STAR AIR:

PRICING STRATEGY IN THE AIRPLANE INDUSTRY

Agung Mahendra Habiburachman Muhamad Ibnu Fauzi Nurliyasari Rangga Tri Raeros Ria Agustriana Busra

LOW COST CARRIER

Designed to lower operating cost and implemented through three elements 1. Point to point flight system 2. Lower labor cost 3. Elimination of some passengers facilities

HISTORY
2001
Established You Are Our Star 6 domestic routes (exhibit 1) Having relationship between Hotel, Travel and Airlines interlink as a service business Ale Sugiharto want to make Star Air the most wanted aviation enterprise with a good professional management Operate four Boeing 737-200s with 118 seats capacity

2003
Implemented reservation system in travel bureau and other service users through Galileo system Planned to serve a number of regional routes as its expansions effort

2004
Opened a flight strip of Jakarta Kuala Lumpur

2005
Tariff war during the increasing of avtur prices Stopped all its operational activities 600 employees were fired 5 of 7 airplanes were rented and the rest owned by company

COMPETITORS

Batavia Air

Lion Air

Established in 1999 Strongest competitor Low priced focused 24 units Boeing and purchasing additional 60 units Purchase Boeing with newest technology Targeting passenger with abroad destination who were price conscious

Start operation in January 2002 Owned 36 units airplane with 150 flights and 29 local destination Trust us to fly EDI and online administration Focused on domestic and price conscious

Adam Air

Established in 2003 20 destinations and 6 units of fleet Low ticket price Targeting people who satisfied at simplicity Win award as LCC airplane

CONCLUSION
Star Air was stopped all of their operational activities in June 2005 Tariff war during increasing of avtur price Star Air cant survive during the tariff war Daily operational cost was exceeding company income

SOLUTION
Firms survival Cover variable cost and some fixed cost for short run objectives Decrease operational cost For long run objectives the firms has to giving added value Company strategy Allocated 5% - 10% free seats Offer lowest ticket price Change their airplane to the economic one Maximize their plane capacity LCC Point to Point flight system Lower labor cost Elimination of some passengers facilities during the flight