Airline marketing and management 7th edition

Airline marketing and management 7th edition Airline marketing and management 7th edition Airline marketing and management 7th edition Airline marketing and management 7th edition Airline marketing and management 7th edition Airline marketing and management 7th edition

Airline Marketing and Management Seventh Edition Stephen Shaw Airline Marketing and Management This page has been left blank intentionally Airline Marketing and Management Seventh Edition Stephen Shaw SSA Ltd, Oxfordshire, UK © Stephen Shaw 2011 All rights reserved No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise without the prior permission of the publisher Stephen Shaw has asserted his right under the Copyright, Designs and Patents Act, 1988, to be identified as the author of this work Published by Ashgate Publishing Limited Ashgate Publishing Company Wey Court East Suite 420 Union Road 101 Cherry Street Farnham Burlington VT 05401-4405 Surrey, GU9 7PT England USA www.ashgate.com British Library Cataloguing in Publication Data Shaw, Stephen, 1950Airline marketing and management 7th ed Airlines Management Airlines Marketing I Title 387.7'4'0688-dc22 Library of Congress Cataloging-in-Publication Data Shaw, Stephen, 1950Airline marketing and management / by Stephen Shaw 7th ed p cm Includes index ISBN 978-1-4094-0147-6 (hardback) ISBN 978-1-4094-0149-0 (pbk.) ISBN 978-14094-0148-3 (ebook) Aeronautics, Commercial Marketing Airlines Marketing I Title HE9781.S35 2011 387.7'40688 dc22 2010053666 ISBN  978-1-4094-0147-6 (hardback) ISBN  978-1-4094-0149-0 (paperback) ISBN  978-1-4094-0148-3 (ebook) III Contents List of Figures and Tables xiii Introduction1 The Fundamentals 1.1 What is Marketing? 1.1.1 Definition 1.1.2 The ‘Marketing Mix’ 1.1.3 Stages in the Application of Marketing Principles to Airline Management6 1.2 Benefits of a Marketing-Based Approach Successful Airlines …  The Market for Air Transport Services 2.1 What Business Are We In? 2.1.1 Transportation 10 2.1.2 Communication 10 2.1.3 Leisure 10 2.1.4 Logistics 11 2.1.5 Information 11 2.1.6 Selling Services11 2.2 Who is the ‘Customer’? 12 2.2.1 Definitions12 2.2.2 ‘Apparent’ and ‘True’ Needs14 2.2.3 Industrial Buying Behaviour15 2.2.4 The ‘Customer’ in the Business Air Travel Market 18 2.2.5 The ‘Customer’ in the Leisure Air Travel Market22 2.2.6 The ‘Customer’ in the Air Freight Market24 vi Airline Marketing and Management 2.3 Market Segmentation: Air Passenger Market 2.3.1 The Concept 2.3.2 Segmentation Variables in the Air Passenger Market 2.3.3 Customer Requirements: Business Travel Market 2.3.4 The Business Travel Market: Demographics and Psychographics 2.3.5 The Leisure Segment of Demand 26 26 27 30 38 40 2.4 Segmentation of the Air Freight Market 43 2.4.1 Differences between the Air Passenger and Air Freight Markets 44 2.4.2 Segmentation Variables: Air Freight Market45 Successful Airlines …  The Marketing Environment 3.1 The Theoretical Basis: PESTE Analysis 52 53 53 3.2 PESTE Analysis: Political Factors 54 3.2.1 Terrorism Fears/Political Instability 54 3.2.2 Deregulation and ‘Open Skies’ 56 3.2.3 Marketing Policies for a Deregulated Environment 60 3.2.4 Privatisation 63 3.2.5 ‘State Aid’ 65 3.2.6 Airport Slot Allocation66 3.3 PESTE Analysis: Economic Factors 70 3.3.1 Economic Growth and the Trade Cycle70 3.4 PESTE Analysis: Social Factors 72 3.4.1 The Ageing Population 73 3.4.2 Changing Family Structures 73 3.4.3 Changing Tastes and Fashions in Holidays 73 3.4.4 The Uncertain, Deregulated Labour Market 74 3.4.5 The Female Business Traveller76 3.5 PESTE Analysis: Technological Factors 3.5.1 Video-Conferencing 3.5.2 The Internet 76 76 77 Contents 3.5.3 3.5.4 Surface Transport Investment New Aircraft Developments vii 78 79 3.6 PESTE Analysis: Environmental Factors 3.6.1 Climate Change and Global Warming 3.6.2 Shortages of Infrastructure Capacity 3.6.3 ‘Tourism