InterAir's New Strategy

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  • Topic: Amtrak, Business class, Economy class
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  • Published : December 17, 2012
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INTERAIR’S NEW STRATEGY

INTRODUCTION:

InterAir is a Canadian airline led by Jacques Rousseau. For some time, the company loses its business clientele. Indeed, the company received many negative opinions. Therefore, she knows why his business class is declining. A lack of custom services, too noisy aircraft, seats are too small but also because a competitor coming to cause trouble, the train that offers a real business class. The last campaign ad in 2010 hasn’t worked, so, his manager team seeks again to regain this clientele and maximize its profit on the Toronto-Montreal route. In 2010, InterAir allocated 30% of the 120 seats in the business class for a fare of $ 130 compared to 20% in 2011 for the same price. Formerly configured with 2 types of fares, 2011 strategy was to offer 4 rates broken down with the business class, the economy class, the advance economy class and the standby one way which offered very interesting prices for last minutes bookings. However, this strategy hasn’t worked. Despite a strong increase of low factors, profits were reduced because the low prices were too many. On the other hand, aircraft were configured in the same way all the time. There was no distinction according on the time and day. To propose a new strategy, we will first understand past statistics based on the graphs and texts that are available for the years 2010 and 2011. Then, we will see the differences between the two strategies and what hasn’t worked. And then, I would suggest specific ideas and calculations to define the strategy of 2012.

I] FINDINGS:

1.1. GRAPH 1:

Thanks to this graph we notice that in 2011, on the 3500 business trips do every day between Montreal and Toronto, the passengers were 10% to use the aircraft against 15% in 2010, 30% have borrowed the train while they were only 20% in 2010, 60% have used their car or a rental car against 65% the previous year. There was a drop of 5 points of air transport as well as road transport. These 10 points lost by these both was assigned to rail transport. So, on 3500 daily business journeys in 2011, 1050 was made by train from 700 in 2010. The aircraft at therefore, suffered a drop of 175 passengers every day, annually makes a loss of 45.500 tickets (counting 52 weeks of 5 working days). Considering that InterAir is alone on the market and offers its business class fares to $130, it is a loss of turnover of more than $6 million between 2010 and 2011.

1.2. GRAPH 2:

This graph shows the average total time for the three different types of transport. We can note that the fastest solution is the plane. Indeed, in a little less than 3 hours we can go to Toronto from Montreal, travel time to the Airport (45 min), check-in (30 minutes) and journey Airport-city centre (40 minutes) included. Just then the train that offers the same route in 4 hours and the road or it is possible to make the trip in 6 hours. We can conclude that it is more comfortable to fly in terms of journey time. Especially for a day of travel or the trip will last 5 h and allow more time to work on the spot. The car being the little usable way for this same type of travel or the trip consists of a complete day. However, for the movement of longer duration, the train and the car remain very profitable ways.

1.3. GRAPH 3:

This graph shows us some figures. It compares low factors of aircraft between 2010 and 2011 and shows us the differences of fares between the two years. In 2010, the turnover for a plane was $9.480 and profits amounted to $4.480 respectively against $8.196 and $3.196 (direct costs per return flight = $5.000) for 2011. In 2011, the strategy includes 4 different fares instead of 2 in 2010. There is then a drop of 10 points in Business class, an increase of 15 points for the Economy class (economy fare and advance economy grouped) and a spare capacity reduced to 1%, especially thanks to the new class called Standby one way. In addition, the old strategy had a...
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