Song Airlines CaseSong was a low-cost airline subsidiary of Delta Airlines, founded in 2003. It was formed to compete with JetBlue and other low-cost airlines for the Florida market . At the time of the case the market environment was extremely difficult due to rising fuel costs, increasing security requirements after 9/11 and customer expectations for lower fares. It has forced many big players in the airline industry into bankruptcy. Operating costs, which include boarding taxes, ground operating costs, etc., were increasing causing even more problems for airlines. Rates on the Florida route were decreasing while costs steadily increased making it difficult to stay operational in that space. Song Airlines' basic marketing strategy was to reduce costs and increase volume through operational efficiency and thus increase profits. The company's core market strategy included:1. Reduce unit costs and increase unit volume. By changing the airline fleet to larger aircraft, seat volume increased by 70%.2. Increase resource utilization (aircraft, employees, gate space). They optimized operational logistics and activities to ensure more operational hours and thus increase volume again. Employee work time policies have been changed to reduce overhead expenses by eliminating hotel stays for flight attendants3. Value pricing strategy with simple and transparent tariffs4. Create new marketing segments and customer targets. Song created based on extensive market research showing that women are the primary decision makers in leisure travel ventures. And so it created a marketing campaign that heavily targeted women by offering healthy food, bright colors for the plane interior, leather seats, friendly flight attendants and great in-flight entertainment.5. Extensive use of low-cost distribution channels – mainly the Internet.6. Improve customer service by employing customizable flight attendants in designer clothes. Song wanted to present the image of a high-end airline so that customers would not be compromised on service by paying lower fares. He used new techniques by opening concept stores in Boston and New York to attract customers. Song Airlines spent a lot of time analyzing past data and did a lot of market research to identify these various strategic points. And I think it clearly shows that they used experience curve techniques to analyze and utilize data such as gate usage, flight attendant working hours, seat usage and flight route planning etc. to optimize the operational aspects of managing overall operations.
tags