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THESIS

CUSTOMER RELATIONSHIP MANAGEMENT IN THE AIRLINE INDUSTRY

By

Dvid Smatana
Advisor: Ing. Jana Janokov
A Thesis to Be Submitted to
The College of Management
In Partial Fulfillment of the Requirements for the Degree of

Bachelor in Business Administration (Bc.)

Submitted by ______________________________________________Date______________
Candidate Signature

Approved by ______________________________________________Date______________
Thesis/Project Advisor

Approved by ______________________________________________Date______________
Rector (or his representative)
Table of Contents
I. Introduction and Problem Statement.................................................................................. 4

The Purpose of the Study............................................................................................................ 4


Problem Statement ..................................................................................................................... 4

II. Review of Literature........................................................................................................... 5

Relation to the Program of Study............................................................................................... 6


Modern Marketing...................................................................................................................... 6
B-2-C Business to Customer ...................................................................................................... 6
Vision of an airline company ..................................................................................................... 7
Marketing policies of service-selling businesses ....................................................................... 7
Customer relationship understanding customers needs and measurement of effectiveness.. 8
Positioning of the company and Communication with the customer ......................................... 9
Company in the Global Environment......................................................................................... 9
Modern Marketing in the Airline Industry............................................................................... 10
1 The Customer market size, demographics, customer requirements and attitudes....... 11
Frequency and Timings ............................................................................................................ 12
Punctuality. .............................................................................................................................. 12
Frequent Flyer Benefits............................................................................................................ 12
In-Flight Service....................................................................................................................... 12
Relationship Marketing Strategy.............................................................................................. 13
2 The Marketing Environment ............................................................................................ 13
Terrorism- one of the biggest threats for the airline industry................................................. 14
Deregulation and Open Skies Treaty................................................................................... 14
3 Airline Business and Marketing Strategies. ..................................................................... 14
A Cost Leadership Strategy in the Airline Industry............................................................. 15
Low Fleet Costs........................................................................................................................ 16
Short Turnarounds / High Aircraft Utilization. ....................................................................... 16
Limited On-board service......................................................................................................... 17
Point-to-Point Only. ................................................................................................................. 17
Simple Fares............................................................................................................................. 17
Low Distribution Costs............................................................................................................. 17
Non-Refundable Tickets. .......................................................................................................... 18
B Differentiation in the Airline Industry. ........................................................................ 18
C Focus Strategies........................................................................................................... 19
Value Added Focusing. ........................................................................................................ 19
Low Cost Focusing. ............................................................................................................. 20
D Lost-in-the-Middle............................................................................................................ 20
4 Product Analysis in Airline Marketing. ........................................................................... 21
Fleet and Schedules-Related Product Features. ...................................................................... 21
Cabin Configuration and Classes of Service. .......................................................................... 21
Network, Frequencies and Timings.......................................................................................... 22
Punctuality. .............................................................................................................................. 22
Controlling Product Quality. ................................................................................................... 22
5 Relationship Marketing. ................................................................................................... 23

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Building Advocate Relationships. ............................................................................................ 24
Customer Relations. ................................................................................................................. 25
Using the Power of Relationship to Achieve High Performance. ............................................ 26
Leadership. ............................................................................................................................... 26
Organizational Culture. ........................................................................................................... 26
Shared Goals ............................................................................................................................ 27
Shared Knowledge.................................................................................................................... 27
Mutual Respect ......................................................................................................................... 28

III. Methodologies and Procedures Used in the Study....................................................... 29

Air Slovakia BWJ..................................................................................................................... 30


IV. Results .......................................................................................................................... 32
1 The Customer market size, demographics, customer requirements and attitudes. ....... 32
Business versus Leisure Air Travel Market.............................................................................. 32
Factors for choosing the Airline Company .............................................................................. 33
In-Flight Service: ..................................................................................................................... 33
A separate Business Class cabin .............................................................................................. 33
Cabin comfort........................................................................................................................... 34
Entertainment system ............................................................................................................... 34
2 The Marketing Environment ............................................................................................ 34
Terrorism is one of the biggest threats for the airline industry. .............................................. 34
Deregulation and Open Skies Treaty................................................................................... 35
3 Airline Business and Marketing Strategies. ..................................................................... 35
A Cost Leadership Strategy in the Airline Industry............................................................. 36
Low Fleet Costs........................................................................................................................ 36
Short Turnarounds / High Aircraft Utilization. ....................................................................... 36
Limited On-board service......................................................................................................... 36
Point-to-Point Only. ................................................................................................................. 36
B Differentiation in the Airline Industry. ........................................................................ 37
C Focus Strategies........................................................................................................... 37
4 Product Analysis in Airline Marketing. ........................................................................... 37
Network, Frequencies and Timings.......................................................................................... 37
Punctuality. .............................................................................................................................. 38
Controlling Product Quality. ................................................................................................... 38
5 Relationship Marketing. ................................................................................................... 39

V. Discussions, Conclusions, Recommendations ................................................................. 40

VI. Bibliography................................................................................................................. 45

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I. Introduction and Problem Statement

Traveling by air has become more convenient than ever before. The airline industry
has reached a critical point in time when critical decisions must be made. Many new airline
companies have swamped the market and it is the customer who decides whether the airline
company will earn profits or not; and finally whether it will survive or disappear from the
skies. Relationship towards the customer is considered to be one of the most important
objectives for every airline in order to optimize customer loyalty and revenues. Despite the
latest trends in airline Marketing and Management, one of the most powerful keys of success
in every company is using the power of relationships to achieve high performance. Shared
goals, shared knowledge, and mutual respect among the employees are necessary
preconditions of success.

