The Low Budget Airline Jetstar Essay

Jetstar Asia Airways is a low-priced budget air hose operating in the Southeast Asiatic part. It is founded by its female parent company – Australia ‘s Qantas Airways in 2003. Unlike Jetstar in Australia, Jetstar Asia is bulk Singapore in which a Singapore investing company, Temasek Holdings Limited holds 19 per cent of portions, two Singaporean business communities possess 32 per centum, and the staying 49 per cent of portions belongs to Qantas Group. The company is known as an air hose to offer low menus, all twenty-four hours and every twenty-four hours to South East Asia clients.

It has received several valuable awards, such as “ Best Brand Experience for Low Cost Carrier ” ( 2006 ) , “ Best Low Cost Airline, Southeast Asia and Asia ” ( 2006, 2008 ) , “ Top 10 Airlines by Passenger Carriage ” ( 2006, 2007 ) , “ Best Asiatic Low-Cost Carrier ” ( 2006, 2007 ) . The first Jetstar Asia Airways ‘ flight took off for Hong Kong on December 13, 2004. Jetstar Asia and Valuair Airways Limited were merged on July 22, 2005 ( Jetstar, neodymium ) .

With a fleet of seven A320 aircrafts, Jetstar Asia now offers up to 126 hebdomadal flights from Singapore to 17 finishs in 10 Asiatic states.

It is be aftering to increase capacity by more three A320 aircrafts by early following twelvemonth and add finishs in India and China. This selling survey aims to supply the Jetstar Asia Airways ‘ current selling environment. It will analyze SWOT every bit good as PESTEL to do clearly internal and external selling environment. The study besides discuss about the current market program of Jetstar Asia Airways. From the audit procedure, recommendations will come out for bettering Jetstar Asia Airways ‘ selling public presentation in bing competitory air power environment.

Get quality help now

KarrieWrites

Verified

Proficient in: Accounting And Finance

5 (339)

“ KarrieWrites did such a phenomenal job on this assignment! He completed it prior to its deadline and was thorough and informative. ”

+84 relevant experts are online

Hire writer

Today, planetary air power industry has been divided into three major classs ( Lelieur, 2003 ) . The first class consists of big web bearers, such as United Airlines, American Airlines, and Delta in the United States ; Air France, British Airway, Lufthansa in Europe. The 2nd 1 is the in-between size bearers such as KLM and SAS in Europe. The concluding class is the low cost bearers, such as Jet Blue, Westjet in North America ; Virgin Blue and Australian Airlines in Australia ; Ryanair, EasyJet, and Air Berlin in Europe ; Air Asia, Oasis Hong Kong Airline, Jetsatr Asia Airway, and Tiger Airway in Asia Pacific.

Harmonizing to Weiss ( 2008, p.84 ) , “ Low-cost bearers, besides known as a no frills or price reduction air hoses, offers low menus in exchange for extinguishing many traditional riders services. These air hoses have a lower cost constructions than rivals. They frequently operate a individual rider category and fleet, cut downing preparation and service costs ” .

In recent old ages, the low-priced bearers ( LLCs ) phenomenon has become more popular in air power industry. The low cost air hose concern has experienced surprising growing in term of riders carried and aircraft ordered. LLCs are likely to maintain their monetary value down exhaustively on-line engagement every bit good as supplying the minimal degree of onboard services. They can be seen as a new large success in the universe air hose industry. Harmonizing to OAG ‘s Quarterly Airline Traffic Statistics ( 2007 ) , low cost international flights have increased 20 % twelvemonth by twelvemonth. Asia Pacific witnessed a dramatic growing in low cost sector, with an addition from 3,900 flights and 600,000 seats in 2001 to 61,000 flights and 9.2 million seats in 2007 ( Abacus, 2008 ) . The Asia Pacific low cost market now has accounted for 12 % of all flights and all seats. Many Asiatic states such as Singapore, Malaysia, India has opened up LCCs to attractive a big figure of riders. As an avowal about Jetstar Airways ‘ chance, Geoff Dixon, CEO of Qantas Airways Ltd said: “ We ‘re really confident about the timing of the launch of this air hose. I do n’t cognize where other air hoses will stop up but I can guarantee you Jetstar Asia will be about in four old ages ‘ clip and will be profitable, so Temasek and our other investors can be confident. ” ( 2004 ) .

Jetstar Asia has announced its gross increases 20 % for the twelvemonth ended 31 March 2008 ( Jetstar, neodymium ) . These proves that low menus has become attract more travelers. The outlook of Jetstar Asia Airways about “ the universe ‘s largest possible air power market ” is coming true. Plague analysis is a common tool for analyzing an administration ‘s macro-environment to place those factors that might increase the possible for crisis. ( Elliott, Swartz and Herbane, 2002 ) . These include political, economic, societal and technological factors and the analysis examines the impact of each of them on the concern.

On the August 09, 1965, Singapore left Malaysia Federation and became crowned head, democratic and independent state. In 1967, Singapore, Indonesia, Malaysia, the Philippines and Thailand established the Association of Southeast Asiatic Nations ( Asnic, neodymium ) . From 1970 Singapore is considered as a political stableness state. It has become the comfortable state with a widespread web of trading links. So far, Singapore political stableness has leaded to a high rate of economic growing. As one of Asia ‘ most stable economic sciences, many Singapore companies have developed good. Singapore economic has been developing services industries such as wealth direction and touristry, air power industry. Singaporean air hose industry plays a cardinal function in Singaporean economic system. It now includes mainstream Singapore Airlines and two low cost air hoses – Tiger Airways and Jetstar Asia Airways. However, September 11th terrorist onslaught event in United States caused important falling in going. Besides, the political instability in South East Asia part, such as Thailand, Indonesia, and Malaysia influenced negatively on air power industry in Asia countries.

