Marketing Strategies to Counter Any Restrictions and Additional Taxes
The airline industry has been facing challenges with increased competition, the need to adopt new technologies, fluctuations in oil prices, new expansion strategies and entrance to other countries. The changes have required innovation and research to take measures that help the airlines offer quality service at reasonable prices hence receiving higher returns. The European airlines operating from Ireland and UK specifically from the mid-1990s have reported significant returns and are known for their low-cost aspect.
Cappel et al. define these low-cost airlines as those that have eliminated many traditional air passenger services while offering low prices. The low-cost carriers have benefited because of their strategies. First, they offer simple products thus increasing attraction while reducing operational costs for the products. As Jarach reveals, the airlines have a single class, narrow seating with capacity that is much bigger, the inclusion of pariah customers who travel for leisure to visit friends and other adventures, together with business travelers who are conscious of cost.
Cappel et al. argue that the airlines have fare systems that are very simple with early passengers rewarded with lower costs which increase as the plane fills up. The sale of tickets directly has helped to reduce costs and bureaucracy and to save on time. Tickets are also sold on the internet providing convenience to customers and time and money-saving in form of commissions and fees for bookings and to travel agents. The airlines have also some travels that provide equal treatment of passengers since there are no rewards for frequency of travel or seat assignments.
Jarach asserts that there is efficiency in the hiring and remuneration practices of the airlines. This is due to the reduced employment, and simplification of the boarding process which has led to less time for cleaning services and hub and freight services. Employees have been productive through cockpit training the cost of which together with servicing costs, airfare and wages have been maintained low especially with the use of a fleet of a single airplane type.
Cappel et al. assert that the airlines have benefited also from their positioning in respect to the use of secondary airports, budget price system, adoption of point to point connections mainly over short distances and at high frequencies, marketing aggressively and the characteristic of their passengers who are mainly non-business. Jarach further notes that the low-cost airlines have the advantages of fiscal legislations that are favorable for the local operators in European countries through tax incentives.
Jarach points that low-cost airlines are faced with the increased competition due to reduced barriers of entry even as traditional airlines try to lower their costs so as to maintain their competitive advantage. While the low-cost airlines enjoy incentives due to legislations in place, venturing into new markets poses as a challenge. Research is necessary for them so as to make use of efficient means. Cappel et al. state that the low-cost airlines’ influence and new market penetration would require the goodwill obtained from their brand strength.
He also asserts that the airlines have to consider market segmentation. Jarach argues that since new market penetration is costly, low-cost airlines need to build up their market share. In addition, he argues that the low-cost airlines need to make use of strategies that form their crucial elements and aggressive advertising as well as a delegate for effective legislations from the host countries.