The Purpose of the Study

The purpose of this study is to present the essentials of Customer Relationship


Management as well as basic Airline Marketing and Managerial tools and strategies that are
inevitable for conducting successful airline business. At the same time the purpose of the
study is to evaluate the situation in the private Slovak airline company- Air Slovakia. The
study will try to help the company to realize the importance of customer satisfaction in the
highly competitive air transportation environment and apply a modern conceptions of Airline
Marketing and Customer Relationship Management into practice.

Problem Statement

Only those airlines which manage to estimate trends and risks in the airline business,
and adapt the activities to the needs of customers are becoming leaders in the industry.
Successful airlines accept that the principles of marketing provide a framework for all they
do, and set out to apply these principles as widely and as rigorously as possible.

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II. Review of Literature

The literature for the thesis consists of four main pillars written by experts in the fields
of Marketing, Customer Relationship Management, and Airline Marketing and Management.
The additional information were extracted from Web sites of many airline companies, articles
from economy magazines, periodical published on the Internet and case studies of successful
airlines.
One of the most reputable publications and texts about marketing is written by Philip Kotler
and Gary Armstrong. Their publication called simply Marketing is considered to be a Bible
of marketing. The most important parts from this textbook are about new relationships
towards the customers, pointed marketing strategies, and tools for obtaining competitive
advantage.
Another pillar for the thesis is the publication called zen vztah se zkaznky- Customer
Relationship Management written by Vt Chlebovsk.
However, the most valuable publication for the thesis was Airline Marketing and
Management written by Stephen Shaw in 2004. Stephen Shaw is Managing Director of SSA
Ltd, UK, a firm specializing in providing courses in marketing and economic to airlines and
aerospace firms, located at Chinnor, Oxford, England. The author has been writing in the field
of aviation management for a considerable time. His book remains an excellent introduction
to the modern management of an airline. The essence of the thesis is based on
recommendations from this text.
The quartet of the main literature pillars is closed-end by publication written by an assistant
professor of management at Brandies University and faculty member of the MIT Global
Airline Industry Program, Jody Hoffer Gittell called The Southwest Airlines Way with
subhead Using the Power of Relationships to Achieve High Performance introduce
management lessons from the worlds most profitable airline- Southwest Airlines. The
publication is focused on relationships within the company, among the employees with the
stress on shared goals, shared knowledge, and mutual respect.
Other pieces of information were obtained from local magazines, newspapers and periodical
published on the Internet as well as web sites of Air Slovakia and web sites of other relevant
airline companies.

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Relation to the Program of Study

Modern Marketing
Modern marketing to the contrary of traditional marketing is distinguished with
stronger focus on the particular customers; it is so called relationship marketing. Modern
marketing conception can be resumed into 3c:
- Customer Benefits
- Total Customer Cost
- Convenience

Management

Internal External
marketing Marketing

Employees Customers

Relationship Marketing

CRM cannot be realized without next three basic aspects:


1- Change of thinking of all employees is inevitable, however not satisfying
2- Measurement of the reached level of CRM processes feedback
3- Absolutely need for using of modern IT tools that will assure the effective functioning
of relationship marketing (Chlebovsk, V. 2005)

B-2-C Business to Customer

CRM is the tool of differentiation from the competitors in the eyes of customers.
Based on several publications regarding marketing and CRM; I am going to present five
components of marketing tools, directed directly at potential customers of airline companies
the passengers.

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Vision of an airline company
If the company wants to execute the CRM strategy and transform its results into
profits and competitive advantage it has to have clear vision and direction.
The company exists for fulfilling particular goals and roles. At first there is an aim for which
the firm was established. After several years of service when there is greater number of firms
business activities it is important to think again about the concrete vision of the company.
Apparently easy questions are sometimes difficult to answer, for example: What is the subject
of the entrepreneurship, who is our customer or what does our customer value about our
company?
Mission of the company explains the meaning and purpose of the entrepreneurship. It is a
statement of what the company wants to achieve. (Kotler; Armstrong; 2004)

Marketing policies of service-selling businesses


Services are little bit different from tangible product and therefore require using of
other marketing techniques. In the service-sector there is a necessary interaction between
customer and the employee who performs the service. This interaction has to be effective in
order to assure the competitive advantage. This effectiveness depends on the qualification and
the capabilities of employees who offer the service directly to the customers. There is a chain
of relationships between the quality of service and the profit. It consists of several parts:
A- Quality of service within the company: high-quality selection and training of
employees, good working environment and intense support of the employees
who are directly getting in touch with costumers
B- Satisfied and empowered employees: satisfaction, loyalty and hard-working of
the employees
C- Better service quality: better and more effective satisfying of the customers
needs
D- Satisfied and loyal customers: satisfied customers use the product or service
again and recommend it to other customers
E- High profit and vigorous growth: positive economic results of the company
(Kotler; Armstrong; 2004)