Saturation’ 80 80 83 84 Successful Airlines …  84 Airline Business and Marketing Strategies 4.1 Porter’s ‘Five Forces’ and their Application to the Airline Industry 4.1.1 Rivalry amongst Existing Firms 4.1.2 Substitution 4.1.3 New Entry 4.1.4 Power of Customers 4.1.5 Power of Suppliers 4.1.6 ‘Disintermediation’ 85 85 85 86 87 90 93 95 4.2 Strategic Families 96 4.2.1 Cost Leadership, Differentiation and Focus: The Principles 96 4.2.2 Cost Leadership in the Airline Industry: Background 100 4.2.3 ‘True Low Cost’: Fundamentals of the Business Model 102 4.2.4 ‘Hybrid’ Low-Cost Carrier Models 111 4.2.5 Cost Leader Airlines: Current Issues 115 4.2.6 Cost Leader Airlines: The Future 119 4.2.7 ‘Differentiation’ in the Airline Industry 121 4.2.8 Airline Alliances 125 4.2.9 Airline Industry Consolidation: The Latest Developments132 4.3 ‘Differentiation’ Airlines: The Future 137 4.3.1 The Concept of the ‘Legacy Airline’ 137 4.3.2 ‘Legacy Airlines’: Strategic Options141 viii Airline Marketing and Management 4.4 ‘Focus’ Strategies 149 4.4.1 Types of Focusing in the Airline Industry 149 4.4.2 ‘Value Added’ Focusing: ‘Integrated Carriers’ 149 4.4.3 ‘Value Added’ Focusing: ‘All Business-Class’ Airlines 150 4.4.4 ‘Low Cost’ Focusing: Charter Airlines 153 4.4.5 ‘Lost-in-the-Middle’155 4.5 Airline Business and Marketing Strategies: Common Mistakes 155 4.5.1 Objectives 156 4.5.2 Diversification vs Specialisation 158 4.5.3 Pace of Expansion 159 4.5.4 Competitive Response 160 4.5.5 ‘Control’ 161 4.5.6 Over-Optimism/Fall-Back Position161 Successful Airlines …  Product Analysis in Airline Marketing 5.1 What is the ‘Product’? 162 163 163 5.2 The Theory of Product Analysis and its Application to the Airline Industry 163 5.2.1 The Product Life Cycle 163 5.2.2 Product Life Cycles in the Aviation Industry 169 5.2.3 Managing a Product Portfolio: The ‘Boston Box’ 173 5.2.4 Balancing Risk and Opportunity: The ‘Ansoff Matrix’177 5.3 Fleet and Schedules-Related Product Features 5.3.1 Cabin Configuration and Classes of Service 5.3.2 Network, Frequencies and Timing 5.3.3 Punctuality 179 180 183 188 5.4 Customer Service-Related Product Features 5.4.1 Point-of-Sale Service 5.4.2 Reservations and Overbooking 5.4.3 Airport Service 5.4.4 In-Flight Service 190 190 191 194 195 5.5 Controlling Product Quality 197 Contents ix 5.6 The Air Freight Product 5.6.1 Air Freight Capacity 198 199 Successful Airlines …  203 Pricing and Revenue Management 205 6.1 Building Blocks in Airline Pricing Policy 205 6.1.1 Pricing – A Part of the Marketing Mix 205 6.1.2 Deregulation 206 6.1.3 Revenue Management Systems 207 6.1.4 ‘Willingness-to-Pay’ and ‘Capturing the Value’ 210 6.1.5 ‘A La Carte’ Pricing211 6.2 ‘Uniform’ and ‘Differential’ Pricing 212 6.2.1 The Principles 212 6.2.2 Differential Pricing: Arguments in Favour 214 6.2.3 Differential Pricing: The Case Against 218 6.2.4 The Management of Discount Fares 222 6.2.5 Pricing Response and Pricing Initiatives226 6.3 The Structure of Air Freight Pricing 230 Successful Airlines …  233 Distributing the Product 235 7.1 Distribution Channel Strategies 235 7.1.1 Types of Distribution Channel 235 7.1.2 The Concept of ‘Super Profits’237 7.2 The Travel Agency Distribution System 240 7.2.1 Advantages and Disadvantages 240 7.2.2 Today’s Distribution Channels 242 7.2.3 The Future of Distribution244 7.3 Global Distribution Systems (GDSs) 7.3.1 History and Background 7.3.2 Current Issues 246 246 249 350 Airline Marketing and Management Likert Scale Method of measuring attitudes in consumer surveys Runs from ‘Agree strongly’ to ‘Disagree strongly’ Loyalty Marketing Marketing based on giving rewards to customers who are regular purchasers Likely to be especially valuable in industries where switching costs are low Market Segment Group of customers who have sufficient in common to form the basis for a product/price/promotion combination Marketing Mix Marketing process expressed as ‘4Ps’ – product, price, promotion and place Other ‘Ps’ such as ‘Politics’ now often included Marketing Myopia The mistake of taking too narrow a view when answering the question ‘What business are we in?’ Maturity Phase The third stage of the Product Life Cycle Growth in sales will slow and then stop, due to market saturation and increasing competition A product relaunch may be necessary Media Advertising Advertising by purchasing space or time from media suppliers Media Buying Purchasing of advertising space Media Relations Communication with customers by obtaining beneficial publicity through communications media Need A customer requirement which it is essential that suppliers should meet Can be divided into apparent and true, implied and explicit needs Glossary of Marketing Terms 351 NPD New product development Objection Point raised by prospect against making a purchase Must be answered at the Desire stage of the AIDA model Objective Specific, quantified statement of the progress which a firm intends to make over time OTV Opportunity-to-view Quantitative measure to guide the amount of mediabuying necessary to ensure that advertising has the desired impact Pareto’s Rule Generally applicable rule stating that 80 per cent of profits are derived from 20 per cent of customers ‘Percentage of Revenue’ Method of setting promotional budget It is quite wrong, as it ties promotional spending to market conditions PESTE Method of establishing a scenario using the five headings of Political, Economic, Social, Technological and Environmental Planning Horizon Period of years ahead for which strategic plans are formulated Planning System Framework within which strategic plans are formulated Describes, too, participants in the planning process Point-of-Sale Point of contact between supplier and customer Position Audit Framework for analysing a firm’s present position using the four headings of strengths, weaknesses, opportunities and threats Also known as SWOT analysis 352 Airline Marketing and Management Pricing Elasticity Relationship between changes in price and changes in demand Can be subdivided into: Price Elastic Demand: change in price produces a greater change in demand Price Inelastic Demand: change in demand is less than the change in price Problem Child Alternative name for wildcat in the Boston Box Product Life Cycle Model exploring the relationship between demand for a product and time Its message is that product development is a never-ending process for the successful firm Product Portfolio Range of products being offered by a particular firm Promotional Budget Amount of money available in a given time period for communication with customers Psychographics A description/summary of attitudes in a market segment Quality Gap A concept in Relationship Marketing to describe a situation where a customer’s experience of quality is above or below their expectation Random Sample Sample where all members of a target population have an equal chance of inclusion Relationship Marketing A marketing philosophy whereby a firm gives equal or greater emphasis to the maintenance and strengthening of the relationship with its existing customers as it does to the necessary search for new customers Glossary of Marketing Terms 353 Relaunch Initiative undertaken during the maturity phase of the Product Life Cycle Can take the form of product enhancement, price cuts, increased promotional spending, or a combination of all three Resistors Consumers who can never be persuaded to come into the market for a particular product Sales Promotion Attempt to increase sales through running competitions and similar activities Scenario An analysis of the most likely future situation facing a firm Is often prepared using the technique of PESTE analysis Semantic Differential Scale Method of measuring attitudes in consumer surveys Sensitivity Analysis Testing of the