June 12, 2011·by AC· in Aviation. ·
Today, I would like to provide brief information regarding the marketing and survival strategies of the airline industry, both locally and internationally. I should probably stress that the airline industry is too global to be considered as only domestically so a marketing analysis ignoring the international market situations would be off balance and superficial. The airline industry in Turkey was first constructed as a monopolistic market. The major and the only company was the government-owned THY. This situation has changed within the EU standardization and privatization process. After the deregulation, many carriers came into the airline industry to compete against the market leader with the goal of taking advantage of the areas where THY was seriously lacking. Government Regulation used to be the main barrier to entry in the airline industry. However, due to the oil shock, the growing public dissatisfaction and the regular shifts in political opinions, the decision to deregulate was taken. The major barrier to entry was broken, leading to a price war with the entry of many low-price and no-frills airlines. Every carrier could enter and prices were not regulated. The cost of customer switching was very low. Thus THY had to develop “frequent flyer programmers” to retain customers by issuing free tickets and upgrades on basis of number of miles flown, raising the level of offered services and lowering the number of ticket prices thus raising the “cost” to switch between airlines. As far as today is concerned, the airline industry in Turkey consists the government partnered THY and other privately owned Turkish companies. THY can be given as the market leader with 54% percent market share, followed by the most aggressive market challenger “Pegasus” with a share of 18%. Pegasus inspects THY closely, and bases the marketing strategies on the black areas of THY and looks out for flank attack opportunities to fill out the areas where THY is lacking. The strategy of Pegasus is called as “no-frills” in that the first thing that matters is the service of air transportation. Other local companies are considered as market followers which do not seek many aggressive attack strategies and choose to operate in routes where THY is not intensely involved or where there is excess demand for cheap flights. The competitive level is increasing to a higher level as new companies are formed within the industry. We can take Turkuaz Airlines and BoraJet as examples. Although Turkuaz failed recently; they were able to lower the price expectations on the people’s minds which pressured the market leader in a negative way. And Bora Jet – a very interesting company- uses the ATR-42 model aircrafts to fly via non-Istanbul routes. These types of attacks enabled THY to establish strong defense strategies which we will be discussing shortly. Market Segmentation:
Redevelopment opportunities and the aggressive economic growth rates in line with the need for new markets have created increased demand for air transportation services between the EU region, the Americas, Asia and Turkey. The airline market combines the following elements, which all demand larger shares than yesterday; 1) Frequent business traveler, seeking punctuality, high-service, reliability and business oriented schedules, 2) Governmental and international organization travelers,
3) Leisure and cultural travelers, seeking higher level of service with an economical cost, 4) Seasonal travelers, seeking convenience at low costs,
5) Education travelers, seeking the lowest possible costs among the given alternatives, The airline industry has a wide range of segmentation opportunities and executions. The industry outline enables different companies to create different segments to reach the desired profits. Recent developments of the airline industry have moved the segmentation only from being geographically oriented to a...