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Customer relationship understanding customers needs and measurement of effectiveness
The transformation from product-orientation to customer-orientation needs to answer
several questions:
- What are customers expectations? What are their actual needs and how to measure it?
- What are the criteria of customers satisfaction? How to find out and measure the
satisfaction?
- Do customers create a profit for the company?
- Does the company take care about their customers and their needs effectively? How to
measure it?
The main reason of measuring the customers satisfaction is its influence on the financial
results of the company. The primary tool of measurement the customers satisfaction could be
questionnaire based on KANO model. Customers requirements are divided into three parts:
1- Must be: if these requirements are not fulfilled, the customer will be very unsatisfied
2- One-dimensional: the more the requirement is fulfilled the more the customer is
satisfied
3- Attractive: These requirements have the strongest influence on the customers
satisfaction. Their fulfillment leads to a proportional growth of satisfaction. On the
other hand, when these are not fulfilled it doesnt lead to customers dissatisfaction.
(Chlebovsk, V. 2005)

Effectiveness of Relationship
Media Performance of relationship profitability
effectiveness productivity episodes

PRODUCT CUSTOMER

Market share Knowledge of


competitive Time share of Understanding
products and customer customers
services choice

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Positioning of the company and Communication with the customer
The firm has to decide into which segments on the market it intends to enter and what kind of
position it wants to hold. Positioning as a tool means to store the information about
advantages of the brand or the company and their divergences in the minds of customers
comparing to other competitive brands and competitors.
Customers usually choose product that offers them the highest value. Complex positioning of
the brand which means value proposition of the brand presents an aggregate of all value
features, on which the positioning is being build. This is the way of answering the customers
question: Why am I buying this product or service?

A- Greater utility for higher price high standard products and services
B- Greater utility for the same price direct competition to luxury products and services
C- Same utility for lower price lower price due to lower operational costs
D- Little utility for much lower price the quality of the product is on a lower level
E- Greater utility for lower price strategy difficult to sustain
Communication with customers: Immediately after the company chooses one of the
positioning strategies it has to state it and all of the components of the marketing mix must
support it. The customer must know what he is going to get when buying particular product or
service. (Kotler; Armstrong; 2004)

Company in the Global Environment


When a company operates in international and global markets they have to consider several
things which are important for the effective operation. Among these things are: Internet and
the respect of different cultures and nationalities of customers.
Internet
Influenced by many new technologies, especially Internet, firms go through a radical
transformation that can be called the new industrial revolution. Companies of the 21st century
must adapt to operation through the worldwide web of Internet.
E-business, e-commerce, and e-marketing are the tools, which the company can use to sell its
products through the Internet and services through and at the same time promote and advertise
itself internationally in an easy, cheap and convenient way. (Kotler; Armstrong; 2004)

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Global market and Cultural differences
Internet certainly brings many opportunities to operate in global markets, on the other hand
we must realize that the companies must effectively and accurate care for their costumers of
different cultures. People from different cultures have their own customs, norms, and even
taboos. Before a company enters market in a different culture it has to figure out how their
products will be perceived by the local people. (Kotler; Armstrong; 2004)

Modern Marketing in the Airline Industry


The aim of the modern marketing is to get and maintain a competitive advantage by
satisfying our customers needs. The emphasis is on the service to the customer not only to
offer and sell one product but the complex service the product is one part of. According to the
UK Chartered Institute of Marketing, the subject can be described as follows:
Marketing is the management process responsible for identifying, anticipating and satisfying
customer requirements profitably. (Shaw, S. 2004)
The crucial word in this definition is anticipating which means to count on in advance.
Therefore it can be said that marketing is a dynamic discipline where customer requirements
are in a constant state of development and change. Airline industry is an environment where
changes occur continuously, therefore successful air carriers are able to anticipate changes as
well as prepare and be ready when it occurs. Unsuccessful airlines are those who wait for
change to take place and then try to adapt to the new standards. A reactive approach instead of
proactive approach. The standard marketing model follows the 4Ps, which means Product,
Price, Promotion, and Place. Besides the 4Ps there are several interconnected stages of an
airline marketing which create a basic airline marketing framework. These stages are:
1 The Customer knowledge of the companys current and potential customers
2 The Marketing Environment categorization of the marketing factors under the
five headings of Political, Economic, Social, Technological, and Environmental
3 Airline Business and Marketing Strategies the companys goals and objectives
4 Product Analysis in Airline Marketing
5 Relationship Marketing (Shaw, S. 2004)
CRM fits in the concept of modern marketing and it is something like backbone of customer
oriented business activities. (Chlebovsk, V. 2005)
CRM is an indispensable component of a corporate strategy of airline companies. It is a mean
of differentiation of airlines from their competitors in the eyes of customers.