resilience of a strategic plan by reworking it using different, pessimistic, assumptions Social Grading Classification of households according to head-of-household’s occupation Sponsorship Communicating with customers by having the firm’s name associated with a particular individual, team or event May be a cost-effective way of building awareness and image, but poor method of closing business Star Situation in the Boston Box where a firm’s product has a high share of a rapidly growing market High share should enable some profits to be made but the growth in the total market will result in heavy competition High investment to protect the dominant position will therefore be necessary Status Goods Goods where an increase in price is associated with an increase in demand 354 Airline Marketing and Management Switching Costs The costs of changing from one supplier to another Where switching costs are low, there is likely to be a need for loyalty marketing SWOT Analysis Alternative for Position Audit (qv) Synergy Situation where a firm producing two or more products together can obtain lower costs than firms producing each product separately Task-Based Method Correct method of fixing promotional budget, based on the question ‘What we need to spend?’ Test Marketing Marketing initiative taken on an experimental basis over only a small part of the market area it is hoped eventually to penetrate Tracking Monitoring the success of advertising through the progress of a campaign Trade-Off Situation where additional costs are incurred in one area of marketing, in order to secure more than compensating benefits in another Trial Close The sales executive testing to see whether the prospect is willing to buy, without seeking a ‘yes’ or ‘no’ answer Uniform Pricing Situation where all customers are charged the same, irrespective of their willingness/ability to pay User In Decision-Making Unit, person who will actually use the product Will want to gain maximum utility from product and to protect status May be less concerned about price Glossary of Marketing Terms 355 USP Unique selling proposition Statement of where a product is uniquely different from its rivals Want Customer requirement which may be important, but not essential, for suppliers to meet Can be divided into ‘tangible’ and ‘psychological’ Wear-Out Cyclical decline in the impact of advertising towards the end of the advertising life cycle Wildcat Boston Box situation where a firm’s product has a low share of a rapidly growing market The investment message is to spend money to improve position in the expectation that profits will come in the longer term Also known as Problem Child This page has been left blank intentionally Index ‘A La Carte’ pricing 211, 219, 224, 253, 325 AAdvantage 170 Abuse of a Dominant Position 128, 148, 227, 286 Accidental No-Shows 192 Advanced Purchase Fares 224 Advanced Turbo-Prop (ATP) 164, 177 Advertising 3, 6, 7, 22, 39, 62, 72, 73, 76, 77, 130, 164, 167, 168, 172, 174, 217, 219, 235, 241, 267, 268, 275, 289, 294, 295, 296, 298–300, 311–19, 322, 350, 355 Advertising Life Cycles 318, 343 Advocate Relationships 274, 275–6 Aer Lingus 144, 181 Ageing Population 73, 324 Agency Selection 313–14 AIDA Model 289–91, 303, 343, 351 Air Asia 100, 114, 116, 118 Air Asia X 116 Air Berlin 32, 112, 114, 251 Air Canada 63, 118, 130, 135, 146, 181, 296 Air Europe 270 Air France 60, 64, 66, 69, 126, 132, 133, 134, 136, 139, 152, 164, 203, 255, 259, 264 Air Freight Forwarders 24, 25, 96, 102, 103, 202, 233, 254 Air Mauritius 153 Air New Zealand 64 Air Passenger Duty 120 Air Services Agreements 58, 59, 133, 159, 184, 206, 327, 328, 330, 335, 336, 337, 339 Air Seychelles 153 Air Traffic Control 67, 93, 188, 329, 332, 304 Airbus 72, 79, 92, 104, 116, 131, 152, 170, 182, 186, 187, 196, 201 Airbus A318 153 Airbus A319 152, 325 Airbus A320 86, 143, 170, 182, 195 Airbus A330 36, 42, 116, 154, 186, 