Chapter 8

Question 1

What does profitability depend on?

Answer 1

1. Unit cost (per revenue tonne KM)
2. Unit revenue (per revenue tonne KM)
3. Load factor (revenue tonne KM as % of available tonne KM)

these must be balanced

Question 2

How are supply and demand for air services not independant?

Answer 2

Supply-side decisions (aircraft, route, frequency, pricing) effects demand.
Demand-side factors (route density, seasonality, distance, reason for travel) effects supply

Marketing is concerned with this dynamic and interactive process of matching supply and demand

Question 3

What is the essence of marketing?

Answer 3

Identify and satisfy needs. To be consumer-oriented rather than supply-oriented

Question 4

What are the four logical steps marketing should involve?

Answer 4

1. Identify markets and segments
2. Product planning
3. Plan selling and distribution based on product planning
4. Review and monitor

Question 5

What are the 3 main reasons for travel?

Answer 5

1. Business (dominates domestic)
2. Leisure/VFR (dominates international)
3. Other

Question 6

Be able to analyse the factors which effect the distribution of these categories:

Answer 6

1. Route length
2. Frequency
3. Season
4. Time of day
5. Disposable income
6. Economic activities of region
7. Full and low-cost carriers

Question 7

What are the implications on marketing and pricing strategies of a mix of passengers between business and leisure?

Answer 7

1. Passenger mix not same at each end of route
2. Proportion of traffic originating from each end of route may differ

Question 8

What are some socio-economic characteristics that impact travel patterns? Why is this info useful for airlines?

Answer 8

Gender, age, income (most important), stage of life, occupation. Allows airlines to target its services to meet needs of each market segment. Helps planning their promotions and pricing

Question 9

Why do airlines now segment by route? How was it previously done?

Answer 9

To better forecast demand, product planning and pricing. Used to segment by trip purpose and further by socio-economic variables. But this placed too much focus on demographics (passenger needs more important); trips becoming more multi-purposed

Question 10

Differentiate between the business traveller and Leisure/VFR traveller

Answer 10

Study table in slides

Question 11

Read sections 7.6, 7.7, 7.8 in textbook

Answer 11

7.7 NB