Table of Contents
Opening remarks
Lucky Air is issuing a call for action.
Cost Centered Business Strategy
Differentiation tactic
Conclusion
Introduction
Lucky Air operates out of Yunnan in China. This is a small carrier that wants to implement growth strategy. Lucky Air is forced to be creative and effective to gain an advantage in the highly regulated airline industry of China. Lucky Air faces increasing competition in the growing airline industry of China. The company considers e-commerce as a strategy for growth.
Lucky Air’s ChallengesThe airline business was heavily regulated. The regulations were loosened a little, which allowed more competition and made it a tougher environment for Lucky Air. Customers also benefitted from the increased competitiveness. Lucky Air’s fuel costs are higher in Yunnan. As a result, they have to pay them in advance. It may lead to a shortage of funds during the year. Lucky Air charges a commission between 2 and 15% to ticket brokers, but 80% of the airline’s ticket sales are done through these agents. As a result, Lucky Air must pay hefty fees to attract new customers. Airlines cannot lease aircraft directly from the manufacturer, and therefore must pay a middleman a premium.
Cost Centered Business StrategyAs Lucky Air has no control over the regulations placed on the airline sector, it must simply work within its limits. Lucky Air will have to enhance its online presence to attract ticket buyers. Lucky Air could do this through promotions and discounts on tickets. This will reduce commission fees for Lucky Air, while increasing customer engagement. The quality of an experience is also important to consumers. Customers should be able to comment on the online platform or blog about their flight experiences. This encourages customers to feel part of a community and will increase their retention. Promoting e-commerce is harder than many people believe and involves several factors. It is difficult to make a business model shift. The shift to online business is not something you can do overnight. You need a strong IT infrastructure, payment gateways that work 24/7, and a marketing team that works hard to tell customers about your online platform.
Convenience is a great way to differentiate Lucky Air. Convenience encompasses many things. This is why it is so important. Lucky Air must add value to its platform while promoting it online. Lucky Air must have an eConcierge service, which will book reservations at restaurants and hotels for its customers. People will love the restaurant reservation feature because they are not as accepting of food in flights and shorter flights do not have this service. Low air-pressure in planes has a negative impact on the taste of our food. Airlines often use inadequate food storage techniques, which leads to passengers refusing food. All of this helps to support the cost-centered strategy, and increases customer engagement and convenience. Convenience can make or break a brand’s loyalty.
ConclusionThis strategy helps Lucky Air reduce its costs as it lowers the commission fee and achieves economies-of-scale as more customers are attracted by the differentiation tactic. It’s easy to launch a new product and promise something different to customers. However, consistency is also important.