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Customer Relationship Management is an interactive process which aim is to get an optimal
balance between companys investment and satisfying the customers needs. The optimum
balance is determined by the maximum profit of both sides. The key roles of CRM installing
into practice are:
- Change of view of the business contract with the customer. There is a need to come from
a short tightened individual contract to the perception of cooperation in a long run. It is a
transformation from perceiving the aims to perceiving the effect
- Transformation from the product-perceiving marketing to the customers perception
understanding. It means that what truly matters is the customer, not the product.
(Chlebovsk, V. 2005)

1 The Customer market size, demographics, customer requirements


and attitudes.
According to Stephen Shaw, Managing director of SSA Ltd, UK, a firm specializing in
providing courses in marketing and economics to airlines and aerospace firms, one of the
common mistakes that airlines do is misunderstanding between the Consumer and the
Customer. Consumers are those travelers who actually travel and the only criterion for
them is price. They do not care of anything except the price. On the other hand, Customers
follow several decisions, particularly, which airline will be selected or what class of service
will be purchased.
If the passenger decides that the travel will be made by air, because trains and busses are
severe competition to airlines, the Customer has to decide what airline will be chosen for a
particular flight. For example, passenger traveling from Bratislava to London can chose one
of two air carriers SkyEurope Airlines or Ryanair. When a traveler has a particular
preference for a particular airline company, we can speak about the Customer.
With different air carriers, passengers have a choice of flying different classes of service.
Generally, many traditional airlines like British Airways, South African Airways, Emirates or
Qantas operate three-class services on their long-haul flights: First Class, Business Class and
Economy Class. Most of air carriers, however, offer only Business Class and
Tourist/Economy Class.
Air Slovakia also offers only two-class service - their Boeing 757s are configured for 14
Business Class seats and 177 Economy Class seats.

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As the difference between the Consumer and the Customer is clear, we can divide
Customers into two groups the Customers in the Business Air Travel Market and the
Customers in the Leisure Air Travel Market. Business travelers chose the airline company
mostly according to particular conditions, such as preferred departure airport, flight timings or
frequent flyers programs which offer significant incentives such as free tickets or upgrade to a
higher service class. Leisure travelers, on the other hand, who travel sporadically, once or
twice a year, follow the airlines preference according to their dispensable income and
dispensable time. Both, Business and Leisure travelers often buy their tickets through travel
agency, therefore airlines should either operate its own travel agency or keep good
relationships with travel agents through promotions.
Airline companies have to know their passengers preferences so what they are able to invest
is focused on their customers most important requirements, on which their choice of airline
decisions are most likely to depend. This can be performed through in-flight surveys or
questionnaires. Thus the airlines can find out what factors are the most important for their
permanent customers. The most important criteria according to the Corporate Travel Survey
carried out annually by IATA International Air Transport Association are these:
Frequency and Timings important especially for business travelers who want to manage
their business trip within one day. High frequency of flights and their proper timings are one
of the most important factors when dealing with airlines preference.
Punctuality. This factor is vital not only to business passengers whose delayed flights can lead
to the loss of confidence, but also for the leisure travelers who are coming back from holiday
and a delay extending 24 hours for example can seriously injure the relationship with their
employer because the passengers are expected to come to work and they would miss it
because of the delayed flight. Air Slovakia is known for its proverbial lateness which
seriously damages its reputation.
Frequent Flyer Benefits. Frequent Flyer Programs help to build loyalty towards an airline
company. It is also a decisive factor when choosing air carrier.
In-Flight Service. Even it may seem that service on short-hauls flights is not important, on the
contrary it can be very important.
Particularly, business travelers can appreciate a separate Business Class cabin, for example.
Separated cabin can help to create a truly working environment where a businessperson can
prepare for a meeting away from crying children and with higher comfort conditions.
There is also a need for good meals and drinks appropriate to the time of the day. Non-stop
flights are preferred to flights where stops are required.

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Last but not least there is a question of cabin comfort. This factor doesnt play a big role on
short-haul flights but especially on long-haul flights. Comfortable seats within Business and
Economy Classes play important roles, as well as the material of which the seats are made.
Preferably, leather seats dont only look well; they are also very practical from the
maintenance point of view. Initial costs are higher, but return on this investment is profitable
in the end. Leather seats are easier for cleaning and the life-expectancy is very high compare
to the textile seats.
Number of lavatories is crucial for the comfort of passengers. This is a question of a certain
type of an aircraft the company is using for its flights.
Entertainment system on a high level can be valued by the passengers on long-haul flights.
High leveled entertainment system means TV screens which work, audio system must work
perfectly and the selection of movies and audio channels has to follow up the latest trends.
Modern airline companies rebuild their aircrafts constantly so their passengers have individual
TV screens even in the Economy Class. Although this innovation is quite expensive and many
air carriers cant afford it, individual TV screens in the Business Class should be a
commonplace.
Relationship Marketing Strategy. The Business Travel market requires a special strategy of an
air carrier towards a business traveler. Business travelers travel a lot and they are able to
compare services on board of different airline companies. The Business travelers are also very
attractive for airlines because once they get used to a particular company, they can be loyal
during the whole lifetime or career which can last over twenty years and this can return in the
high revenues. (Shaw, S. 2004) Therefore it is very important for an air carrier to hold a
special database of its top customers who should be treated in a special way. The database
should be a core of the Relationship Marketing strategy developed to build up the loyalty of
the customer and to reward the customer at the same time.

2 The Marketing Environment


Marketing policies of an airline company must evidently reflect the structure of its market.
Marketing theory provides a standard model for identifying the companys marketing
environment. There are five categories in this model: Political, Economic, Social,
Technological and Environmental. In this study the stress will be put on the Political Factors
only. From all the political factors the study will focus on the Political fear called terrorism
and how it threatens the airline industry.

