Comprehensive Analysis of Sa Low-Cost Airline Industry

Topics: Airline, Low-cost carrier, Southwest Airlines Pages: 10 (2869 words) Published: October 9, 2010

1.1Key Success Factors in the low-cost airline industry 3 1.2Strategic group map example in the low-cost airline industry 5

2.0Comprehensive analysis of SA low-cost airline industry 6 2.1Buyer Power10
2.2Supplier Power10
2.5New Entrants11
2.5.1Government Policy barriers11
2.5.2Capital Requirements11
2.5.3Economies of Scale11
2.6Competitive Advantage12
2.7SWOT analysis13

Question 1

1.1Key success factors in the low-cost airline industries

The low-cost airline industry has undergone cold season since terrorist attack in 2001 thus requiring strategies to be put in place in order to gain or maintain competitive advantage. The global economic recession, terrorist attack, increases in jet fuel are among the growing threat keeping the industry on its toes.

Major players in the industry, namely 1time Airline, Interlink Airline, Mango Airline and South Africa Airlines (SAA) are competitors tailored in the past years survival strategies in order to upset the market share to their favour.

The key success factors (KSF) as outlined in the case study “ Now Anyone can fly” are the minimal requirements customers expect in respect of characteristics of products or services (such as safe air transport from one location to another at a relatively low price) provided by any airline carrier. In order to be successful, they have to carry out their business from a certain value-based perspective within the identified market constraints (such as threat to existing competitors, structural difficulties, load factors barriers, non-availability of enough secondary airports/capacities to deal with the expected volume of low-cost passengers trend and reduced budget (advertisement) and concentrate their attention on the following key success factors.

Cost cutting is one strategy to acquiring a competitive advantage. The adopted operation strategy of the low-cost carriers were so simple in applying cost-cutting business practices such as use of secondary airports that had lower airports fees, cheaper product design (no free refreshments, no newspapers); direct sales via internet as main distribution channel (less travel agent fees); point-to-point services (no connecting flights and no possibility of rebooking to other airlines); standardized fleet (lower aircraft capital outlay, lower training cost, cheaper parts and equipment supply, lower maintenance costs). The industry as a whole thrives on the significant experience in product innovation, large scale distribution capabilities and the extensive client information. It is thus needless to mention that the use of information technology (internet), employee involvement through branded service delivery which was linked to corporate culture are all necessary operational vehicles used to consolidate the gains generated by the key success factors. had a vision to transform the low-cost airline industry via an innovative customer friendly, serviced oriented, educational and well informed strategy. The key to success hinged on the cutting cost by eliminating travel agents which allows the airline to offer 40% discount on a conventional airline ticket. Loyalty and commitment of morrisjones & Co to product design and their relationship with was also relevant to the success story.

Creation of a different identity ( from the parent organization – Comair was another magic that contributed to the successful factors as the name ( was directly linked to the preferred distribution channel (internet) targeted to achieve 30% of its booking.

The innovative concept “Now Anyone Can Fly” encapsulates its product offering, an easy, direct booking with the airline, offering consistent good...

References: Continental 4.1 -.336 8.40 779
Table 1: Domestic Sector Financial & Operating Data for U.S Major Airlines, 1993
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