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Kulula

Introduction Main Aim: South Africas first low fare airline which aims to make travel more affordable to all. Kulula comes from the Zulu word meaning easy It is owned by Comair Ltd which is listed on the Johannesburg Stock Exchange (JSE) which is also a franchise of British Airways. British Airways set them up as a smart choice low fare carrier. Kulula was established in July 2001 and started operating in August 2001. Focus cities : Cape Town International Durban International Airport Port Elizabeth Airport George Airport Lanseria Airport They have nine destinations countrywide. Parent company Com Air Head Quarters Kempton Park, Ekhurhuleni, Gauteng - South Africa. Key People Gidon Novich and Eric Venter (Joint CEOs) Website : www.kulula.com In-flight Services Offer food and drinks for purchase as part of buy on board programme Have special offers for loyalty club members.

HISTORY March 2010 June 2009 May 2009 Plane vanilla Kulula seat sale, with limited availability Kulula get the Spirit of the Confederations Cup football, and paint their nose-cones of their planes to resemble footballs. Flight centre outlets stop selling Kulula tickets not good remuneration received.

Heidi Brauer appointed executive manager for group marketing Kulula reduces free checked luggage from 23kg to 20kg Oct 2008 Kulula increased the frequency of their trips around the country.

Also launched an online shop with Altech Autopage, where a client can purchase a cell phone package with any network to suite their needs. Sept 2008 Aug 2008 Redesigns its website separating it into Kulula Air, Kulula Travel and Kulula Card. Launched three new brands holiday packages) Kulula Con (data packages) Jan 2008 Kulula wins the South Africa Tourism 2007 award for the lowest airfare flights to Cape Town and Durban. Air (flight, car, hotel and taxi) Travel (Book flights onsite and

Strengths

Internet very efficient (1time also) Quick and easy service online system Work on first come first serve system (So if you do not confirm within 24hrs they lose their booking) Can change your bookings online if not confirmed Lower prices offered throughout the world cup Purchased an additional aircraft for the world cup Lanseria airport in Johannesburg has given Kulula exclusive usage of its Airport. Strong brand consistent brand communication Most passenger numbers Recruiting and maintaining high quality management and staff Cut service increase smile Making safety a priority Strong brand that customers trust

Weaknesses Must pay to confirm your booking within 24hrs can loose customers Cannot transport valuable items e.g. wedding cakes or dresses Cannot cancel flights once you confirm them Fans will be denied cheap airfares from Lanseria if Kulula is fully booked. Pay 30% more to fly from Lanseria and not from OR Tambo Lanseria Airport is small and there is no assistance available you have to carry your own luggage. Service centre not as effective as 1 time On-time performance (Mango on top)

Threats One time, Mango and SAA competitors One time taking Lanseria to Competition Commission over the exclusive usage of their Airport to Kulula. Kulula are the leaders in the market for cheaper airfares so their costs for research and development was high and the competitors just copy their example and use their information to market themselves. Fraud the impact 1 Time intends to launch an airfreight business.

Opportunities Can improve their sales by having exclusive usage at Lanseria Larger profits, because people would not want to travel to OR Tambo International Loyalty programmes and clubs to promote their sales and membership Expansion to credit cards and cell phone contracts also attract more clients Recession can work in their favour. Routes into Africa.

Marketing Strategy

Kulula uses First Rand Bank for their credit cards and for every plane ticket purchased on the credit card moolas (points) are earned which can be redeemed against the purchase of future Kulula flights. Kulula credit card holders qualify for additional free 5kg free baggage. Have an agreement with Discovery Health and the Vitality members get up to 30% savings on Kulula flights.

Kulula Low-cost airlines Competition and demand management Competition is fare-based which makes cost per seat km vital.

Aircraft turn-around times have an influence on aircraft utilization. Aircraft type a commonality of type affect maintenance and training costs. Seat configuration which allows more passengers to be loaded. Number of crew as a direct impact on labour costs. Direct ticketless sales avoids administrative costs. Revenue streams can be exploited. Revenues emanating from hotel bookings and car hire. Sale of on-board goods and services as well as charges loading baggage in the hold. Having only hand baggage. Checking in at the airport rather than on the web.

Manage demand: Managing frequency Flight timings effect demand Press and television and internet advertising can be used to manage demand along with press releases and information provided by e-mail to website subscribers and frequent flyer programmes (Pitfield, 2008:6).

PITFIELD, D.E. 2008. Some insight into competition between low-cost airlines. Research in Transportation Economics, 24:5-14. Available: Science direct.

Business travelers In a study by Fourie and Lubbe (2006:101) the following conclusions could be made. The three most important service factors for business travelers in South Africa, are seat comfort, the schedule/frequency of trips and the price of air tickets. While the methods of payment required are regarded as relatively unimportant by all travelers. The study has also shown that in future small and medium companies would be more likely to use low-cost airlines. FOURIE, C. & LUBBE, B. 2006. Determinants of selection of full service airlines and low-cost carriers A note on business travelers in South Africa. Journal of Air Transport Management, 12:98-102. Available: Science direct.

