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Course Contents Content 8 chapter: Chapter 1:FUNDAMENTAL OF AM. Chapter 2:MARKET FOR AIR TRANSPORT SERVICE. Chapter 3:MARKETING ENVIRONMENT& AIRLINE BUSINESS Chapter 4:PRICING AND REVENUE MANAGEMENT --------------------------------Mid-term------------------------------------------ Chapter 5:DISTRIBUTING OF THE PRODUCT AND BRANDING Chapter 6:RELATIONSHIP MARKETING Chapter 7:AIRLINES SELLING,ADVERTISING&PROMOTE Chapter 8:THE FUTURE OF AM ----------------------------------Final exam--------------------------------------

CHAPTER 2:THE MARKET FOR AIR TRANSPORT SERVICES Learning outcome: Know and understanding about the airline business service.

CHAPTER 2:THE MARKET FOR AIR TRANSPORT SERVICES What Business Are We In? TRANSPORTATION COMMUNICATION LEISURE LOGISTIC INFORMATION SELLING SERVICES

Do you think that transportation is important for social needs and why? What kind of transportation we have now?

THE MARKET FOR AIR TRANSPORT SERVICES What Business Are We In? Transportation Can aircraft gain a profit in transportation? Ex: commercial a/c, private a/c , leas a/c..etc Short haul(domestic) Long haul(international) Door 2 door service Special service demand from customer ..etc Page:6

Example of communication we have now? Telephone, Internet, Video conference etc

THE MARKET FOR AIR TRANSPORT SERVICES What Business Are We In? b) Communication Airline assisted people to: - face to face meeting urgent business deal day trip Advantage for the airline??? Ex: easy to gain a new customer Disadvantage for the airline??? No one will travel because customer easy to communicate by using video conference. Page:7

THE MARKET FOR AIR TRANSPORT SERVICES What Business Are We In? c) Leisure & holiday customers disposable income disposable time leisure holidays Leisure activities Advantage to the airline? Ex: gain more profit and sale Disadvantage to the airline? No customer if political issues involve such as price of ticket, natural disaster and BERSIH etc..

THE MARKET FOR AIR TRANSPORT SERVICES What Business Are We In? d) Logistics Air freight, forward company. - Fast transportation of goods compare to the surface transport. - meeting dateline any ideas. -Advantage? -Airline will be well known in the eyes of the worlds -disadvantage? -Competitive with surface transport(car,motor) Page:7

THE MARKET FOR AIR TRANSPORT SERVICES What Business Are We In? e) Information - moving urgent documents/newspaper(1980) -Challenge to the airline??? E.g: by electronic transmission-fax , email, satellite Page:8

THE MARKET FOR AIR TRANSPORT SERVICES f) Selling services -airline require many skills to be developed. -e.g.: associated with a/c engineering, airport ground handling and etc to gain more profit Ground Handling Airport Management

THE MARKET FOR AIR TRANSPORT SERVICES What Business Are We In? f) Selling services Catering In-flight Entertainment

THE MARKET FOR AIR TRANSPORT SERVICES What Business Are We In? f) Selling services Piloting Engineering

THE MARKET FOR AIR TRANSPORT SERVICES What Business Are We In? f) Selling services Cabin services Reservation/ticketing

THE MARKET FOR AIR TRANSPORT SERVICES What Business Are We In? f) Selling services Duty Free Shops Dubai airport Page:8

Chapter 2:The Market of Air Transport Services Who Are The Consumer and Customers? What is the Market Segmentation?

Who Are The Consumer and Customers???

