Marketing Management Assignment on : AIRLINE INDUSTRY RESEARCH
There are certain inventions that have changed the way people live and experience the world. One of such inventions was that of the airplane. With time travelling by air has become so common that now life without an airplane seems impossible. This marks the progress of the airline industry. The airline industry has changed the way people travel and do business because it has reduced the travel time.
Size of the Industry: The airline industry can be divided into four categories:
- International: there are planes that have more than 130 seats and are able to take passengers in almost any part of the world. The companies that fall in this category earn revenue of around $1 billion or even more than that.
- National: these airlines have the seating capacity for about 150 people and companies can earn between $100 million to $1 billion.
- Regional: These companies focus on the short haul flights. They can earn less than $100 million.
- Cargo: Such kinds of airlines are generally used for transporting goods. (Investopedia 2012)
Scope of the Industry: In the year 2000 there were more than 23,000 aircrafts which were providing their services to more than 3700 airports. The growth of the air travel has averaged to five percent per year since the past thirty years. The annual growth of the industry has been about twice of the annual growth of the GDP. It is however expected to double in the coming ten to fifteen years. (Columbia n.d)
Growth Rate: As discussed before that the airline industry has now become an integral part of the lives of the people and now it will be impossible to imagine life without it. The airline industry earned about 6% profit during 2000-2002. The airline industry has been growing with time. However in recent times due to the European crisis the airline industry finished the year 2011 in a very weakening position. At that time it was speculated that the airline industry might face a loss of more than $8 billion. This happened due to the collapse of the Euro. This suppressed the growth of the global air traffic. After the 2008 financial crisis this is supposed to be the worst performance of the airline industry.( NY Times 2011) The global economic growth will help in shaping the future of the aviation industry.
Key Players: The major players of the airline industry consist of the European airline that dominates the airline industry. The British Airways generated the annual income of 8593 million in the year 2008. Qantas is Australia’s largest airline and it generated annual revenue of about A$12.6 billion. The other major airlines are Cathay Pacific, The Emirates, US Airways, Japan Airlines, Air France –KLM and Southwest Airlines. Cathay Pacific was stated the winner of the 2009 Airline of the Year award. They were given this award in the World Airline Awards after they defeated the Singapore Airlines. (Economy Watch 2010)
Market shares by competitors: Competition is quite intensifying between the low cost and the traditional airlines. The Europe’s airline generated a profit of just $1 billion from a previous forecast of $1.4 billion. Due to the European crisis, the airline industry has also suffered a lot and with the collapse of euro the airline was expected to lose around $4.4 billion. Key Consumers: the airlines earn revenue from the business travelers, leisure travelers, transporting cargo and offering express delivery services. However the major portion of revenue comes from the regular and the business travelers. The business travelers are very important for the airlines because the businessmen travel throughout the year and they also buy the premium services that are being offered by the companies which have higher margins. The leisure travelers do not purchase the premium services as they are price sensitive. The number of leisure travelers will decline at the time of crisis.
Key Services: the key products of the airline industry consist of the services provided, food and the convenience that is provided to their customers. The services are good, bad or ugly. The competitors have been trying hard to outdo each other by providing better services. They advertise about their services like providing separate cabins, hygienic restrooms, better quality food, and timeliness. The key services help an airline company to become a brand name and then the company can lure a customer even if the price which it is offering is high as compared to its customers.
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