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Generic Strategies - Airline Industry

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on 14 October 2013

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Transcript of Generic Strategies - Airline Industry

Strategic Positioning: Airline Industry
Monday 14th September 2013

Introduction
Constance Doyle
Nicola Fisher
Sophie Harkin
Ciara Jones
Agenda
1) Porter's Generic Strategies and Airline Industry


2) Low Cost Strategy - Ryanair


3) Differentiation Strategy - BA


4) Who's winning?
Lower cost structure
Sell goods or services cheaper than competitors
Functional strategies
Competitive strategies
Some Facts.....
Set up 1985 by the Ryan Family
Operating more than 1,600 daily flights (over 500,000 per year)
Across 1,600 low fare routes
Connecting 180 destinations in 29 countries
Average fare €48 (incl. bag)
Ryanair Destinations
Cost Leadership Strategy
Low Fares to stimulate demand
Best Customer Service
Frequent Point-to-Point Flights on Short-Haul Routes
Keep costs low
Enhancement of operating results through Ancillary Services
Strategy Objectives
Ryanair's Business Model
Standardised Fleet
Secondary Airports
Internet booking & check-in
Limited spend on advertising
Quick turnaround
Revenue from ancillary services
Ryanair‘s Low-Cost Strategy
Functional Air Travel
Differentiation Strategy
Strategy is employed to increase the perceived value of a brand or products as a way to entice buyers to choose their products over similar products offered by their competitors

Depends on industry

Typically involves: features, functionality, prestige, reliability and brand image

Successful strategy?

"To be the world’s leading global premium airline”
The UK’s largest International Airline and one of the world’s leading global Airline

Principal place of business is in London, with significant presence at Heathrow, Gatwick and London City Airports.


Vision: To be the most admired airline across the world’s key cities

BA flies to more than 400 destinations worldwide.


Basis for Differentiation

A value added, differentiated service that customers want, which provides a basis for premium prices.

Orchestrating a high quality service to fill customer’s value-driven needs is their basis of differentiation.

Tries to make the experience of flying as effortless as possible.

Staff attend customer service training programmes
Introduction of fast track check in
Cabin crew are highly visible

Different products/services for different customer segments

Who's Wining?
Revenue Breakdown
Destinations
Travel Classes
Strategy and Objectives
Total Revenue €m
Breakdown of expenses
Passenger Load
Clear Winners?
What's next?
Remove toilets in order to create extra seats
Standing - only plane
Eliminating a co-pilot
Today. Tomorrow.
Michael Porters Generic Strategies
The Big Picture : Airline Industry Overview
Factors affecting the airline industry
• 9/11
• Taxes
• Recession
• Fuel prices
Fuel Prices
Fuel Prices Impact on Operating Costs
Industry Players : Legacy Airlines Vs Low Cost Airlines
Operating Expenses €M
Operating Profit €M
Thank You!

Any Questions
How much do you think you really pay?
Expenses as % of Revenue
Full transcript