Executive Summary
Demand for frequent, flexible and efficient airline services by business travelers has made it possible for full-service airlines to operate despite the emergence of low-cost carriers. One of the full-service airline companies that have managed to continue with its operations is Kamuga Airlines located in California. The company target both local and international business travelers especially those who travel to Dubai. In this industry, the company faces stiff competition from companies such as JetBlue Airlines and Sun Country Airlines. This has led to the company including services such as entertainment and meals in its flight to attract customers. It has also established lounges and offers rental cars to travelers. To be able to effectively establish itself, the company requires purchasing more airplanes, building lounges as well as paying its staff well. All these will cost the company a total of $10 billion. Currently, it is located in California but it is in the process of opening more branches across the country. To attract and retain customers Kamuga Airlines uses both geographical and penetration pricing strategies. The company has come up with agents across the country to help sell the company to potential business travelers.
Introduction
Demand for flexible and frequent flight services by business travelers in the United States has helped full-service airlines thrive in the country. This is despite the emergence of low-cost carriers in the country. Travelers wish to use airlines that guarantee them quick and efficient services regardless of the price charged (Doganis, 2001, p. 87). This is not possible with low-cost carriers making business travelers prefer using full-service airlines.
Overview of Kamuga Airline
Kamuga Airline was established in 20007. It is one of the recently established full-service airlines that are based in California. Due to its recent establishment, it has not managed to open its branches in other airports across the country. However, it currently has eight airbuses and three jets that ply across United States. It also recently started dealing with business travelers who operate between the United States and Dubai with the company offering five flights per week to Dubai. As a way of ensuring that it offers quality services to overcome competition, it has ensured that all its staffs are qualified for the responsibilities they are assigned to. Currently, the company is in the process of expanding its services by buying more aircraft as well as establishing new branches in other airports in the country.
The target market for the company
Globalization has eased the manner in which people trade. Unlike the past where people were not able to trade in other countries, it has now been possible for people to travel from one country to another for trade. This has led to high demand for airlines by business travelers. Currently, there are many business travelers in the United States who travel to Dubai and other parts o the world for trade on daily basis. There are also local business travelers who travel within the country for trade. The high demand for airline services by these groups hassled Kamuga Airlines targeting this group of travelers as its major market (Barrett, 2001, pp. 189-193). The company caters to local business travelers and also those traveling to Dubai. It also aims at expanding its services to other countries to exploit the huge market of business travelers in the country.
Competitors
Demand for airline services by business travelers and other travelers has led to the emergence of numerous airline companies offering full-service airline service. Kamuga Airline faces stiff competition from airlines such as JetBlue Airlines and Sun Country Airlines. These airlines have been in the market for many years enabling them to gain huge market share. They have also gained experience on customer needs making it easy for them to fully satisfy them. These airlines have been able to purchase numerous airbuses and jets thus being able to cater to a huge number of travelers (Doganis, 2002, pp. 114-129). As they have established numerous branches in the country as well as they travel to numerous countries in the world, they have been able to get more returns from the industry thus being able to overcome competition. Some of the services offered by these competitors include serving meals to customers, in-flight music and other entertainment. Sun Country Airlines has gone to an extent of establishing airport lounges to cater to customers.
Services offered by Kamuga airlines
In a bid to attract more customers and gain market share, Kamuga Airlines have embarked on ensuring that it offers all services required by business travelers. Apart from offering flight services that are flexible and efficient and frequent, the company also ensures that it has included other services that ensure in-flight comfort for customers. These include the provision of entertainment for customers as well as serving meals and drink to customers while on the flight. Once customers reach their country of destination, they require traveling from one place to another as they meet with their trade partners. They require vehicles to be able to travel from one place to another (Mason, 2000, pp. 107-113). This has led to Kamuga Airlines embarking on offering rental cars to its customers once they get to their countries of origin. For those spending more than one day in Dubai, the company has established its lounges in the airport to cater to their accommodation. The company is also in the process of identifying other services required by business travelers to ensure that it effectively serves its customers.
Marketing budget
One of the main factors that have made it hard for most investors to invest in full-service airlines is the huge budget required for the establishment and continued management of the airline. To be able to effectively meet all its requirements, the company requires $10 billion. The company needs to purchase three more airbuses and two jets all at a cost of $7 billion. It also requires $1.5 billion to facilitate upgrading and opening new airport lounges while the remaining $1.5 billion is to be used in catering for in-flight services and paying its pilots and other staff working for the company (Cochrane & Mackenzie, 2004, p. 324).
Location of the Airline
Currently, the airline is located in California. The main reason for establishing it at this base is because the area is highly populated with business travelers. The airport is also open to numerous parts of the world making it possible for the company to get travelers. Kamuga Airlines has not been able to open its branches in other airports across the United States though it has agents in other parts of the country who are responsible for getting orders from customers and organizing their flights.
Pricing strategy
To gain market share and attract more customers, the company uses two main pricing strategies. When venturing into new markets, the company uses penetration pricing where it offers its services at lower prices. This is to make more customers op to use its services thus helping it establish itself in the market. Later, the prices are increased based on those offered by its rival companies (Kottler & Armstrong, 2010, p. 276). Currently, the company is using geographical pricing strategy. Different regions in the world offer services at different prices. As a result, the company ensures that it sets its prices based on the region it is operating in.
Implementation plan
With the number of business travelers increasing day by day, the company is in the process of coming up with a viable implementation plan that will help it effectively exploit the market. Being a young company, it has decided to come up with numerous agents across the country that is responsible for marketing the company. These agents interact with potential customers and inform them about the services offered by the company (Pels, 2008, pp. 68-74). They also place flight orders for customers who wish to use the company. In addition, the company has embarked on online advertisement of the company as well as using other advertisement media. This is to familiarize the company with more business travelers thus being able to increase its market share.
Reference List
- Barrett, S. D. (2001). Market entry to the full-service airline market: a case study from the deregulated European aviation sector. Journal of Air Transport Management, 7(3), pp. 189-193.
- Cochrane, K. & Mackenzie, J. (2004). A budget gamble. Business Travel Now.
- Doganis, R. (2001). The Airline Business in the Twenty-first Century. London: Routledge.
- Doganis, R. (2002). Flying off course: the economics of international airlines. New York: Routledge
- Kottler, P. & Armstrong, G. (2010). Principles of the marketing 13th ed. New York: Pearson Prentice Hall.
- Mason, K. J. (2000). The propensity of business travelers to use low-cost airlines, Journal of Transport Geography, 8(2), pp. 107–113.
- Pels, E. (2008). Airline network competition: Full-service airlines, low-cost airlines and long-haul markets. Research in Transportation Economics, 24(1), pp. 68-74.