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business management

Extracts from this essay...

Introduction

Module NO: 208BUS - Module Title: Business Management 2006 - 07 For Chun Man Yip (JORDAN) Literature Review: Research Topic: The European Low Cost Airline Industry CONTENT PAGE Executive Summary 1.0 Intention of the Report --------------------------------------------------------------P.3 2.0 The Marketing Environment ------------------------------------------------------P.4 3.0 Situation Review: The European Airline Industry ----------------------------P.5 4.0 Segmentation of the European Airline Industry -------------------------------P.5 5.0 The European Airline Industry vs. The US Airline Industry ---------------P.7 6.0 The Macro Environment -----------------------------------------------------------P.8 6.1 SWOT Analysis --------------------------------------------------------------------P.8 6.2 PESTEL Analysis-----------------------------------------------------------------P.10 7.0 Conclusions and Recommendations ----------------------------------------------P.14 Summary of Abbreviations ---------------------------------------------------------------P.15 Research Portfolio -------------------------------------------------------------------------P.15 Executive Summary: The European airline industry is a competitive and dynamic industry whose fortune is closely linked to the performance of the overall European economy. In 1997 the European Commission deregulated commercial aviation within the European Union (EU) with an 'open skies' agreement allowing any airline to fly any route in Europe. Over the last 10 years European aviation has moved from a highly regulated market, based on bilateral agreements, to a highly competitive single market. The liberalization of Europe's airline industry was hailed as a turning point. Another major turning point to this industry came as a result of the terrorist attacks of September 2001. Although this hurt the aviation industry the resulting turmoil provided an opportunity to reshape a troubled sector. While America's federal government propped up its ailing airline industry with cash and loan guarantees, the European Commission limited aid. Swissair and Sabena, the national carriers of Switzerland and Belgium respectively, filed for bankruptcy that October. The big winners of the shake-out were low-cost airlines who continue to grow in market share. The established network carriers slimmed down and began fighting back. Most of the big airlines have pursued marketing alliances. In October 2003 two European airlines, KLM and Air France, announced they were hooking up. In a further step towards market consolidation, talks began in October 2003 between the EU and the United States over extending the liberalization of transatlantic traffic.

Middle

* Expansion of the EU in 2004: Moves toward a federal government for the EU will likely result in attempts to create competition on a Europe-wide basis as trade barriers and anti-competition barriers are broken. Eastern Europe is heralded as an emerging market in the process of being exploited by the airline industry. * Industry Monitoring: The European Commission continues to monitor the industry and investigate to make sure competition is fair; an example includes the monitoring of Ryan air subsidies at Charleroi Airport. * Expansion restrictions: European Legislation on air and noise pollution will restrict the possibilities of airport expansion projects e.g. Heathrow expansion scheme. Economic Analysis * World business: Air transport is essential for creating jobs and opening up new market opportunities. Over 40% of world trade of goods (by value) is carried by air. * Rising real income: There is a strong relationship between rising real incomes and demand for air travel. Providing accession countries enjoy economic growth and development once inside the single market, there is every chance for existing airlines to exploit market opportunities. Economic growth is the main driving force of the airline industry. * Increases in GDP: Rises in GDP have a positive affect on the industry, and this is exuberated by the high income elasticity of demand. * Recession: Of all the airlines the low-cost ones are the best positioned to with-stand recession. * Growth in travel demand: Demand for air travel in Europe increased three-fold between 1980 and 2000 and is set to increase even more. Figure 10 shows how the European travel market is set to grow, in RPK (Revenue Passenger-Kilometres) in relation to other world-wide travel markets; the graph shows a growth above the world average of 5 per cent between 2002 and 2022 for the European market. Figure 5 Source: http://www.airbus.com/pdf/media/gmf2003.pdf Social Analysis * Loss in passenger confidence: As a result of the tragic events of September 11th and the floods in Central Europe in 2002 there has been a need to rebuild confidence in air travel.

Conclusion

full service before prices take off', 30th September 2003 This article reviewed the position of low-cost airlines relative to competitors including British Airways. > http://www.world-tourism.org/ This is the official website of the World Tourism Organization. It enabled me to research Europe as a tourist destination. It provided information on the current political and economic situation. I used the article entitled, 'Global Tourism Trends and Prospects for Central and Eastern European Countries', Shlevkov, 13 December 2002 Research Papers: > Mintel Report 'Travel Agents - UK', June 2002 This report looks at the use of travel agents in the holiday market sector. It discusses amongst other issues, the increase in demand for Independent travel and how this may affect the holiday market through the eyes of a travel agent. > Mintel Report 'Holidays - Coping with a Crisis - UK', Jan 2002 This report discusses repercussions of events such as the 11th September Terrorist attacks on the US on the travel and holiday industry including the effects on low-cost airlines. Textbooks > Electronic Commerce B2C Strategies and Models; Elliot, 2002, John Wiley &Sons Ltd This textbook contains analysis of strategies undertaken by the low-cost airline Easy Jet, allowing me to understand its key business drivers. > International Marketing Strategy; Isobel Doole and Robin Lowe, 1st edition, 1999, International Thompson Business Press This textbook contains the context, techniques and strategies involved in successful international marketing. It provided me with a good background to better direct my research and understanding > Principles of Marketing, Brassington, F and Pettitt, S, 3rd edition 2003, Prentice Hall This book provided me with an overview on the principles of marketing. It contains case studies which aided my understanding into certain marketing principles. The book is a good point of reference as it puts theory into a practical context. > Marketing Theory, a student text; Michael J Baker, 1st edition, 2000, International Thompson, Business Press A collection of original contributions on the subject of marketing theory, from specialists. ?? ?? ?? ?? 1

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