Abstract
In the current scenario, aviation industries have survived global economic challenges through internal restructuring and rebranding (Franke, 2007). The face of the industry is changing as it is restructuring its routes and distribution channels, reducing staffing levels, outsourcing core activities and developing technology (Driver 1999). Cost cutting, more flexible pricing models, and re-orientation toward low-cost markets have resulted in some airlines becoming profitable, while others continue to struggle (Franke, 2007). Many airlines are caught in a position with little differentiation and unsatisfactory growth perspective, which leads to poor profitability (Franke, 2007).
Although traditionally, airline marketing is focused on factors such as routes, seating, on ground and in-flight facilities and pricing, the restructuring and reorientation of many airlines core business suggests a need for new ways to achieve a competitive advantage. The competition in the industry appears to be increasing, partly due to the economic downturn and what appears to be a change in consumer values and ideals. Thus, value-added services such as the in-flight experience and frequent flyer reward systems or paying less for less service, are becoming important branding initiatives (Betts 1994).
The development of strategic alliances such as ‘Oneworld', which is a partnership between five major airline companies including Qantas, are important business strategies which shape marketing practice in the field (Driver 2001). Commentators agree that the core offering of the airline product is of course seat availability, but it also consists of a range of other services matching consumer requirements, including safety, comfort, convenience, baggage facilities etc. (Driver 2001). Relationship marketing and airline loyalty schemes are also an important consideration.
Another issue to consider is effective market segmentation, which is becoming increasingly important. An airline must be very clear about the customers they serve and their specific needs and wants. The customer can be a user, a buyer and or an influencer. If Airline brands fail to understand their customer through effective marketing segmentation, they are bound to be unsuccessful. This is partly related to the ongoing dominance of the market by some major carriers who have established a premium brand perception in the marketplace, airlines such as Singapore Airlines and British Airways (Franke, 2007).
Background context
According to the Australian Tourism Export Council, Australia has a tourism export sector worth $24 billion (ATEC 2009). However, this essay will show that competition is stiff and the industry is suffering from the effects of both the economic down-turn as well as the impact of increasing public concern over the effect of air travel on global warming. According to Lijesen et al (2005), airlines such as Jetstar are operating against a background of deregulation, which is leading to an apparently unprecedented impact on the logistics, and the market organization of airlines. This deregulation and the impact of the global economic downturn led to an investigation of the key forces operating within and without the business.