196, 200 Airbus A340 164, 184, 185, 186, 196 Airbus A350 36, 72, 79–80 Airbus A380 79, 94, 121, 187, 188, 199, 201, 319, 325 Airline Deregulation Act 56, 57 Airport Co-ordination Ltd 67, 327, 340 Airport Service 34, 93, 194­–5 AirTran 112 Aldi 98, 100 Alitalia 66 All Business Class 72, 83, 150–3, 178, 184, 218, 265 All Nippon Airways 135 Allegiant Air 102, 104, 111 Alliances 29, 114, 125–32, 133, 134, 142, 171, 207, 264, 271, 281, 282, 287, 288, 327, 330 Al-Qaeda 55 Amadeus 94, 113, 131, 191, 248, 251, 253, 307 American Airlines 113, 124, 125, 131, 135, 142, 146, 151, 170, 187, 245, 247–8, 252, 281, 330, 332 American Express 272 American International Group 237 ‘Ancillary Revenues’ 106, 107, 110–111, 114 Ansett Airlines 57 Ansoff Matrix 177–9, 203 ‘Anti-Marketing’ 214 Anti-Trust Immunity 125, 132, 134, 135, 207, 327 ‘Apparent’ Needs 14–15, 34, 265, 345 358 Airline Marketing and Management Asda/Walmart 238, 361 ‘Atlantic Plus Plus’ 135 Atlas Air 96, 201 ATR 177 Australian Airlines 57 Austrian Airlines 60, 133, 266 Baggage Handing 76, 107, 110, 123, 277 ‘Bait-and-Switch’ Marketing 228 Barriers-to-Entry 87–9 Belly–hold Capacity 149, 150, 200–201, 203, 231 Ben and Jerry’s 260 ‘Betrayal Factor’ 305 BMI Baby 118, 266 BMW 259, 261, 269 Body Shop 260 Boeing 72, 92, 94, 104, 115, 131, 152, 164, 165, 166, 169, 170, 182, 185, 186–8, 196, 201 Boeing 707 199 Boeing 717 164, 182 Boeing 737 103, 104, 143, 152, 169– 70, 182, 186, 196, 200, 325 Boeing 747 80, 93–4, 96, 186–8, 196, 199, 200, 325 Boeing 747F 96, 199, 200 Boeing 757 104, 151, 180, 183, 199 Boeing 767 134, 151, 186, 196 Boeing 777-300ER 36, 165, 186, 196, 200 Boeing 777-200LR 36, 185 Boeing 787 36, 72, 79–80, 145, 188, 196, 324 Bombardier 143, 165, 186 Bombardier C Series 143, 165 Bombardier Dash 177, 196 Booking Fees 95, 96, 78, 109, 113, 131, 145, 206, 220, 247–52 Boston Box 173–7 Boston Consulting Group 173 Brand 62, 73, 122, 123, 136, 217, 257–72 Brand Positioning 17, 264–7, 268, 270, 294, 318 Brand Stretching 260, 270–271 Branson, Sir Richard 57 British Aerospace 131, 164, 177 British Airways 13, 60, 63, 69, 72, 86, 118, 125, 132, 133, 135, 136, 137, 138, 139, 144, 151, 152, 153, 164, 165, 178, 192, 197, 203, 206, 212, 239, 241, 246, 259, 263, 264, 266, 272, 281 British Caledonian 158 British Midland Airways (BMI) 104– 105, 106, 118, 133, 139, 266 Brussels Airlines 133 ‘Bucket Shop’ 23, 91 Bulk Unitization Programme 220, 232 Business Class 13, 28, 35, 36, 38, 71, 72, 76, 86, 101, 109, 112, 117, 138, 143, 150, 151, 152, 153, 165, 178, 181, 182, 183, 196, 205, 212, 213, 243, 259, 263, 285, 298, 304, 325 Buyers 17, 258, 291 Cabin Cross Section 199 Cabin Door Size 199 ‘Cabotage’ 57, 88 Canadian Airlines 270 ‘Capturing the Value’ 210–211, 218 Carbon Offsetting 82–3, 260 Carbon Trading 82 Carrefour 97, 258 Cash Cows 173, 175 Cathay Pacific 125, 137, 206 ‘Cattle Truck Handling’ 106 Cendant Corporation 248 Channel Tunnel 176 Chapter 11 Bankruptcy 65, 130, 146, 227 Charleroi Airport 120 Charter Airlines 42, 92, 114, 119, 129, 153–5, 196, 215, 237, 238–9, 258 Index Chartered Institute of Marketing Chicago Convention 58 Civil Aeronautics Board 57 Civil Aviation Authority 32 Climate Change 80–83, 158 Club World 212, 263 Co-Branding 272 Code-Sharing 124, 127, 147 Combi Aircraft 201–202 Commissions 20, 21, 78, 91, 102, 109, 168, 174, 191, 220, 235, 236, 238, 241–2, 243, 244, 251, 307, 309, 326 Commodity 11, 44, 47, 87, 230, 232, 238, 257–8 Communications Mix 292, 295, 322 Concorde 152, 164, 259, 260, 264 Connexion-by-Boeing 165 Consolidation 24, 60, 124, 132, 133, 135, 136, 142, 207, 232, 253, 254, 271 Consolidators 14, 23, 24, 91 Consumer Marketing 4, 15 Continental Airlines 124, 130, 131, 134 ‘Controllable’ Costs 229 Copywriting 302–304 Corporate Business Traveller 14, 28, 32, 35, 101, 112, 210 Corporate Travel Manager 17, 21, 171 Cost Leadership 96–7, 98, 100–101, 104, 117–18, 119, 121, 155, 180 ‘Cost