Back to Silverjet, here is some information about it. Silverjet Aviation Limited was established in 2004 by Lawrence Hunt – a successful businessman. The airline secured two Boeing 767-200 aircraft in August 2006 and began its all-business class service from London to New York in January 2007. It was huge achievement for Mr. Hunt because Silverjet had developed rapidly and strongly. “We launched a whole new business model and level of service. Our target was 80% load factor in ninth months - we got there in seven. We did not receive one complaint” said Mr. Hunt. Silverjet had been chosen as the best airline of the year by the Sunday Times.
It can be seen that, Silverjet has gained huge success at that time. So, why did Silverjet success like that? This company attended on business class, and its main route was from London Luton to New York’s Newark Airport. As you know, this route is one of the busiest and most lucrative routes in the world. There are many businessman and businesswoman travelling each day through both of them. They are rich and they want to have good service, despite of that they got more money than others. And Silverjet offer to customers had these features:
- $2,200 for a return trip from London Luton to New York.
- Check-in as late as 30 minutes before departure with a dedicated terminal and security process at Luton.
- Six feet three inches long beds.
- In-flight food and drink delivered by hand rather than with trolleys.
- A women-only lavatory on board.
(Anderson)
In this time, the customer came from London to New York and flying back, they will pay about $8000 for business class with larger carrier’s airline.
Silverjet had one more special thing is that the carbon offset charge added to the ticket price. As you know, when the plane fly, they need to burn fossil fuels, this lead to give out harmful gases, which destroy upper atmosphere, make greenhouse effect and global warming. Carbon offsetting is which you invest back into the environment and counteract the greenhouse gases that you have created with your flight. With the target customers is businessman, it is no problems if they have to pay more only 20$ to protect environment. It can be seen that, Silverjet had a good marketing as they used this as advertising. As a result, many people knew about their airlines.
As you can see, Silverjet have made reasonable and proper segmentation. They were used to geographic and psychographic segmentation. Geographic segmentation means Silverjet has chosen the route from London Luton to New York’s Newark airport. And psychographic segmentation means they have chosen businessman as passengers serving. They were targeting business class, so they have chosen the busiest route that over 10,000 passengers travelling each day and a great deal of them is businessman.
Despite of developing rapidly and reaping a huge success in business, in 2008, Silverjet made lose business and afterwards, it went to bankrupts. There are some reasons why Silverjet failed. Firstly, at the end of 2007, the global economic erupted and had great influence to all economy industry. Secondly, MAXjet – an airline has the same target customers and operation as Silverjet, went to bankrupts. The investors were made jittery to invest on Silverjet. Finally, their targeting customer is one reason too. They only targeted on business class, and not another class. It is good when the economy developing well, but it is big problem while crisis economy erupted.
In conclusion, from the story of Silverjet, you can see that market segmentation is very important key that will determine the success or failure of a company. It is really necessary to set up proper and reasonable market segmentation for any organization if they want developing and success.
- Termpaper Queen, 'Silverjet: A case study in failure', termpaperqueen.com, viewed on 8 November 2012
- Essential Travel, 'What is carbon offsetting and how does it work', essentialtavel.co.uk, viewed on 8 November 2012
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Anderson, D. Upgrading the business class jet Fortune International (Europe) 15th October 2007 p B-5