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On the other hand the study will have a look on the Open Skies Treaty that has brought a
deregulation into the airline industry within Europe. Both elements have influenced the airline
industry, and airline companies must adopt a posture on them.
Terrorism- one of the biggest threats for the airline industry. The airline industry is quite
vulnerable, meaning that many air carriers are identified with a particular nation that can be a
target of some terrorist group. (Shaw, S. 2004) It is obvious that a decline of the demand for
air traveling after September 11 is over. Nowadays people travel as much as never before
(according to the statistics of carried passengers) and it means that they are less afraid to fly.
However, airline companies must do their best to prevent themselves from the possibility of
an attack.
Deregulation and Open Skies Treaty. During the history of the airline industry
governments have often interfered in the decision making of air carriers. Governments have
controlled where airlines can fly and aspects of their product planning and pricing policies.
They have had a role in regulating airline safety standards, and airlines route entry, capacity
and frequency decisions. (Dobson, A.P.1995) Recently, there is a new substantial regulatory
reform that has given the airlines the challenge and the opportunity of responding to an
economic environment which has more freedom. (Williams, G. 2002) Deregulation through
the Open Skies Treaty means that an airline company registered in any European country
can operate between any two other European countries. Successful airlines should organize a
thorough and progressing review of their marketing environment, and take new directions in
preparing their marketing policies.

3 Airline Business and Marketing Strategies.

Once the airline company understands the needs of its customer and the marketing
environment, the next necessity is to choose the most suitable strategy for the business.
There are several strategies in the airline industry and each of them can be particularly
successful. According to Stephen Shaw there are several types of airline business strategies
which will be introduced in this study.
Marketing Strategies in the airline industry can be defined as a Positioning, which is a tool for
getting a competitive advantage. The company must decide what type of segments in the
market it intends to enter and what type of position it wants to hold in the market. Positioning
of a product in the market presents a way how consumers sense the products attributes
comparing them to other similar products.

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Positioning is storing the information about advantages of the brand and its differences in the
costumers minds. For example, in the automobile industry, Toyota cars represent reliability,
Mercedes and Cadillac represent luxury segment, Porsche and BMW are considering as sports
cars and Volvo is a synonym of safety.(Kotler, Armstrong. 2004) The same differentiation is
known in the airline industry. Southwest Airlines, Ryanair or SkyEurope Airlines are
considered as companies which offer inexpensive fares without any frills on board. Emirates
on the other site represent traveling on the highest level and Qantas Australia is well known
for its safety- the company has never had a fatal accident.

STRATEGIC ADVANTAGE
Uniqueness perceived by the Low cost position
customer
Industry wide DIFFERENTIATION OVERALL COST
STRATEGIC LEADERSHIP
TARGET
FOCUS
Particular Segment Only
Sources of Competitive Strategy by M. Porter

According to M. Porter in his Competitive Strategy, there are several strategies which
the airlines can achieve success from Cost Leadership Strategy, Differentiation Strategy and
Focusing Strategy. There is also fourth position called Lost-in-the-middle according to Porter.
The study will briefly go through these strategies and try to find the most suitable strategy for
Air Slovakia.

A Cost Leadership Strategy in the Airline Industry


The concept of Cost Leadership strategies is not new in the airline industry. It has its
deep roots in 1973 when Southwest Airlines, the pioneer among the low cost carriers, was
established. Southwest Airlines is one of the most successful airlines in the world and it is an
airline company with a profit for 35 consecutive years. (Information obtained from
Southwests web site) The airline became profitable in 1975 and has stayed profitable ever
since that time, which is remarkable comparing to other airline companies fighting with
financial problems. Fortune magazine called Southwest Airlines the most successful airline
in history and the same magazine placed Southwest on the list of the 100 Best Companies
to Work for in America. (Gittell, J.H. 2002)

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This study will focus on Southwest Airlines later on when talking about using relationships to
achieve high performance. Then, in the middle of 1990s, the Low Cost Model has spread
rapidly to the whole world. There are several Low Cost air carriers operating in Europe, the
largest ones are Ryanair, easyJet, and SkyEurope Airlines. There are many low cost
companies around the globe and they have endeavored that air travel is now accessible to
many people. One of the most fundamental requirements for a successful low cost air carrier
is achieving and sustaining simplicity in business process. (Shaw, S. 2005) There are several
basic features of this strategy:

Low Fleet Costs. Most of the low cost air carriers are pursuing a fleet-commonality policy,
which means that the company operates only one type of aircraft. This was originally an idea
of Southwest Airlines. Sole type of an aircraft means lower maintenance costs, lower costs
regarding training of the crew and cabin crew and in the end the better purchasing prices for
the airplanes. For example, when Ryanair after September 11 placed orders for over hundred
Boeings 737-800, Boeing Company rewarded Ryanair by very good prices. (Ryanair web
site) Every important low cost carrier operates only one type of aircraft. Southwest, Ryanair,
easyJet, SkyEurope Airlines have in their fleets Boeings 737s, Jetblue Airways, for example,
operate with Airbus A319.