Product features of low cost carriers (OConnell & Williams, 2005:260) Brand: Fares: Distribution: Check-in: Airports: Connections: Class segmentation: In-flight: Aircraft utilization: one brand: low fare simplified fare structure Online and direct booking ticketless Mostly secondary Point-to-point One class (high density) Pay for amenities Very high

Turn-around time: Product: Ancillary revenue: Aircraft: Seating: Customer Service: Operational activities:

25 minutes turn-around One product: low fare Advertising, on-board sales Single type: commonality Small pitch, no assignment Generally Underperforms Focus on core (flying)

Low cost carriers attract a high number of young people with the older passengers tending to prefer incumbent carriers which offer additional airline products not offered by low cost airlines. 2005:263,264). Low cost airlines carry more passengers who travel as a group than do incumbent airlines (OConnell,

Ryanair strengthened a perception of expecting low fares from the airliner and that the airline is economically strong by giving away free seats when a milestone was reached, for example they gave away 66 000 free seats in May 2003 when its competitor easyJet announced half yearly losses of 66 million, 70 000 on 12 June to celebrate that it had carried 70 000 more passengers in May than its competitors and it celebrated its 80th million passenger by giving away 800 000 free seats (OConnell, 2005:267).

OCONNELL, J.F. & WILLIAMS, G. 2005. Passengers perceptions of lowcost airlines and full service carriers: A case study involving Ryanair, Aer Lingus and Malaysia Airlines. Journal of Air transport Management, 311:259272. Available: Science direct.

The Product and Marketing The airline product is more than the simple availability of a seat for traveling on a particular route, though this is the core benefit. The product is not a physical item, but a constellation of services matching, to a greater or lesser extent, the consumers requirements. This include factors of safety, comfort and convenience, with the latter covering the frequency of departures, services including ticketing and baggage handling, baggage allowance, etc. The product concept can be further extended by associated services such as car rental, hotel reservations, excursions, etc. A survey of frequent business travelers reported that four out of five were concerned with seat size, while no other comfort or service factor rated a mention by more than one out of five (Driver, 2001:127).

DRIVER, J.C. 2001. Airline marketing in regulatory context. Marketing Intelligence and Planning, 19(2):125-135. Available: Emerald.

Frequent flyer programs were developed to increase the switching cost of their customers (Rhoades & Waguespack, 2005:344).

RHOADES, D.L. & WAGUESPACK, B. 2005. Strategic imperatives and the pursuit of quality in the US airline industry. Managing Service Quality, 15(4):344-356. Available: Emerald. Complaints On the hellopeter-website the following number of remarks by passengers were made in the last 365 days:

Good Mango 16

Bad 141

Responded to by airline 4 (2,5%)

1time Kulula

47 74

167 378

200 (93,5%) 321 (71,0%)

Complaints should have a service recovery plan which should include the following: Training employees to resolve customer issues. Empowering them to do so. Recognizing success stories. Communicating best practices (Eedes & Durand, 1998:70).

It is clear that Kulula lags behind 1time in managing their customer relationships.

ECCLES, G. & DURAND, P. 1998. Complaining customers, service recovery and continuous improvement. Managing Service Quality, 8(1):68-71.

Allowing tickets to be sold at local convenience stores, will allow the customer to purchase them in familiar surroundings. South Africa with its low internet usage. This would cut overheads of call centres (Anon, 2004:6). This could be put to good use in

ANON, 2004. Singapore Airlines winning formula: Cutting the cost of being the best. Strategic Direction, 20(9):4-7. Available: Emerald.

Components of airline service quality According to Tsantoulis and Palmer (2008:36), Chen states that two important bases on which buyers evaluate competing airline offerings, are schedule and price. There are however, secondary important aspects which might be considered. These are aspects like safety, comfort of the seats, in-flights

amenities, attitude of the flight and ground crew, financial stability, on-time performance, assurance that bags arrive with the passengers, the perceived likelihood of being bumped from a flight and frequent flyer programs.

TSANTOULIS, M. & PALMER, A. 2008. Quality convergence in airline cobrand alliances. Managing Service Quality, 18(1):34-64. Available: Emerald.

Key factors for low cost airlines Price is the single most important product feature in the low cost airline business model. The key qualitative factors appear to be:

Focus on the core product (air transportation) without costly service offerings such as airport lounges. Lower cost structure through the use of cheaper airports, online booking and uniform fleet. A lower and more flexible price structure. Higher productivity through faster turn-around times and better use of its workforce (Flouris and Walker, 2007:31).

FLOURIS, T. & WALKER, T. 2007. Financial comparisons across different business models in the Canadian Airline industry. Journal of Air Transportation, 12(1):25-52. Available: Business Source Premier.

Deliver the customer experience 1. Eliminate actions that dont match the brand promise Kulula has produced and delivered their promise air travel for ordinary people from staff uniform (jeans and takkies) to the approach to customers (friendly, effi-cient and low key). Their actions are highly defined. The brands in the flight magazine will not contain dry, analytical, editorial content. All actions that do not match the brand

promise, have been eliminated. Kulula customers are assured, at all times and across all contact points, of a consistant brand experience.
2. Reinforce actions that match the promise take things that work and

make them better, or more visible. Kululas active use of humor pre take-off worked well and has been carried through all communication mediums (even on the outside of their planes). 3. Add new, high leverage actions that match the brand promise. 4. Recover from off-promise actions when there is a mistake, recovery is the key. Act swiftly and concertedly, always according to the brand promise (Spark, 2005).

SPARK, J. 2005. The art of marrying brand promise and delivery. http://www.bizcommunity.com/PressOffice/PressRelease.aspx? i=560&ai=8214. Date of access: 5 Mar. 2010.