BUS620-WK 6 Summary Plan - Airline Carriers 1 Full-Service...

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Airline Carriers 1 Full-Service vs Low-Fare Airline Carriers Jennifer Baxter BUS 620 Managerial Marketing Professor Zobisch March 28, 2011 Full-Service vs Low-Fare Airline Carriers
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Airline Carriers 2 Executive Summary Air has become a preferred method of transportation for many people around the world and more travelers are looking for affordable ways to travel between destinations. Consequently, the increase in customer’s demand for cheaper fares has created an excellent business opportunity for low cost airlines to emerge. After the tragedy of 9/11 and the unfortunate economic recession that ensued, market factors favor the air industry’s opportunity for introducing a new airline to meet the demand for cheaper airfare with fewer frills. In the wake of the tragedy that led consumers to shy away from air travel, full service airlines with steeper airfares quickly began to lose their appeal to travelers. Accordingly, the introduction of the new trend in air travel will appeal to a broader market that has previously been poorly served, if at all. Newer and less-experienced travelers would now have the opportunity to become frequent fliers. The goal of the no-frills airline is to become the first carrier known for filling a niche in an unoccupied corner of the air travel marketplace. The new airline would assume the responsibility of presenting a professional, growth-oriented image that would set the stage for planned expansion after the first year of operations by utilizing key characteristics which would lead the new carrier to success and profitability. In designing a strategic marketing plan, dozens of specific decisions must be made before entry into the marketplace is viable. Mullins and Walker (2010) discuss four categories of market variables in which these decisions are based. “Often called the 4 P’s, the controllable elements of a marketing program are the product offering, price, promotion, and place. Because decisions about each element should be consistent and integrated with decisions concerning the other 3, the four components are often referred to as the marketing mix” (p 18).
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Airline Carriers 3 Company Overview Southwest Airlines is a superior model for a no-frills airline carrier just entering the market. Even before September 11, 2001, the airline industry faced many problems, including overcapacity, lower profits due to fierce competition, and airport congestion, according to an article by author Bimin Chan (2007). “The terrorist attacks of September 11 had the worst economic impact on the airline industry. Although some of the initial panic and fear of flying directly following September 11 has dissipated, more rigorous security screening and passengers’ perceptions of the risk of flying have altered the demand for and experience of air travel, especially in the United States.” The proposed airline's mission is to fill a niche in the growing air-travel market by setting a new standard for air service and professionalism both within the target market and beyond. In
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