Leader’ airlines 18, 34, 103, 109, 115–20, 138, 139, 144, 146, 147, 154, 175, 191, 243, 244, 245, 250 Counterfeiting 259 Creative Strategies 316–17 Cross-Border Ticketing 108 Customer 3–4, 5, 6, 7, 9, 12–15, 18–26, 27, 29–32, 35, 36, 38, 41, 46, 47, 48, 75, 77, 85, 86, 90–93, 97, 103, 113, 114, 117, 359 121–4, 128, 138, 141, 146–7, 154, 161, 171–2, 178, 179–80, 190–97, 198–9, 203, 219, 233, 234, 235, 236–7, 238, 248, 260, 265, 267, 274–7, 278–80, 285, 287, 289, 290, 294, 302, 306–7, 309, 312, 319 Customer Relations 198, 276–7, 278–80, 302, 307 Dallas Love Field Airport 104 Dan-Air 239 ‘Dash-for-Cash’ 227 Database Marketing 6, 27, 268, 283, 287, 295, 298, 299, 300, 301, 302, 303, 304, 312 Deciders 16 Decision Making Unit (DMU) 15–16 Decline Phase 169, 171, 178 Deep Vein Thrombosis (DVT) 43, 119 Deliberate No-Shows 193 Delta Air Lines 65, 118, 124, 126, 134, 135, 146, 191, 221, 243, 248, 264, 269, 281 Delta Express 118 Demographics 6, 38–40 Department of Transportation 117, 126, 134 Deregulation 31, 56–60, 62, 63, 97, 160, 185, 206–207, 237, 241, 306, 317, 324, 325 Design Density 199 Destroyer Relationships 274, 275 DHL103, 203, 233 Differential Pricing 212–230, 233 Differentiation 96–7, 98, 99, 117, 121–5, 137–49, 151, 155, 180, 195, 325, 326 Directional Imbalances 44, 47 ‘Disintermediation’ 95–6 Disney 22, 260 Dissonance 304 Diversification 158–9, 251 ‘Do-Nothing Case’ 178 360 Airline Marketing and Management Dogs 173, 176–7 Dusseldorf Airport 152 ‘Earn-and-Burn’ rights 128, 281, 287 Easyjet 32, 57, 86, 100, 109, 112–113, 115, 118, 250–251 Eastern Airlines 191 Economic Market Investor Principle 65 Economies of Scale 80, 89, 95, 102, 103, 126, 167, 217, 248, 254 Economies of Scope 126, 128 Economic Perishability 47 Economist, The 315 Embraer 143, 166, 186 Emergency Traffic 46 Emirates 79, 121, 122, 123, 126, 195 Engine Alliance 175 Environmental Taxation 120, 324 Eos Air 151–2, 218, 259, 265 Eupo-Air 91 European Commission 59, 65, 68, 120, 133, 247 European Court 59, 132 Excel Airways 116, 155 Expedia 245, 263 ‘Express’market 103, 233, 254 Fairlines 150 Federal Aviation Act 56 Federal Express 60, 77, 178, 233 Field Sales Team 306, 311 Fifth Freedom Rights 60 Financial Times 315 First Class 13, 28, 36, 71, 72, 76, 79, 138, 150, 151, 181, 182, 196, 205, 212, 213, 243, 282, 325 ‘First Mover Advantage’ 121 Fleet Commonality 103 Flybe 110 Flyglobespan 155 Focus Strategies 149–55 Fokker 176, 270 Ford 263 Four Corners Travel 165 ‘Four Ps’ of Marketing 4–5, 168 Fractional Ownership 166 Franchising 148, 171, 271–2, 287 Freight-of-all Kinds (FAK) Pricing 232 Freighter Aircraft 43, 92, 96, 142, 199, 200, 201, 202, 231 Frequency 14, 18, 28, 32, 33, 34, 35, 36, 37, 39, 46, 49, 56, 62, 66, 77, 80, 86, 143, 151, 152, 154, 158, 176, 186, 200, 202, 203, 216, 217, 264, 265, 298, 312 Frequent Flyer Programmes 39, 112, 124, 128, 135, 142, 170, 277, 280, 281–8, 298, 326 Galileo International 94, 113, 131, 248, 307 Gatekeepers 16–17, 304–305 Gatwick Airport 144 General Cargo Rates 232 General Electric 87, 175, 176 General Electric Capital Aviation Services (GECAS) 236 GFX 254 Global Distribution Systems (GDSs) 94, 112, 246–53 Global Warming 80–81 Go 118, 144 Gol 100 Google 239, 253 GPA 236 Grandfather Rights 68, 69, 70, 88, 142, 144, 159, 184, 191 Greenhouse Gases 81, 82, 120 Growth Phase 167–8, 169, 170, 172 Gulf Air 166, 296 Gulfstream 176 Heathrow Airport 67, 69, 144, 192 Hub-and-Spoke 62, 80, 185, 186 ‘Hybrid’ Carriers 102, 105, 109, 111, 113 Index IATA 129, 207, 232 ITA Software 253 Iberia 60, 86, 132, 133, 135, 136, 139 IKEA 98 ILFC 236 Imitative Buying 164, 167 Independent Business Traveller 28, 35, 41, 101, 112, 138 Industrial Buying Behaviour 15–18 Industrial Marketing 4, 16, 17, 235 In-flight Service 34–8, 43, 121, 150, 151, 195–7, 212 Influencers 18 Innovators 164, 171–2 Insurance Costs 49, 51, 105, 321 Integrated Carriers 92, 102, 149–50, 203, 233, 254 