The achievement of the world globalization has led to increased travelling of people to different destinations for various economic or social interests. Passenger air airline has become the important means of transport for people to reach their destinations. Although air transport has been viewed as the fasted and most efficient means of transport to reach most world destinations, its operations are affected by numerous external factors. Some factors include fuel prices, forecasting, security, environmental factors, and economic crisis. Due to its ability to shuttle people between different countries, it plays an important role in the process of economic development ant. Hence, it is important to analyse factors affecting it and analyse the industry in order to make informed decisions when faced by challenges.
Government policies and Fuel prices
Increase of the fuel prices may affect the performance of passenger airline industry negatively. The policies that may affect the prices and the supply of fuel may affect the sustainability of the airline industry greatly. For example, government policies to increase tax or expansion of the oil refinery by supplier may result to increase in fuel prices thus affecting passenger airline industry. The industry may be affected since any increase of passengers’ prices and its fairly constant capacity may not have significant impact (Structure of the airline industry, n.d.).
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Fuel dominated countries experiences wars that are also causing fuel price to rise due to shortage and thus affecting negatively on airline industry operation.
Forecasting
In order for the passengers airline industry to realise steady performance necessary for economic growth, it must be able to predict future changes in demand, market, destinations and develop plan that mitigate such changes (Structure of the airline industry, n.d.).
Accurate predictions favour growth of the industry. However, poor predictions result in poor strategies that may lead to the industry incurring high loses and in the end affect its performance. The constant changing economy that is marked by unexpected recession makes it hard for airline industry to forecast and thus the industry is prone to negative effect that may arise from the recession.
Security
The performance of airline passengers industry is affected by the state of security of the flying destinations. Many countries’ government give travel advisory to their citizens on security matter in various destinations. In case of insecurity, countries warn and restrict their citizens from travelling to the affected areas. As a result, the airline industry experience decreased service demand, which affect it productivity and its growth. Most African countries experience civil war and terrorism that has caused deterioration of security and thus affecting airline industry performance from decreased number of passengers travelling to the destination. On the other hand, improved security increases customer demand and enhance the economic growth of the industry.
Economic crisis
Passenger airline obtain its income or revenue from transportation people who form the main market. When there is economic crisis, airline customers are also affected. As a result the number of people may be greatly reduced and this may increase the cost of operations due failure to meet airline capacity for travelling. Losses may be incurred that may also affect the efficiency of airline negatively. Hence, state of the economy has direct impact of the operations and profitability of the industry.
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Market segments
In order for passenger’s airline industry to maintain a constant or steady growth in the dynamic market environment, it must be able to develop strategies that facilitate service differentiation and quality that meet customers demand. The market strategies commonly adapted by airline industry is segmentation-target-positioning process.
Segmentation
In the passenger airline industry, customers are the central factor for its operations. Therefore, the industry must be able to understand identify its customers for them to provide services that meet customers’ demand (Perner, n.d).).
Hence, customers are classified in various groups so that their characteristics can be identified to study the market. The segmentation is based on geographic for example market according to states; demographic where customers, which entails to customers’ socioeconomic factors; and psychographic, which entails to customers’ lifestyle and personality activities (Esri, n.d.).
Targeting
The industry target individual segments in the market and identify the needs in order to provide quality services. The airline industry identifies target market and proceeds to elect strategies that will help it to enter in undifferentiated market where it identifies groups segments. Once the segments are identified and more differentiated services are offered to the extent of meeting individual customers need at the stage of micromarketing (Perner, nd).
During the latter stage, the airline industry is able to influence the market and has high performance probability.
Positioning
After the process of segmenting the market to the point of indentifying the appropriate group of customers, the industry is able to gain market experience and develop further market strategy through service innovation (Perner, nd).
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The airline industry has developed comfortable chairs that are comfortable and can extend to adjustable beds in addition to other services such as power supply on the seats for laptops and clean environment (Wen, & Yeh, 2010; Rothman, & Jasper, 2011).
The strategy has led to increase in customers’ demand, which is a critical factor for the industry economic growth achievement.
JetBlue versus Southwest Airlines
Target market
JetBlue’s airline primarily target leisure travellers and is segmenting additional target market from business travellers while Southwest Airline has already established target market for both business and leisure travellers (Bennett et al, 2010).
Hence, the latter has market advantage.
Positioning
JetBlue airlines offers low discounted prices to leisure and the new business travel market segment at an average of 11.2 cents per mile while its counterpart yield 13.29 cents per mile in order to increase its market share (Bennett et al, 2010).
This has led to increased advertising cost for Southwest in order to maintain its market share in the airline industry by spending more than $ 150 million compared its counterpart airline. Southwest airline provide customers with information through its website while JetBlue have several sites ranging from its website, online travel sites such as Expedia and GDS. This ensures that the latter is able to provide exceptional services to their customers that are convenient and fast. .
Conclusion
Passengers airline play an important role global economic growth. However, factors such as insecurity, fuel prices that are driven by government policies, poor forecasting, and economic crisis may affect its performances and thus influence economic growth negatively. In order of passengers industry to succeed, it must carry market segmentation by identifying its potential market and further targeting more focused individual customers demand and needs through positioning strategies such as low and discounted prices, comfort and clean environment. Southwest and JetBlue airlines are example of such airlines that have employed target and positioning strategies to attract and maintain their market share from both leisure and business travellers’ market. Each company has specific positioning tactics that enable it to survive stiff competition in the industry.
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References
Bennett, D., Gruenstein, T., Raman, R., Sachse, & T., Walsh, A. (2010).
Integrated Company Analysis JetBlue Airways. Busine
Esri. (n.d.).
Demographic, consumer, and business data. Retrieved from HYPERLINK “http://www.esri.com/data/esri_data” t “_blank” http://www.esri.com/data/esri_data
Perner, L. (n.d.).
Segmentation, targeting, and positioning. Consumer Psychologist. Retrieved from HYPERLINK “http://www.consumerpsychologist.com/cb_Segmentation.html” t “_blank” http://www.consumerpsychologist.com/cb_Segmentation.html
Rothman, A., & Jasper, C. (2011, Dec 19).
The unbearable heaviness of business class. Business Week, 1.Structure of the airline industry (n.d.).
Littleton, CO: Avjobs. Retrieved fromhttp://www.avjobs.com/history/structure-of-the-airline-industry.asp
Wen, C., & Yeh, W. (2010).
Positioning of international air passenger carriers using multidimensional scaling and correspondence analysis. Transportation Journal, 49(1), 7-23.
