Pricing Strategy 3
Marketing Strategies 4
Re-Structuring of the Routes and Timings 4
London-New York Route 4
London-Orlando Route 5
London-Miami Route 6
London-Chicago Route 7
London- San Francisco Route 7
London-Lisbon and London-Barcelona 8
Air Longways is a private airlines company, established in Europe. It is a small airlines company that contains about 20 aircrafts, which mainly operates in the short haul European routes with some long haul aircrafts. Over the past few years, the company has been suffering from huge financial crisis due to the advent of competing airline companies in the European market. As the European routes were from the principal International airports and the directors of the company had already sold majority of the aircrafts and slots to other airlines companies, it helped them stand up against the crisis and operate its business again (Emerald Group Publishing, 2011). Therefore, it is inherently necessary to implement and adopt the most efficient strategies that will help the company to earn maximum profits and sustain among its competitors (Akyuwen, 2011; Varnes, 2010).
An effective pricing strategy is very essential in order to attract larger volume passengers towards Longways airlines. Since the company has for once, suffered from financial crisis, it is necessary to set the fares of their aircraft in such a way that the passengers are also benefited and the company also does not incur any loss, i.e. at the point wherein the company can balance its profitability and customer satisfaction efficiently (The Chartered Institute of Marketing, 2015). To be noted, Longways is a small airlines company with many competitors dominating the European market.
Thus, it is quite necessary for the company to set competitive prices, maintaining parity with the fare charged by its competitors (Intervistas, 2015). To be noted in this regard, after the financial crisis, the company is left with only two aircrafts that provides the facility of both economy class as well as business class seating arrangements. While one of its aircrafts contain only economy class seats, the other aircraft hosts 50 business class and 200 economy class seating arrangements.
As the economy class is meant for the common middle class people, the price of the fair should be kept to some extent lower than that of its competitor’s fair without compromising the quality of services provided (Knorr & Zigova, 2004). However, the business class is meant for the higher-class people and therefore, the prices may be kept higher, as they would not hesitate to afford a comparatively higher fare. Moreover, this will also help the company to adjust with losses that the company suffered from lowering the price of the economy class (Bloomberg, 2015; Malighetti & et. al, 2009; Bamber & et. al., 2006).
The major limitations of the previous year’s strategy were the lack of proper marketing strategy being implemented by the company that created a poor perception about the services provided by Longways (Avmark, Inc, 2013). Moreover, it should also be able to differentiate its services and facilities that are provided in the Longways aircraft from that of its competitors.
This will help the passengers grow their loyalty towards the company and thereby, the margin of profit will also increase (Yannopoulos, 2011). As it is a small company, there should be a limited expenditure budgeted for advertisement. Moreover, the company should also focus on expanding the routes that will help it bring diversity in its customer portfolio (Civilaviation, 2015; PWC, 2015).
Re-Structuring of the Routes and Timings
London-New York Route
The profitability of Longways is highly dependent on choosing the proper air traffic routes. One of the most high density business traffic routes is the London-New York route, which is also considered as one of the most profitable in comparison to other routes. It is fundamentally owing to the fact that the facilities and timings that have been scheduled by the company for this particular route concentrate immensely on the needs and conveniences of customers targeted. For instance, the timetable of this route has been structured indicating the businessmen who need to travel to New York at the beginning of the week and thereafter return on Wednesday.
Although the aircraft flying in this route was configured for carrying 50 business class as well as economy class passengers, its problem was the availability of limited service in comparison to other operators and less flexibility in the timings and dates for the return journey. Therefore, it is very essential for the company to schedule the timings and dates in a more flexible manner as per the convenience of the passengers, which remains almost untapped in the current scenario. Moreover, the number of seating capacities should also be increased to host a larger volume.
Suggestively, in addition to Monday-Wednesday, scheduling a time table for Thursday-Saturday would be beneficial for the passengers for enhancing the flexibility in this route. As in this route, the maximum numbers of passengers are businessmen, increasing the number of business class seats would be a wise decision for the company in order to maximize its profit-earnings ratio (ThePointsGuy, 2014).