THE AIRLINE CUSTOMERS The Consumers --- “ARE THOSE PEOPLE WHO ACTUALLY TRAVEL” The Customers --- “They Are The Decision Makers” Page:9

CHAPTER 2: 4 CUSTOMER DECISION WHICH AIRLINE MUST BE ANALYSED Page:9&10

CHAPTER 2:UNDERSTAND THE AIRLINE MARKET The general customer need Industrial buying behavior The customers in the “business air travel market” Leisure & Holiday Travel Market

CHAPTER 2: The General Customers Needs

UNDERSTANDING THE AIRLINE MARKET The General Customers Needs

The General Customers Needs

CHAPTER 2:UNDERSTAND AIRLINE MARKETING Industrial Buying Behavior – DMU(decision Making Unit) Decider Gatekeeper User Buyer Influencer

Industrial Buying Behavior – DMU (decision Making Unit) Decider - he makes the final decision: owner, CEO, Senior Manager, Gatekeeper – those people who control the flow of information into decision-unit. e.g.: PA protect their Boss from times wasting visit, unwelcome sales people. User– those people who use the product or service, concern about quality , cost Buyer – negotiate to get the best deal, expect reward from savings Influencer– those people who don’t use a product, but who influence the final outcome-e. g: government, civil, Page:12-14

CHAPTER 2:UNDERSTAND THE AIRLINE MARKETING The Customers in the “Business Air Travel Market” Secretaries who makes bookings for their bosses – understand the bosses requirements, Travel agents – 80% of bookings, Corporate Travel Manager – special task Customers – who provide feedback Page:15-17

Leisure & Holiday Travel Market A) Their Concerned ~Is there other/better mode of travel ~Service and quality Challenges from surface & ground transport B) Children – facilities for children & babies ~women – well plan program C) Travel agent ~ provide package, visa etc D) Tour operators ~ organizes travel in groups E) Consolidators ~bucket shops, block seats to sell on discount CHAPTER 2:UNDERSTAND THE AIRLINE MARKETING Page:18-20

What are the different between LCC compare with the other commercial Airlines??

Homework!! What is the Low cost carrier? What is characteristic? What LCC do and DO not do? In your words, what the effect of LCC to our economy? What is the schedule flight and non-schedule flight? What is the chartered flight? Due date:21/07/2011

CHAPTER 2:MARKET SEGMENTATION A market segment is a group of Customers who have sufficient in common that they form a viable basis for a product/price/promotion combination. Or in other words: ~~A market segment is a subgroup of people or organizations sharing one or more characteristics that cause them to have similar product needs~~

CHAPTER 2:MARKET SEGMENTATION The Air Passenger Market Air Freight Market Page:22-47

CHAPTER 2:MARKET SEGMENTATION The Air Passenger Market a) Journey Purpose - b)Length of Journey- c) Country/Culture of Origin of Traveler- Page:22

MARKET SEGMENTATION 1. The Air Passenger Market a) Journey Purpose - Pilgrim visits: Mecca for hajj for Muslim , - Vatican city (Rome)Christian - other country for specified religions - etc….

MARKET SEGMENTATION 1. The Air Passenger Market - cont a) Journey Purpose-cont - Leisure holiday: (Bali , Australia) high disposable income to cover accommodation and meals(hotel,transport) - Leisure travel visiting relatives:(niece , family) lower disposable income..(VFR)-(FOC) - - etc…

CHAPTER 2:MARKET SEGMENTATION The Air Passenger Market a) Journey Purpose - b)Length of Journey- c) Country/Culture of Origin of Traveler-

MARKET SEGMENTATION 1. The Air Passenger Market b) Length of Journey * flight length is defined as the time airborne during a flight. 1) Criteria of Short-haul-route: 1 hour up to 3 or 4 hour frequency and timing Punctuality, not delay Seat Accessibility/Ticket Flexibility-easy to fly In-Flight Serviceseats comfort/food are less significant * Regional - anything less than an hour.Short Haul - 1 hour up to 3 or 4 hours.Medium Haul - 4 up to 6 or 7 hours.Long Haul - 7 to about 14 or 15 hours.Ultra Long Haul - anything over 15 hours non stop.