Short Turnarounds / High Aircraft Utilization. An aircraft earns money only when it is in the
air. This means that when the company wants to earns more money, its airplanes has got to be
in the air as much as possible. Low cost airlines have always scheduled turnarounds of 20-25
minutes, compare to 50 minutes or more which is regularly used in the airline industry. The
airplane cleaning is the reason for which the airplane spends a long time at the airport. Flight
attendants working for low cost carriers are obliged to do cleaning themselves. Thus the plane
is promptly ready to board passengers for the way back. This, of course, can be used only
when the passengers are not served food or meals with possible big amount of waste that
could smudge the plane too much. Low cost carriers often use stairs instead of air bridges.
Although the passengers are therefore unprotected in wet or cold whether, the process of
passengers enplaning and deplaning is quicker, because stairs allow to use both front and rear
aircraft exits. What might seem controversial is that some carriers do not use seating by the
computer and they announce free seating. It has a positive effect because passengers want to
get the best seats so they are in the gate on time.

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Limited On-board service. Meals and drinks that are served on board represent a substantial
part of airlines budget. Many companies have approached to a saving-mode, when for
example meals are distributed free of charge only when the flight is longer than 100 minutes.
Some of them only sell the meals for high prices. This step can be unpopular among
passengers, but on the other hand, when the price of the ticket is agreeable they do not mind
giving up their meals. They can purchase it anyway and this helps the airlines to transform the
passengers service from a cost item into a revenue.
Point-to-Point Only. One of the main signs of low cost carriers is that they provide its services
from point A to point B without any connections.
Simple Fares. Pricing policy of traditional airlines is often complicated and unclear. The
greater pricing complexity of traditional airlines has often resulted into fifty or more fares on
a particular route. Each fare had different conditions and it was all very confusing. Pricing
policy of low cost carriers is very simple, offering only one price per particular flight. Of
course, the lowest prices can be obtained only by booking well in advance, because as the
departure days near the price increases.
Air Slovakia follows up the model of simple fares. Although some fares might vary from time
to time, the list of all prices can be found on the companys website. Companies web sites
represent the cornerstone of a distribution.
Low Distribution Costs. The accurate distribution channel can save a company a lot of money.
The distribution channel were provided by travel agents which used to charge high fees for
making reservations. Airlines were quite vulnerable to the pricing practices of Global
Distribution Systems which used to charge approximately $4, 5 per reservation. (Shaw, S.
2005) Low cost carriers couldnt afford to pay such amount of money to travel agents. For
example, $4.5 on a Business Class return fare of $3000 is irrelevant. On the other site, $4.5 on
a $50 fare is certainly not. The answer and the solution to this situation were brought by the
Internet. The pioneer in this regard was the British low cost carrier easyJet which started to
use its own web site for selling the tickets. The idea was soon followed by the other low cost
carriers as well as by the other regular airline companies. Selling the tickets through the
Internet not only saves the money to the company, it also saves the money to the passengers.
It is also very comfortable. It only requires having well arranged and transparent web site with
the companys own reservation system.

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Non-Refundable Tickets. Most regular airlines in the past have had the policy which enables
passengers to return their money in the case of canceling their reservation. Of course, this was
relating to more expensive tickets; however, business travelers whose plans change from
minute to minute and whose schedule cannot be predicted in advance have used this
possibility very often. It has resulted into common and repeated no-show problem. (No show
means that passengers for a particular reason do not come to check-in. Therefore airlines
almost always overbook their seating capacity on certain flights which can be a serious
problem In the case that there are more passengers with valid ticket for a particular flight, the
airline company has to take care of accommodation, and most of all arrange a next flight for
them. Low cost airlines have a policy which doesnt allow any refunds.
These are several features of Low Cost Airlines which try to break through the airline
industry. Obviously, the low cost strategy features are accepted only by those passengers who
are willing to give up some frills on short-haul flights. This fact can signify the possibility to
combine some basic features from each marketing strategy. The combination of several
factors from each strategy might create a successful and profitable airline company favored by
passengers.

B Differentiation in the Airline Industry.


Unlike the low cost carriers, the airline companies which have found the
differentiation strategy the most suitable try to follow up the idea of value-for-money.
Those companies that want to be successful through the differentiation strategy have to be
innovative and have to follow up the idea of FMA, which means First Mover Advantage.
(Shaw, S. 2004) Airlines from the Middle East such as Emirates (Dubai), Etihad Airways
(Abu Dhabi), Qatar Airways (Doha) or Singapore Airlines in Asia, Qantas in Australia and
few others try to be innovative in such areas as cabin comfort, in-flight service or in-flight
entertainment. The concept of First Mover Advantage can be visible in the purchase orders for
Airbus A 380 the largest double-decker airplane in the world which can offer either larger
seating capacity or more room for luxury facilities which will make the flight an extraordinary
experience. Etihad Airways doesnt have the cabin separated into classes, rather into zones
which are called Coral Zone (Economy Class), Pearl Zone (Business Class) and Diamond
Zone for the First Class. (Etihad web site, 2007) Emirates Airlines in their Airbus A340s in
its First Class offers separate compartments where the passengers can enjoy an absolute
privacy and the highest level of luxury.

18
Even the walls in the airplanes have special lighting- during the night there are stars on the
walls and as the airplane arrives in the destination in the morning the passenger listens to
birds singing. (Emirates.com, 2007) Qantas- Australian Airlines has a reputation of very
secure company which has never experienced a fatal accident. The very important factor
regarding a passengers satisfaction is the customer-contact staff, hence flight attendants. If
the cabin crew members are ill-disciplined, poorly motivated or incompetent, it will have a
very deep impact on the reputation of the company and finally in the profits. Generally, the
companies using the differentiation marketing strategy are those which want to be
remembered by the passengers in a best possible way.

