The Marketing Mix is the name given to the elements which are the key components which a marketing plan should be based upon. Typically in Marketing literature there are four elements: price, place, promotion and product, however this is now sometimes expanded to incorporate another 3 elements: people, physical evidence and process. Pricing policy is clearly very important to the marketing mix and is affected by variables such as firm’s objectives, the nature of competition, demand and firm costs. Firms operate pricing in different ways according to their marketing strategy and the industry in which they participate; an example of pricing methods will be shown and evaluated further in the
The airline industry has long attempted to segment the air travel market in order to effectively target its constituents. The classic airline model consists of First Class, Business Class and Economy, and the demographics that make up the classes have both similarities and differences to the other classes. For instance there may be similarities between business class travellers on a particular flight, but they will not all be travelling for the same reason. An almost-universal characteristic of air travel is that customers do not fly for the sake of flying; the destination is the important element and the travel is a by-product, a means-to-an-end that involves the necessity of an aircraft that gets the customer from point A to point B.
Since the economic model for this project is based on many assumptions, it is important that
The purpose of the administration developing newer policies is to “provide clear and thorough guidance to airport sponsors on the conduct of project-level benefit-cost analysis for capacity-related airport projects.” (FAA, 1999) The administration encourages the use of innovative methods to quantify benefits and cost that yields project merit. Undergoing the development of any new airport requires a great deal of strategic planning. Therefore, this comprehensive report provides an analysis of cost, construction, and operation.
Recently, the WSJ had displayed data regarding United Airlines signifying that the company was not covering their flight costs from San Francisco to Washington D.C. Due to this, they had assumed United Airlines is unable to cover their costs, so in this case it was suggested for them to discontinue their services. To begin, it is critical that United Airlines should preform a marginal analysis in order to make a final decision. A marginal analysis focusses on incremental costs and benefits that will help aid companies in making a final decision. After completing this analysis, the company can then make an executive decision on whether or not they should discontinue their flights.
Since the airline industry is a direct product of market conditions, it is greatly affected by all externalities. Many people noticed a decline in travel after the September 11th tragedy occurred due to safety concerns. When there is a huge increase in fares that definitely interferes with the demand for travel; it causes the price of tickets to continue to rise since a clear correlation between supply and demand exists. When the economy is doing well in terms of the employment rate, and when the dollar is strong people have the tendency to travel more (Jerram,1998).
The implications of this analysis are that the focus on the Chinese market is justified. The Chinese air travel industry is booming, and indeed this is fueled by that country's rapid growth and the increased demand for
The airline industry is undeniably tied to the overall economy – even minor recessions result in reduced demand and increased sensitivity to prices for leisure as well as business travelers.
The competence of air travel depends largely on the coordination of grid and flow investment as well as operating decisions. Air transportation has become popular among travelers to different destinations due to economic liberalization. Even though economic liberalization has brought about numerous gains, there are substantial, fundamental issues that plague the industry. Currently, there is only one major corporation that has full control of air transportation. Unfortunately, this has caused travelers who want to take quick trips between cities pay higher prices while having few options on flights. Business owners and various advocates have argued that the dire situation has caused reduced air access to air transportation for those who require it. Subsequently, this issue requires a policy that targets certain aspect of the air transportation industry that will benefit the vast amount passengers who fly. These benefits should include increased travel options that are convenient, fair pricing, higher customer satisfaction, and greater flight frequency that enhances the overall travel coordination. Thus, this paper will discuss policy alternatives that will mitigate air transport issues.
The airline industry provides services for passenger and cargo transport. Over the years the airline industry has faired fairly decent. That is, until the September 11 tragedy in 2001. From 1995 through 2000, the airline industry earned about $23 billion then lost about $35 billion from 2001 through 2005 (McCabe, R., 2008). There are many factors that indicate the economic downfall of the airline industry after the September 11 incident. The purpose of this paper is to discuss some of these factors and their impact the airline industry. Issues for discussion include: (1) shifts and price elasticity of supply and demand, (2) positive and negative externalities, (3) wage inequality, and
While the cost of fuel represents one of the biggest outlays within the aviation industry - average fuel costs amount to some 29% of running costs (IATA, 2016) – one would expect to see savings made on the bottom lone by airlines passed onto the consumer / passenger in the form of reduced fares. This however, has not proved the case across all carriers, indeed the place where savings are most obvious to those looking to travel is almost exclusively within the low cost model operators such as Ryanair and EasyJet, while in
Airlines must be able to make a profit when setting ticket prices. “By comparing the demand curve with the average total cost curves for each airplane type, the airline can determine which size airplane will maximize profits for a given flight.” (Kons, n.d.)
Tools like pricing differentiation and over booking contribute to raise airline company revenues without a significant increase, so an efficient use of these tools do not only increase revenues, but also improve benefits.
The fuel crisis is no stranger to the business world, especially to the airline industry. Many airlines were forced to adopt new approaches to this high cost issue in order to stay afloat. The realistic concern of the effect to the consumer has not only impacted the cost to travel, but the profits for the airline industry. The 2008 US economic recession has greatly impacted how often people are traveling. Most consumers’ disposable income is very little and they categorize travel, especially travel via airline, to be a luxury product. According to the U.S. Department of Transportation, the bulk of airline travelers, about 50%, are those who are going on holidays or vacation, 40% are traveling for business and the rest are categorized under other. Airlines are fearful that their majority of travelers will be affected by the raise in cost and choose other alternatives for satisfying their escape from reality needs.
Air freight market is not stable and might be weak because of uncertain international trade increase (Barnard,2015). There was fluctuation in air cargo demand over the last 10 years from 2006 to 2016 which indicates that cargo demand could be changed by some external and internal influences. Some figures were released about worldwide air freight market and presented that air cargo capacity increased 2.2%, comparing to 2014. While this was the 5% growth calculated by The International Air Transport Association (IATA), the growth of cargo volumes in 2015 was much slower than 2014(Barnard, 2015). However, some experts pointed out that global air freight market get a positive growth from 2011, and it is enjoying a relatively steady growth, due to the enhanced trade and economic recovery after the global financial crisis of 2008(Huang,2016). Because of sluggish world trade growth, air cargo suppliers face a lot of challenges including alternative transportation, perspective uncertainty and unexpected policy and here are some potential solutions: improving customers service, efficiency, security and reducing negative environmental impacts.