ILAM

INSTITUTE OF LOGISTICS AND

AVIATION MANAGEMENT

UNIT 2: the business and

customers of air
transportation industry
Aviation Economics and
 What Business is the airline into?
• An airline which is to apply the concept of
supply and demand needs to understand
current and potential markets for its services.
• It needs to clearly identify the different
Businesses in which airline participates
 Air transport market
• TRANSPORTATION
• COMMUNICATION
• LEISURE
• LOGISTIC
• INFORMATION
• SELLING SERVICES
Markets for Air Transport Services
 Who is the “Customer”

"Consumers" are those people who actually travel. They are easy
to identify and analyze. They may not be decision-makers.

In Marketing such decision-makers are defined are "Customers".

There are at least four customer decisions which must be
analyzed:
• Will a trip be made at all?
"Customers" for the airlines might be firms CEO or
CFO.
• What mode of transport will be selected?
Considering merits of different mode of transports, usually
corporate policy is formulated for selecting the suitable mode
of transport. In leisure trip, influential member of the family
will take decision.
 Who is the “Customer”

• For air trip, what classes of service will be

purchased?
All most all firms have a corporate policy whereby very senior
executives are allowed to travel in First class, mid level in
Business class and junior in Economy class. Policy is reviewed
in recession and crises
• Which airlines will be selected?
In the post, business traveler did have choice in selecting
airlines. Corporate discounts offered by airlines have forced to
narrow down the choice. In leisure travel, Tour Operators are
the decision makers. Passengers have little to say.

It is crucial for airlines to identity "Customers" for an effective

marketing policy.
 "Apparent" and "True" needs

The difference between the claim and the truth is

known in marketing as the difference between
"Apparent" and “True" needs

Example: Business travellers might figure out

prominently for services such as flight frequency,
punctuality and roomy cabin. But true needs of greed
might be confined to maximize personal benefits
available to them through Frequent Flyer Program
using employers money

"True needs" are at the heart of successful marketing

 "Customers" in the Business Air travel market

Correctly identifying and targeting "Customers" rather than

"Consumers" is a cornerstone of successful marketing in the
airline industry.
The "true needs" of the customers should be taken into
consideration in order to ensure accurate targeting.
Followings are the probable customers in air travel market
Secretary to Senior Executive:
Busy executives might trust their secretaries to select
airlines and make booking. He/she will choose suitable
airline considering the choices and requirements - departure
airport, flight timing. Airlines targets secretaries with offers
of corporate entertainment and discounted travel in return
for loyalty.
"Customers" in the Business Air travel market
Travel Agent-Busy executives regard the travel agent
as an expert to obtain their advice to explore
alternatives. Travel agents motivates by the greed of
higher commission provided by airlines.

Travel clerks actually make bookings and

tickets, offer of incentives free travel on issue
so-called
educational or familiarization visits arranged by
airlines

Corporate travel Managers in large corporation

organize travel plan for executives
Many airlines today follow the policy of giving
incentive to everyone, whether or not the person in
question is actually able to influence the amount of
business obtained. Thus, today almost all airlines offer
individual incentives through Frequent Flyer Program.
 The "Customer" in the leisure Air Travel Market

Children can have an important influence on travel

buying decision made by parents. Video game availability
in airlines in flights entertainment (IFE) system and
preference choices of destination - Disney resort.
Some societies are matriarchal, where women are
dominant in family. Others are patriarchal, where men
dominate. In UK, Women are extremely influential in
holiday planning.
Travel Agents - Leisure travellers turn to travel agents
for advice on making of booking and visa application as
they are relatively in experience.
Tour operators usually selects airlines of a group along
with others relevant aspects of travel. They coordinate
"consolidators" - dealers of discounted air tickets - to
organize tour.
 "Customer" in the Air
Freight Market
Air freight forwarders - More than 90% of the air
freight is provided by forwarders. Forwarders do gather
together a large number of small packages from
individual shippers and present them to an airline as a
large consignment. In return airlines charges much
lower rate per kilo. All airlines regard managers of
forwarder as "Customer"

Clerks who work for freight forwarder do take decision

in selecting routing and carriers for moving emergency
shipments late at night without disturbing Senior
Managers.

Integrators - FedEx, UPS and DHL - provide good

support in retail market of non-expert users.