International Standards Organisation (ISO) 199 Internet 4, 23, 61, 74, 77–8, 87, 91, 95, 96, 101, 103, 109, 145, 154, 165, 166, 191, 235, 242, 244, 245, 246, 248, 250, 251, 294, 295, 313, 315, 319 Intra-company Travel 87 Islip Airport 104 Japan Airlines 132, 135, 142, 146, 158 Jetblue Airways 100, 113, 221 Jetstar 114, 118, 144 Jetstream 164, 177 Jugular Marketing 148 ‘Junk Mail’ 280, 305 ‘Just-in-Time’ 49 Kennedy Airport (JFK) 105, 113, 150 KLM 60, 69, 125, 133, 134, 136 Korean Air 63 ‘La Navette’ 264 Laggards 164, 172 LaGuardia Airport 105, 112 Laker Airways 264 361 Landing Fees 79, 93, 104–5, 116, 185, 229, 231 Lauda Air 266 Learning Curves 89, 167, 168 ‘Legacy’ Airlines 3, 63, 66, 114, 118, 121, 136, 137–48, 190, 210, 211, 220, 221, 218, 222, 245, 323 Lifetime Value 39, 274 London City Airport 153 ‘Long-Haul Low Cost’ 115–16, 142 ‘Lost-in-the-Middle’ 97, 100, 155 Low Cost Carriers 86, 101, 110, 111, 112, 113, 114, 115, 116, 119, 120, 134, 140, 141, 142, 143, 147, 148, 166, 182, 189, 193, 194, 196, 210, 211, 219, 220, 221, 252, 281 Lufthansa 11, 60, 63, 69, 86, 113, 125, 130, 132, 133, 134, 135, 137, 148, 152, 153, 165, 178, 181, 246, 281, 287 Lunn Poly 239 Luton Airport 151 McDonalds 260 McDonnel-Douglas 182 Malaysia Airlines 64 Malev 64 Market Segmentation 26–43, 45, 138, 141, 215, 298 Marketing Communication 5, 267, 268, 270, 280, 292, 293, 294, 295–311, 312, 314, 319, 322, 326 Marketing – Definition 3, 30 Marketing Emergency 46 Marketing Mix 4–6, 168, 171, 172, 174, 205–6 ‘Marketing Myopia’ 9, 52 ‘Marketing Support’ 66 Marks and Spencer 98, 99, 260 Marlboro 262, 268 Maturity Phase 115, 168–9, 171 362 Airline Marketing and Management Maximum Stay Conditions 223–4 Maxjet Airways 150, 151, 152, 218 MD-11 199 MD-80 104, 182 Media Buying 22, 294, 313, 314–16 Media Relations 268, 295, 305–6 Mercedes 259 Metroair 118 MGM Grand Air 150 Microsoft 102, 245 Midway Airport 104 ‘Miles-and-More’ 152 Minimum Stay Conditions 223 Monarch Airlines 154 Morrisons 238, 261 MyTravelLite 154 Newark Airport 105 Newsweek 315 Northwest Airlines 65, 124, 125, 134, 248, 269 Norwegian Air Shuttle 32 No-shows 33, 192–3 Oasis Air Hong Kong 116 O’Hare Airport 104 Olympic Airways 66 OneWorld 114, 125, 126, 132, 134–5 On-line Connections 123–4, 127, 135 ‘Open Skies’ Agreements 59, 80, 125, 133, 135 Opodo 245 Orbitz 245 Orly Airport 67 Overbooking 110, 191–4 Ownership and Control 58, 59, 60, 88, 124, 125, 126, 127, 133, 136, 155, 269, 324 Packaging Costs 49, 51, 321 Panalpina 96 Pan American 269, 281, 284 Percentage of Revenue Method 292, 293 322 PESTE Analysis 6, 53–84 Physical Perishability 47 Piedmont Airlines 269 Point-of-Sale Service 103, 190–91, 197, 206 Pooling Agreements 127, 129 Porter, Michael 85, 86, 90, 91, 93, 96, 97, 117, 121, 149, 155 Porter’s Five Forces 87–97 Power of Customers 85, 90–93 Power of Suppliers 85, 93–5 Pratt and Whitney 87, 175, 176 ‘Preferential’ Fares 225–6 Premier Travel Inns 98 Premium Economy 183, 212, 325 ‘Premium Traffic’ 138, 161, 205 ‘Presenteeism’ 75 Primary Slot Trading 70 Priority Boarding 111, 195, 211 Privatair 152 Privatisation 63–5 Product Life Cycle 40, 115, 163–73, 203, 287, 318 Pro-Rating 108 Psychographics 38–40 Punctuality 14, 18, 28, 32–3, 34, 35, 37, 42, 48, 188–90, 106, 197, 265, 267, 271, 277, 278, 290, 291, 294, 302, 326 Qantas 63, 114, 118, 144, 260, 296 ‘QC’ (Quick-Change) aircraft 201 Quality Control 197–8, 203, 277–8 Rackham, Neil 290 Relationship Marketing 39, 273–88 Reservations 5, 15, 19, 94, 101, 103, 105, 109, 159, 190, 191–4, 205, 218, 245, 246, 250 Retailers 50, 62, 236, 237, 238, 255, 261–2 ‘Retreat-to-Core’ 142–3 Revenue Dilution 108, 139, 22, 225 Index Revenue Management 7, 108, 109, 140, 192, 205, 207–11, 217, 219, 222, 228, 234, 244 ‘Rocket-and-Feather’ Pricing 275 Rogers, E.M 165 Rolex 259 Rolls-Royce 87, 99, 175, 176, 269 Routine Non-Perishable Traffic 51–2 Routine Perishable Traffic 47 Ryanair 