MARKET SEGMENTATION 1. The Air Passenger Market - cont b) Length of Journey 2) Criteria of Long-haul-route: 7 to about 14 or 15 hours. service are important (sleep , a place to do a work) seating comfort, food must be good for customer satisfaction

Question for you ..: D A)How is long haul and short haul defined? By flying time or mileage? B)What is the AVAILABLE SEAT KILOMETERS?(ASK) C)What is the REVENUE PASSENGER KILOMETERS?(RPK)? D) When an airline to start calculate the revenue in year?

CHAPTER 2:MARKET SEGMENTATION The Air Passenger Market a) Journey Purpose - b)Length of Journey- c) Country/Culture of Origin of Traveler-

MARKET SEGMENTATION 1. The Air Passenger Market - Country/Culture of Origin of Traveler 1)Airline should offer a free baggage allowance for customer require . Y? [different races have different height/weight body]

. The Air Passenger Market - Country/Culture of Origin of Traveler 2)seating comfort/arrangement, European vs. Eastern traveler(big/small),toilet(western/eastern)

1. The Air Passenger Market - Country/Culture of Origin of Traveler 3)food for Muslim and non-Muslim - vegetarian/different suitable breakfast between country.(Nasi lemak VS Spaghetti),(Durian VS Apple)

CHAPTER 2:MARKET SEGMENTATION The Air Passenger Market Air Freight Market

*Carriage paid for goods transported in aircraft. Example: UPS,DHL,TNT ,Fedex Air freight market?? MARKET SEGMENTATION Why we are using air freight? Emergency traffic: e.g: -fast delivery of goods, door-to-door a.s.a.p, cost is secondary consideration. 1)- operating emergency occurs when a firm has to rectify an operational problem. Example: Emergency parts for oil company or ship spare parts ,natural disaster. 2)- marketing emergency; Such a situation occurs when a supplier is in danger of missing a deadline or one of its customers has expressed dissatisfaction with service levels. Example : deliver in short time,(pos laju-dijamin sampai esok)

Air Freight Market Perishability goods: -good with short life span-(expired) Example : cut flower , soft fruit, vegetables

Air Freight Market b) Perishability goods have 2 type: 1) Physical Perishability: (describes situations where goods physically deteriorate) Example : Cut flower and soft fruit.

Air Freight Market b) Perishability goods have 2 type: 2) Economic Perishability: ( occurs not when goods are prone to deteriorate physically , but when the life cycle within which they remain saleable is a short one) Example:

Air Freight Market By Type of Services: 1) Just in time: (JIT) (An inventory strategy companies employ to increase efficiency and decrease waste by receiving goods only as they are needed in the production process, thereby reducing inventory costs.) Example : Customer demand the item by 2 day , firm already prepared it before due date. 2) Turnaround time:(TAT) (Period for completing a process cycle commonly expressed as an average of previous such periods . Example: such as repair or replacement of a component or equipment),

Summary chapter 2: ~~The market for air transport services.~~ ~~Consumer and customer definition~~ ~~ Understand the airline market~~ ~~ Market segmentation~~

Assignment

EXERCISE!!!!(only point form) Please explain the 2 market of air transport services and give your own example. Please state 3 ways how can you improve the market of air transport service? An airline has implemented the type of service which 1st, economic and buss class. As the customer, which one you prefer and explain why. Please explain the definition of Consumer and Customer. As a customer, what are your general needs which an airline need to pay attention? As the airline industry operator, you must know the air passenger Market. Please explain 3 kind of the air passenger market. Submit :28/7/2011

ASK Available Seat Kilometers (ASK) measures an airline's passenger carrying capacity. It is: seats available ×distance flown This number should be calculated per plane, but is (at least in an investment context) usually quoted per airline. A seat-kilometers is available when a seat that is available for carrying a passenger is flown one kilometers. Seats that are not usable for various reasons are excluded.

RPK Revenue passenger kilometer (RPK) is a measure of the volume of passengers carried by an airline RPK is a measure of sales volume of passenger traffic. calculated by multiplying the number of revenue-paying passengers aboard the vehicle by the distance traveled

RECITE A PRAYER.. 30s