Introduction
Airlines have a number of products and diverse services to offer. This paper is anticipated to demonstrate the diversity of two airlines, Air Asia and Jetstar, product offerings that are available and inspire concepts concerning how ideal to serve the varied desires and wants of passengers. Air Asia and Jetstar are among the larger low cost carriers (LCCs) airlines. They compete for the similar group of customers who go for cheap fares among Asia-Pacific cities and nations. The paper compares and contrasts Air Asia and Jetstar services bases on the concept of Doganis’ five key product characteristics as a structure. The five comparison elements include price, comfort, convenience, schedule, and image. The comparison is based on both airline destinations to Sydney. Apart from the five categories, the comparison and contrast are also based on the passenger segment(s) targeted by each airline, airlines’ profit history, evaluation of each carrier’s overarching business strategy, and finally assessment of the most suitable and profitable strategies.
Comparison and Contrast
Passenger Segment(s) Targeted
The Jetstaris one of the LCC airlines, acknowledged for serving travelers across the world at a low price strategy. The company marketing strategy is based on serving the consumers by offering quality-oriented services at a low price. The airline strives to provide best in-flight amenities to the travelers and customer at lowest achievable airfare (MakeMyTrip 2015). The target passenger segment for the airline is middle class customers who seek luxury and comfort at cheaper prices
Likewise, the Air Asia is another LCC airline with low prices marketing strategy. It is acknowledged as the most important low-cost aircraft company in Asia. The business has expanded tremendously since 2001 and it is a well-acknowledged LCC in the Asia and other continents. The low prices strategy has been used to attract new passengers while retaining the regular passengers and the objective is an ingredient of AisAsia business strategy (Yee, 2006). The strategy has propelled the airline to its vision achievement of being the biggest LCC in Asian and serves big populations that were initially underserved while paying higher prices and getting poor. The strategy is based on the conveniences for the target market and other benefits (Yee, 2006). The airline appreciates the strategy achievements since the convenience and affordability have attracted many customers and travelers. The target market segments are the middle class who yearn for luxury travel at affordable prices (Yee, 2006).
Airlines’ Profit History
AirAsia is a lucrative airline industry with stable global systems.
Annual Financials for AirAsia (US Dollars)
Source: marketwatch.com
Jetstar’s Profit History
The Jestar Group reported a loss in the year 2014; however, the Jetstar Australia has been making profit since its launch in 2004, and it has continued to boost the Group’s success through the domestic business and international business.
In comparison, both selected airlines have been making profit with AirAsia having clear growth plan than Jetstar Airways.
Overarching Business Strategy
The overarching business strategy for both the Jetstar and AirAsia is the low-cost carrier approach. Even though the airlines have strived and expanded due to the strategy, it is challenging their expansion plan and procedures. According to researchers the companies’ low running costs and low prices have made them affordable preference for budget conscious passengers (MakeMyTrip 2015). As a result, the low-cost strategy has essentially transformed the airline business, as conventional carriers began opting for a variety of components of low-fare aircraft. Doganis research proposes to differentiate between the strategic factors and cost-related.
Low-fare strategy factors: Doganis illustrated the fundamental concept of the low-cost strategy on the no-frills framework of the some Airlines. The authors identified that strategic directions make up four components of industry development, growth principles, spatial strategy, range, and target market (Huettinger & Adomavičius, 2011). The elements are essentially established by an industry’s preferences, which are based on choices between the high cost and full services or the low cost and no frills’ frameworks. The choices have direct consequences to the growth of the company (Huettinger & Adomavičius, 2011). On the other hand, the author reiterated that the low-cost policy is mainly sought by industries that have a point-to-point mechanism of doing business. In airline industry, point-to-point strategy refers the airlines that travel or operate directly to destinations without branching to central hubs. The objective is on precise destinations and the passengers travel plans are not given much consideration. The objective is based on providing service for the least accessible price, and is frequently referred to as value-oriented. In addition, the strategy provides hidden cost benefits considering the restrictions on working hours and flying hours, besides the strategy makes crew planning easier and effective to manage (Huettinger & Adomavičius, 2011).
However, the strategy is best fit for the short-haul industry, as cost economy can mostly be acquired and achieve on the airports as oppose to in the air. Assessing the low-fare strategy, it is apparent that cost benefits are weaker in a case of long haul scope of travel becomes visible that most cost advantages would be significantly weaker on a long-haul range. Furthermore, travelers are willing to sacrifice and save money on short distance journeys, but on a long-haul range flight, they will require more legroom, seat width and having more comfort (Huettinger & Adomavičius, 2011).
Profitable Strategies
The low-cost strategy has been seen to have benefits and challenges. It is suitable for short distances based on its point-to-point principle, but when it comes to long-haul range flight, the strategy is not sustainable. Therefore, the most profitable strategy would be the one that do not consider on the prices only but other factors. The framework (SFC) that encompasses different factors based in three categories; strategic direction factors, pricing factors, and cost structure factors (COFA), would be a more profitable strategy (Huettinger & Adomavičius, 2011). The SFC structure offers an all-inclusive instrument for the assessment and analysis of the low-fare strategy execution in the air industry. The framework is fundamentally structured for all airline organizations that have an ambition of expansion and growth into longer destinations. The strategy provides an avenue for growth and expansion since the stakeholders will be looking at the business framework from a different perspective (Huettinger & Adomavičius, 2011). The three main elements of SFC frameworks have various sub dimensions that are pertinent for productivity and growth of the industry (Huettinger & Adomavičius, 2011).
Conclusion
The five comparison categories such as price, comfort, convenience, schedule, and image have indicated that AirAsia is a better airline than Jetstar. It offers cheaper prices, have more destinations, schedule time is more accurate, and has higher smart rating capacity.
References
Huettinger, M., & Adomavičius, B., (2011). A framework for assessing the low-fare model in the airline industry
MakeMyTrip. (2015). Jetstar Asia. Retrieved from http://www.makemytrip.com/international-flights/jetstar-asia-3k.html
MarketWatch, Inc. (2016). Annual Financials for AirAsia Bhd. MarketWatch. Retrieved from http://www.marketwatch.com/investing/stock/airasia/financials
WanderBat. (2016). AirAsia (AK) vs Jetstar Airways (JQ). Retrieved from http://airlines.wanderbat.com/compare/68-105/AirAsia-vs-Jetstar-Airways
Yee, L. H. (2006). AirAsia embarks on 2nd chapter. The Star. Retrieved from http://article.wn.com/view/2006/12/27/AirAsia_embarks_on_2nd_chapter/?template=cheetah-search-adv%2Findex.txt