32, 57, 66, 86, 95, 100, 102, 104, 105, 106, 109, 111, 114, 115, 117, 120, 139, 144, 189, 250, 251 Saab 2000 164 Sabena 66, 142 SABRE 94, 113, 131, 191, 246, 247, 248, 251, 252, 253, 307 Safety Stock 50–51 SAGA 73 Sainsbury’s 238, 261, 262 Sales Budget 291–3, 322 SAS 118, 139, 264 Schedules Planning 184, 189 Scope Clauses 148 Seat Accessibility 33, 35, 37 Seat Pitch 29, 35, 42, 43, 119, 154, 180, 181, 182, 183, 212, 213, 259 Secondary Slot Trading 69, 88 Selling ‘Seventh Freedom’ 60 Shannon Airport 153 Shipping Manager 25 Shuttle 32, 191–2, 263, 269 Shuttle-by-United 118 Silverjet 82–3, 151, 152, 218, 260 Singapore Airlines 121, 122, 123, 184, 188, 268 Single Aviation Market 57, 65, 86, 101, 206 Sky Europe 115 Skybus 115 Skyteam 126, 132, 134, 264 363 Skytrain 264 Slot Allocation 66–70, 142, 184, 324 ‘Slot Co-ordinator’ 67–8 Smith, Fred 179 Snowflake 118, 264 Song 118, 264 ‘Sonic Cruiser’ 166 Southwest Airlines 31, 100, 104, 105, 107, 109, 111, 112, 113, 117, 134, 138, 158, 186, 250, 251, 265 Specialisation 158–9 Specific Commodity Rates 232 Spey Engine 176 SPIN Cycle 289–91 Sponsorship 265, 267–8, 295–7, 298, 312 Standby Fares 192, 224–5 Star Alliance 125–6, 128, 130, 131, 134, 135, 252, 264, 287 Stars 173, 175 Start-up Economics 89 ‘State Aid’ 65–6, 120, 155 Status Goods 167 Stelios, Haji-Iannou 115 Strasbourg Airport 120 Substitution 86–7 ‘Sum-of-Sector-Fares’ 108 Super Profits 62, 237–9, 261–2 Swiss International Airlines 64, 133, 152 Swissair 142, 181 Switching Costs 90, 92 TAM 131 Tango 118 Tariff Co-ordination 129, 207 Task-based Method 293, 322 Tay Engine 176 Ted 118 Terrorism 54–5, 77, 123, 137, 138, 141, 161, 323 Tesco 99, 238, 261–2 Thai International 196 364 Airline Marketing and Management Thomas Cook 154 Thomson Holidays 239 Thomsonfly 239 ‘Ticketless Travel’ 192 TNT 103, 233 ‘Tourism Saturation’ 84 Toyota 268 Trade Cycle 70–72, 77, 117, 123, 138, 141, 226, 230, 239, 266, 271, 285, 324 Traffic Rights 58, 59, 60, 132, 133, 159, 174, 206 Trailfinders 91 Trans-Australia Airlines 57 Transfer Connections 123 Travel Agents 6, 20, 21, 23, 24, 78, 91, 94–5, 101, 109, 112, 113, 190, 206, 219, 237, 239, 240–46, 248, 249, 250, 252, 291, 307, 309, 318, 326 Travel Management Companies 244, 250, 252, 326 Travelocity 245, 263 Travelodge 98 Travelport 94, 113, 248, 253 Treaty of Rome 59, 227 True Needs 3, 14–15, 17, 19, 20, 34, 265 TUI 154, 239 Turkish Airlines 13 TWA 248, 281 ‘Two Airline Policy’ 57 Uncontrollable Costs 161, 229 Uniform Pricing 212–17, 233 Unique Selling Proposition (USP) 319 Unit Load Devices (ULDs) 96, 202–3 United Airlines 71, 118, 125, 130, 135, 146, 246, 284 Upper Class 263 UPS 60, 77, 103, 149, 150, 203, 233, 235 US Airways 65, 191 Users 17 ‘Value Added’ focussing 149–50, 153 Van Cleef and Arpel 259 VARIG 63, 130 VAustralia 113, 260, 271 Videoconferencing 10, 12, 39, 76–7, 87 Virgin America 260, 271 Virgin Atlantic Airways Virgin Blue 57, 100, 112, 113, 260, 271 Visiting-Friends-and-Relatives (VFR) 28 Wall Street Journal 315, 322 ‘War-on-Terror’ 54, 55 Wardair 270, 294 Warehousing costs 50, 321 Westjet 100, 118 Wet Leasing 96 Wholesalers 50, 62, 236, 237, 238, 255, 261, 262, Wildcats 173 ‘Willingness-to-Pay 114, 210–11, 214, 218, 219, 220 ‘World Offers’ 266 Worldspan 248 Yield Improvement Programme (YIP) 229 Zip 118 Zoom 116 ... 246 249 Airline Marketing and Management x 7.4 Distribution Channels in the Air Freight Market 253 Successful Airlines …  256 Brands Management in Airline Marketing 257 8.1 ‘Brands’ and ‘Commodities’... Surrey, GU9 7PT England USA www.ashgate.com British Library Cataloguing in Publication Data Shaw, Stephen, 195 0Airline marketing and management 7th ed Airlines Management Airlines Marketing I Title... engineering, airport ground handling and data processing and management 12 Airline Marketing and Management As an overall summary, airlines participate in many businesses and must take a broad view