C Focus Strategies.
Airlines with a Focus marketing strategy provide the costumer either a value for money or
lower costs.
Value Added Focusing. Airlines which wants to add a value for their passenger has to
provide an unique service that no other rival company can provide. During 2002, German
Airlines Lufthansa arranged a contract with Swiss corporate jet operator Privatair about
corporate jet services on three routes between Germany and USA with an airplane consisting
solely of 48 Business Class seats. The service should be operated by Lufthansa, and is sold
through Lufthansa marketing system. The services are operated by special corporate narrow-
bodied aircrafts, mostly Boeing 737 or Airbus A319. (Shaw, S. 2004) This project is
obviously focused on Business travelers willing to pay money for the value they are given by
the airline. Another example of Value Added focusing would be the Concorde flights which
were operated by British Airways and Air France. Although the Concorde was an economic
disaster due to extremely high operating costs; from the passengers point of view it was very
successful project. People loved Concorde not only because it could manage to fly from Paris
to New York for less than three and a half hours. Flying by Concorde was a matter of status
and prestige. Despite the high maintenance costs Concorde was a part of the Value Added
strategy until the very first fatal accident of Air France flight from Paris to New York on 25th
July 2000. It crashed 60 seconds after take off after suffering tire blow out which caused a
rapture of fuel tank. All 109 people on board plus 4 in a local hotel on the ground were killed.
(www.concordesst.com; 2007)
Airlines like Air Mauritius or Air Seychelles can gain from what we can call geographical
focusing. These airlines are small and they will stay small but their advantage is that they
know the particular country or region where they are based better than anyone else.

19
Someone on holiday choosing them might feel that their vacation was beginning sooner that
would be the case on Air France or Austrian Airlines where the flight to their holiday
destination would be like any other flight. Particularly Air Mauritius, which was established
in 1967, has now in its fleet two newest Airbuses A340-300E, five Airbuses A340-300, two
A319 and other small airplanes as well as helicopters. The company flies to several
destinations in Europe, Africa, Asia and Australia. (airmauritius.com; 2007) The brand new
modern airplanes, three-class service and specific meals, and beverages as well as warmth of
the cabin crew can make the company successful.

Low Cost Focusing. The companies which, in the eyes of customers, are known as charter
airlines are good examples of low cost carrier choosing focusing strategy. These airlines
used to fly for the tour operators only. These tour agencies used to sell the airplane tickets
together with accommodation and other elements in special packages. Nowadays the situation
has changed and these airlines sell blocks of the seats to tour operators whose primary
concern is the low seat-mile costs. They are using large aircrafts because the capacity is more
important than a frequency, especially on flights the exotic vacation destinations. The
situation facing Europes charter airlines is a very challenging today. Many people nowadays
do not require rigid package holidays. The charter airlines like TUI, My Travel or Hapag-
Lloyd have responded to this trend and almost all of them have now set up web sites to enable
at least a proportion of their capacity to be retailed direct to the public. (Shaw, S. 2004)

D Lost-in-the-Middle.
There is one more concept in the aviation industry according to Porters Competitive
Advantage model the firm which is Lost-in-the-Middle. (Shaw, S. 2004) These companies
dont fit to any of the boxes. Their costs are too high for the Low Cost strategy and there is
too little about them which make them distinctive from competitors. They cannot either gain
benefits from the Focusing Strategy because their activities are too broadly-based. (Porter, M.
1980) There are many airlines which are Lost-in-the-Middle in todays aviation industry.
Italian national air carrier Alitalia or United Airlines from USA are good examples. Both
companies have been recently going through difficult period and their future is unclear.
The companies have to realize the importance of accurate marketing strategy and those which
want to be successful have to design and implement such a strategy in order to survive and
win over the competition.

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4 Product Analysis in Airline Marketing.
Once the airline company has chosen its strategy the next step is to transform the
basic elements into the product design process. First of all, it has to be clear what the
Product within the airline industry means and that it is intangible. The stress will be put on
two areas: Fleet and Schedules-Related Product Features, and Controlling Product Quality.

Fleet and Schedules-Related Product Features.


In this section the frame of reference will focus on the airlines point of view to sell
interesting product which the company will be able to manage financially, because attractive
product are often very expensive to produce.

Cabin Configuration and Classes of Service.


Airline companies which look for the lowest operational costs will place into the cabin
as many seats as safety standards allow. Thus maximizing the number of seats on board tends
to the highest profit. However, maximizing the number of seats on board also means that the
comfort of the passengers will deteriorate. When, for example, Boeing 757 is used by leisure-
oriented airlines, even 235 seats can be placed on board. Air carriers which want to
concentrate also to Business-Travel market cant afford to operate a single class aircrafts.
Some airline companies offer three class service on board of their planes. First Class in long-
hauls flights nowadays is considered to have seats that can be fold down into a horizontal bed.
Emirates in its First Class offers separate compartments which are called suites. The
horizontal bed is at least 198cm long; therefore First Class seats need a lot of space. The trend
in the industry today is to fold down the seats into a bed in Business Class as well. However,
many air carriers have abandoned the First Class on board and focus on enhanced Business
Class. Delta Air Lines, KLM or Air Canada are examples. There are still airlines which still
offer First Class, like Lufthansa or British Airways. All European carriers gave up the First
Class on their short-haul flights and offer only two class service. The airplanes operating
short-haul flights often do not have special Business Class Seats; however they sell the
product as the Business Class. This problem can be solved by flexible cabin dividers which
can divide the cabin into two parts. Anyway, the seating comfort is the same as in Economy
Class. The price, however, is often five-times higher comparing to Economy Class.. Some
airlines therefore dont fill the seat in the middle thus the passengers have higher comfort.

