Entrepreneur Robert Deluce introduced Porter Airlines in 2006 aiming to create a higher value experience for its customers compared to other major players and competitors in the Canadian airline industry such as Air Canada and West Jet. The brand image is designed to provide upscale and refined service to its customers, giving the sense of traveling in first class with free amenities that competitors provide at very high prices such as meals, beverages, wine, etc. Even thought Porter has had considerable success in attracting new customers, it is still a small player in the market. In order to increase its presence Porter is aiming to target the Toronto-Montreal-Ottawa business market currently being dominated by Air Canada and followed by West Jet who is also looking to penetrate this lucrative route.
SWOT Analysis: Strengths: the innovating new concept brought by Robert in the airline business focused on the high class flight experience, has succeeded in attracting customers for Porter Airlines, allowing it to stand out from its competitors. The high class of service that Porter looks to provide in the airport lobby and on board, creates a brand image of quality and social value for passengers. The Airline’s Hub is conveniently located in the downtown Toronto area for fast and easy access. Competitors offer a relatively basic passenger experience and are subject to losing existing clientele to Porter Airlines.
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Weakness: Porter Airlines is relatively new and unknown in the market, there for it may be operating within a limited budget and looking to have a return on investment. Furthermore it is imperative for Porter Airlines to throw an aggressive marketing campaign to gain a level of awareness with the public and attract new customers which adds to an increase on expenditures. Since it is a new company, Porter Airlines will have to work hard to retain customers while at the same time maintain a competitive edge ahead of their competitors who dominate the market. Opportunities: Porter Airlines positioning as a quality/social value company allows it to seek partnership opportunities with other companies. Ex: A points system with gold and platinum level credit cards providers. They can also look for ventures that will enhance the experience of the business traveler such as hotels, efficient and comfortable shuttle services for flights to “Golden Triangle” destinations. Furthermore Porter can create partnership with hotels that attend the majority of business travelers within Toronto Montreal and Ottawa.
Threats: Major competitors such as Air Canada have dominated the market for a lengthy amount of time becoming a synonym for business travel. Air Canada has a greater amount of flight connections and destinations than Porter Airlines. Business travelers may be already enrolled in Air Canada’s loyalty points system influencing them in staying with Air Canada in order to continue redeeming their points. West Jet’s low introduction airfare prices and the aim for companies to reduce costs may lure Business travelers their way, putting Porter Airlines at a disadvantage since they are in the introductory stage and reducing prices may translate in to going out of business.
Problem Statement: Porter Airlines is a new company looking to penetrate the business traveler market currently dominated by Air Canada. Other competitors with more tradition in the airline business are also in the look to take over the same target market. Relatively unknown in the market, Porter Airlines faces two giants in the industry that have an established client base and also have loyalty systems in place that ensure the flow of repeat customers. Business travelers demand scheduling flexibility and frequent flights. Alternatives:
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ALT #1: Use smaller planes and increase the amount of flights PROS: 1. Higher amount of flights allows for flexibility in flight hours 2. Reduces amount of staff needed which reduces cost and there for increases profit. 3. Allows for personalized service increasing customer satisfaction CONS: 1. Higher mechanical maintenance needed for planes 2. Limited space on flights ALT #2: Create an aggressive marketing campaign and loyalty system PROS: 1. Potential customers experience increased awareness on high end services offered by Porter Airlines 2. Appeal to frequent fliers
3. Customer retention CONS: 1. Costly to develop and throw marketing campaign 2. Development of loyalty system can also be costly ALT #3: Create an introductory trial low price for the new routes PROS: 1. Further increase of new customers 2. New customers try high end services provided by Porter 3. Based on Quality and Innovation customers will most likely pick Porter over their competitors. CONS: 1. Little to no profit 2. Competitors may be able to reduce even further price to a level that Porter Airlines cannot. Recommendation: Introducing a trial price Porter will significantly increase its flow of customers, who will get to experience the convenient downtown location as well as all the complementary amenities that Porter has to offer over their competitors. Even though giants like Air Canada and West Jet could possibly afford to further lower their prices, business travelers as well as regular passengers will experience the convenience, quality that Porter Airlines offers. This will translate in Porter Airlines gaining and retaining a fair market share allowing it to expand into new routes and gain more passengers thus increasing profitability.