The route from London to Orlando is also a high-density air traffic route. On this route, majority of the passengers are tourists who travel to various holiday destinations, while on the other hand, the number of business class passengers travelling in this route is limited. The timings and dates in this route are very attractive and flexible as the flight takes off at daytime and returns at night. However, the main problem in this route is the problem with pricing the fares.
As there is a huge competition due to international competitors and chartered aircrafts, the pricing is kept lower and thus, it becomes difficult for the company to maximize the profit. Therefore, it is necessary for Longways to increase the fares in this route along with providing best possible quality of services unlike its competitors and charter aircrafts. Moreover, it is also necessary to restructure the fare of the business class in order to make it more attractive to the businessmen, i.e. the targeted customers of this route (Market Realist, 2015).
The numbers of business class travelers are higher in London-Miami route because of the relocation of offices of certain large MNC’s including IBM and WR Grace among others. However, the main problem with this route is that the slots of timing are scheduled at the end of the week. This creates huge difficulties for the targeted business class passengers to spend a week or so with their family. However, as per the scenario of the previous year, it has been found that there were less business class passengers than was anticipated. The passengers preferred to travel through the economy class at full price that provided the same flexibility of timing as that of the business class. This particular factor can be deemed as the consequence of the less flexibility in the business class that led the passengers to travel through normal economy class tickets. Therefore, in order to make the business attractive to the passengers, it is necessary for the company to increase the flexibility of timing of the business class and at the same time, improve the quality of services that it provides. Moreover, providing tickets at lower fares and at discounted price in the business class may also attract the passengers to travel in business (Piga & Bachis, 2006). As majority of the passengers in this route are businessmen, scheduling the time of departure on Wednesday would be beneficial for them for starting their business on Monday morning.
The London-Chicago route consists of passengers of both business class as well as tourist class. The timing slots of Thursday and Sunday have helped the businessmen to travel in the midweek or in the weekend and therefore, start their business from Monday morning. Moreover, the business class also provides a special sleeping facility to host overnight travels. However due to improper marketing, the passengers are not aware of the flight timings and facilities, which has evidently led the company with an opportunity to maximize the profit. Hence, in order to attract the passengers it is very essential for the company to implement effective marketing strategies, aggressively promoting the services and facilities that it is providing in this route unlike its competitors. Moreover, the fair of business class should also be lowered, which would be beneficial for the company to increase the number of passengers for its business class (Fageda & et. al., 2010).
London- San Francisco Route
This route provided a West-Cost destination for Longways Airlines. In order to attract more passengers, the fares were set at a lower rate as compared to the competitors operating in the similar route. However, this strategy of the company seemed to be successful from the viewpoint of economy class but was unsuccessful with respect to the business class. Lowering the fare of the business class lowered the margin of earning profit (Vidovi? & et. al., 2013). The three day per week service was also ineffective. Therefore, it will be beneficial for the company if the fare of the business class is raised to an extent and the services are reduced to 2 days a week.
London-Lisbon and London-Barcelona
The above two routes are the most attractive routes as they are the main business centers of the countries. Moreover, these countries have many tourist places and holiday destinations that highly attract the passengers of both business class and the economy class. However, if the fares of the routes are kept at 80 percent of the existing fare, it would be beneficial for the company to attract more customers and maximize profit. The fare of the business class may therefore be increased by 20 percent as the economic conditions of the countries support the affordability of the customers to pay higher for their traveling (Alexandre, 2009).
Conclusively, it can be stated that, even though Longways was suffering considerable effects of financial crisis, there is a scope for the company to revive its financial position and maximize profit through the implementation of effective strategies. However, it is necessary for the company to implement proper marketing strategies that would help in promoting attractive fares and facilities to the passengers that would attract more passengers and enhance their degree of loyalty to the brand. The pricing of fares should also be set strategically based on the prevailing competitive pricing model in the industry. Moreover, the number of seats to be allocated for business class and the economy class of each aircraft is necessary to be selected based on the demand of the passengers. The restructuring of the routes may also serve as beneficial in attaining maximum profit and sustaining in the current era of aggressive competition.
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