` The economic environment consists of factors that affect consumer buying power and disbursement forms ” . ( Kotler and Armstrong, 2009, p103 ) . These undermentioned analyses will demo how economic factors have an consequence on air power industry.

In recent old ages, planetary economic crisis has pushed the trade-service dependent states into worst recession. The universe travel market has besides been affected in this crisis. Harmonizing to International Air Transport Association, due to economic recession, the planetary rider traffic will diminish by 3 % in 2009 and non turning above 4 % until 2011 ( IATA, 2008 ) . Another major factor effects strongly on air hose market, particularly budget air hoses, that is the addition in fuel monetary value. From 2004, the oil monetary value rush was a consequence of three chief factors: increased demand, a little planetary surplus of production capableness, and the fright of supply break. The fuel cost addition caused of 36 % rise of air hose operating costs in 2008. The deathly combination of falling demand and high oil monetary values made a dip of air power industry ‘s profitableness, about losingss of US $ 10.4 billion in 2008. At the same twelvemonth, Asia Pacific air hose industry incurred losingss US $ 300 million ( IATA, 2009 ) .

Tendencies in societal factors are important constituent of the PEST analysis for air hose industry. Firstly, some factors such as advanced medical commissariats and low ratio at birth have allowed people to populate longer. The mean age of the population has been increasing steadily. Therefore, the merchandises that air hoses offer refering to older and handicapped riders who need aid at airdromes. Besides, traditional household construction has been altering in today modern society. The addition of divorce rate every bit good as figure of one-parent household has become modern-day tendency that travel industry has to make to suit. They can be promotional and merchandise planning policies, which offer to those who are singles or one-parent household. Furthermore, the alterations in the occupation market have impacts for air hose selling policies. Due to work force per unit areas, executives frequently have to do a day-return trip alternatively of two yearss. This has become more of import for short-haul markets.

As an advanced engineering, Internet now plays an of import function in air hoses industry. All air hoses have web sites that allow clients to book air ticket online. In doing reserve, clients can besides choose their place. Use of cyberspace in air power industry brings benefits for both air hoses and riders based on cost economy. The application of Simplifying the Business ( StB ) undertaking in about air hoses brings non merely convenience to consumers but besides lower costs to air hoses industry. The undertaking includes electronic-ticketing, Common-Use Self-Service booths, and bar-coded embarkation base on ballss ( BCBP ) . BCBP can be accessed through web sites, booth, and a check-in desk. It will extinguish magnetic-stripe embarkation base on ballss in close hereafter. With PEST analysis as above, selling environment of Jetstar Asia Airways has merely evaluated to see how the company operates in the today altering environment.

Jetstar Asia Airways has focused on non merely single riders but besides concern travelers. It has set up several sorts of privilege services for concern travelers to increase figure of riders twelvemonth by twelvemonth. From merely 50 houses in 2004, now Jetstar has 400 corporations going with it ( Baoying, 2009 ) . More and more concerns, even transnational companies, are likely to take low cost air hoses to salvage their concern cost that create possible low cost market for Jetstar Asia Airways and other air hoses. Besides, tendency of short-haul traveling is increasing in figure of Asiatic tourers ; alternatively of long-haul vacations because it enables Asiatic people travel more on a regular basis in twelvemonth. Concentrating on these topics, Jetstar Asia will catch more chances to spread out its market portion. In add-on to this, in Singapore, two incorporate resorts – the Marina Bay Sands and Resorts World Sentosa – will be opened in 2010. At that clip, figure of traveler visits Singapore will increase dramatically. There will be about 15 million visitants coming to Singapore ( integratedresort, neodymium ) . Such general tendencies as mentioned above will convey chance for Singapore air hose industry, including budget air hoses and mainstream air hoses.

The addition in fuel monetary value over the past few old ages has bad affected on sustainable growing of Jetstar Asia Airways and air power industry. This can be seen an inexplicit menaces to profitableness of air hoses. Furthermore, the spread swine grippe in many parts has affected significantly on air hose going due to the dramatic lessening of travelers. Unpredictable accidents that come from bad conditions or proficient jobs are besides menaces to air hoses. Passengers may waver in taking between budget air hoses and mainstream air hoses because of the safety in budget air hoses. This menace may veto impact on gross revenues of Jetstar Asia.

Recommendation

Presents, Asian air hoses industry is acquiring more ferociously competitory between budget air hoses and traditional full services air hoses. Furthermore, competition among the outgrowth of Asiatic budget air hoses, such as Air Asia, Tiger Airways and Jetstar Asia has besides become intensely. In order to better the company ‘s selling public presentation, we suggest some recommendations based on SWOT analysis above and consequences collected from an interview with people who are refering about air hoses market.

First, we suggest Jetstar Asia should plan a client driven selling scheme to place its mark market. Its market cleavage includes clients those who normally travel on short draw trips and can non afford mean international tickets. Then the company should construct profitable client relationships based on topics: travelers for leisure, business communities and pupils. Understanding who its clients are, the company will construct client relationship to fulfill their demands.

In add-on to this, the consequences from questioning reflect the company ‘s convenience and services are non excessively high, merely over 50 % of respondents think that it is just. In order to capture value from clients and ain client trueness, in its selling schemes, the company needs to construct the right relationship with right clients and make client delectation. The company should beef up clients ‘ belief that lower monetary value does non intend bad services. Besides, Jetstar Asia should develop effectual advertisement scheme to consolidate their trade name name through mass media.

Furthermore, limited fleet and flight finishs caused limitation in enlargement market place every bit good as pulling mark clients. Therefore, we recommend the company to use competitory schemes. The company should transport out non merely protect its current market portions but besides increase it farther.