels, outsourcing core activities and developing technology (Driver 1999). Cost cutting, more flexible pricing models, and re-orientation toward low-cost markets have resulted in some airlines becoming profitable, while others continue to struggle (Franke, 2007). Many airlines are caught in a position with little differentiation and unsatisfactory growth perspective, which leads to poor profitability (Franke, 2007).
Although traditionally, airline marketing is focused on factors such as routes, seating, on ground and in-flight facilities and pricing, the restructuring and reorientation of many airlines core business suggests a need for new ways to achieve a competitive advantage. The competition in the industry appears to be increasing, partly due to the economic downturn and what appears to be a change in consumer values and ideals. Thus, value-added services such as the in-flight experience and frequent flyer reward systems or paying less for less service, are becoming important branding initiatives (Betts 1994).
The development of strategic alliances such as ‘Oneworld', which is a partnership between five major airline companies including Qantas, are important business strategies which shape marketing practice in the field (Driver 2001). Commentators agree that the core offering of the airline product is of course seat availability, but it also consists of a range of other services matching consumer requirements, including safety, comfort, convenience, baggage facilities etc. (Driver 2001). Relationship marketing and airline loyalty schemes are also an important consideration.
Another issue to consider is effective market segmentation, which is becoming increasingly important. An airline must be very clear about the customers they serve and their specific needs and wants. The customer can be a user, a buyer and or an influencer. If Airline brands fail to understand their customer through effective marketing segmentation, they are bound to be unsuccessful. This is partly related to the ongoing dominance of the market by some major carriers who have established a premium brand perception in the marketplace, airlines such as Singapore Airlines and British Airways (Franke, 2007).
Background context
According to the Australian Tourism Export Council, Australia has a tourism export sector worth $24 billion (ATEC 2009). However, this essay will show that competition is stiff and the industry is suffering from the effects of both the economic down-turn as well as the impact of increasing public concern over the effect of air travel on global warming. According to Lijesen et al (2005), airlines such as Jetstar are operating against a background of deregulation, which is leading to an apparently unprecedented impact on the logistics, and the market organization of airlines. This deregulation and the impact of the global economic downturn led to an investigation of the key forces operating within and without the business.
[...] Accessed: AAP, February Jetstar ditches fuel surcharges. [Online]. Available at http://www.theage.com.au/travel/travel-news/jetstar-scraps-fuel- surcharges-cuts-fares-by-up-to-68-20090212-857n.html Accessed Air Transport News Jetstar reservation system replacement, [Online]. Available at: http://www.airtransportnews.aero/article.pl?id=15741&keys Accessed Asia Travel Tips Jetstar Tickets now available at Select Post Offices in Singapore, [Online]. Available at: http://www.asiatraveltips.com/news06/277-JetstarTickets.shtml . Accessed ATX Magazine Greenwatch to fight myths, issue 5 pp.3-6 Bamber, G.J. (2006) Marketing strategies and labor-market behavior of full- service and low-cost airlines: an Australian Study. [Online] Available at http://www.ctw-congress.de/ifsam/download/track_20/pap00767.pdf Accessed Betts, P A slow flight back into profit the pain for airlines is by no means over. [...]
[...] Summary of appropriateness of the Jetstar product for its market Figure Innovation Cycles as a Response to Economic cycles (Franke, 2007) Utilizing the framework in Figure 1 above, it can be seen that while Jetstar operates in a highly competitive market which poses significant challenges, it has also developed significant strengths. In response to changed customer behavior/demand, it has targeted key measures of customer satisfaction. It has avoided poor differentiation by retaining its own clear corporate brand and image, but building upon current trends. [...]
[...] (2007) Innovation: the winning formula to regain profitability in aviation? Journal of Air Transport Management 13 23-30. Gerstein, J Anti-travel movement targets exotic destinations. The Sun, April 11th. Jetstar [Online]. Available at: http://www.jetstar.com/au/en/index.aspx. Accessed: Jetstar Jetstar and World Vision launch ‘StarKids' to give children a brighter future, Media Release, May 2007[Online]. Available at http://www.jetstar.com/au/en/travel-info/travel- services/~/media/Files/PDF/starkids/20070503a.ashx. Accessed Jones, K Jetstar signs Jelena Dokic in $1m sponsorship deal, Herald Sun, January Lijesen, M., Nijkamp, Pels, E. and Rietveld, P. (2005) The Home Carrier Advantage in Civil Aviation [Online]. [...]
[...] Jetstar will need to invest heavily to keep up with the competition. Investment is required in key areas such as the use of greener fuel (bio-fuels) and more efficient aircrafts. Legal Forces Recent terrorist attacks have lead to stricter security measures worldwide There is growing pressure from green groups, governments and passenger groups, forcing Asia Pacific and Australian airlines to join up to the UN Climate Pact. This will force them to pay for their greenhouse gas emissions. (Reuters2009). There are also numerous emerging national and regional emissions schemes which could cost the airlines a great deal (Reuters 2009). [...]
[...] Jetstar currently makes growing size of operations (Air the same effort to reduce its Transport News, 2009) carbon footprint as its Product innovation: Recent competitors. (Travel Mole, introduction of JetSaver Light and 2008) self-service kiosks, which improve Competitor companies such as product quality and consistently Virgin and Air New Zealand have deliver low fares, which are at the already started testing core of the Jetstar offering and bio-fuel blends (Reuters 2009). positioning Reward schemes including Frequent flyer scheme operated through Qantas and Jetstar membership Opportunities Threats New technology could enable air-travel The International Air Transport to drop its for the environment' Association estimates that image. [...]
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