21
Network, Frequencies and Timings.
Although night-flights are not popular among passengers because of problems with
airport-access many airlines plan its flights during the night in order to use the airplane as
much as possible.
Concerning long-haul flights, one of the most intensive concerns among the passengers is
non-stop flight to their destination. Most of the passengers prefer to fly without intermediate
stops. Non-stop flights seem to be helping airlines to low operating costs because landing fees
and turnaround costs associated with the intermediate stops are eliminated. On the other hand
long-haul flights require large quantities of fuel which has to be carried early in a flight for
use later on what causes raising aircrafts weight and fuel burn. There is also a need for the
extra cabin crew who needs a proper rest periods. The flight is then more expensive for the
company and it also takes up the seating capacity. (Shaw, S. 2004)

Punctuality.
One of the most important issues for airlines is ensuring high standards of punctuality.
Obviously, the most significant area for these tradeoffs is the airline fleet planning. The best
punctuality can be obtained only when the company operates new aircraft of proven
technology. Airlines should have a policy of replacing their old airplanes after a few years. It
is proven that aircraft dispatch reliability tends to decline with the age of an airplane once a
certain threshold has been passed. (Shaw, S. 2004) Replacing old aircrafts for new ones will
not only help the company to benefit from the punctuality, but it also help to build the
confidence of the passengers towards the airline and its aircrafts. Of course, new aircrafts are
very expensive and there are plenty of airlines which would never be able to purchase a new
airplane, therefore they use old airplanes which had been put out of operation from their
previous keeper.

Controlling Product Quality.


An indispensable part of the product design phase of marketing for airlines is quality
controlling. It is an important feedback and without it, the company doesnt know which parts
of its product are weak and where improvements need to be done. One of the most useful and
easy ways how to measure the product quality and how to know the customer requirements
are questionnaires or in-flight/airport surveys. Thus the airline gets the useful information and
customer on the other hand is convinced that the airline is interested in continuous product
improvement.

22
There is also another group of people whose opinions and complaints should be heard the
cabin crew, sales staff and all the employees who have direct contact with the customers. The
contact staff knows exactly where the sticking points are. Their reports can provide an
accurate barometer of the airlines performance. (Shaw, S. 2004)
When an airline company wants to be successful in analyzing its product it has to work
constantly to ensure the highest standards of personal service delivered to customers.
Prosperous companies have to establish a demanding quality control system for their products
and eliminate the weaknesses shown by this system in order to wok on a continuous
improvement. (Shaw, S. 2004)

5 Relationship Marketing.

The effort to apply relationship management concept is one of the most demanding
aspects of airline marketing. Here is the definition of Relationship Marketing.

Relationship Marketing is a marketing philosophy whereby a firm gives equal or greater


emphasis to the maintenance and strengthening of its relationships with its existing customers
as it does to the necessary search for new customers. (Shaw, S. 2004)

The common misunderstanding in the airline industry is assuming that the relationship
marketing is just sophisticated Frequent Flyer Program where passengers are awarded for
number of miles they have flown with the company. The Frequent Flyer Program is very
important and useful in maintaining good relationships, however its just not enough.
According to Stephen Shaw, airlines need to know two remaining definitions those of
Advocate and Destroyer relationships.
An Advocate relationship is when a person not only buys the products of the company, but
he or she acts as a firms advocate by intensively advising other people to buy the companys
product.
A Destroyer is a situation when a potential customer doesnt buy the product, and also
discourage other people to do so pointing out the companys many deficits and imperfections.
It is certainly an advantage for the company to have a high number of Advocates, on the
other hand, Destroyers are always a handicap because they can seriously harm the
reputation of the company. Thus building strong Advocate relationship should be a core of
Relationship Marketing for all companies, especially airlines. (Shaw, S. 2004)

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Building Advocate Relationships.
One of the most crucial aspects of building relationship is that of delivering promises.
In advertising campaigns many airlines promise their passengers more than they could
actually manage. The advertisements claim that traveling with the company will be one of the
most wonderful experience beginning with on-time flights, comfortable seating, delicious
food and most of all the warmest of welcomes from the airlines customer contact staff. Many
people influenced by such advertisement chose to fly with the company, but soon find out that
there are delays, the airplanes are old and dirty, lavatories smell bad, the food is disgusting
and flight attendants are rude, demotivated and without language skills. Then passengers feel
betrayed and they can easily become Destroyers. Advocate relationship can be built only by
caring- the passengers must feel that the customer contact staff cares of them. Even a
complaint can lead to Advocate relationship, if it is quickly and positively responded.
One of the most fundamental aspects of relationship-building is that of gratitude. If a
customer buys loyally from a particular company it is then expected that this loyalty will be
recognized in the form of reward. This can be obtained only when a company keeps overall
customer database. This database is important for the company, which needs to know
demographic information about their customers. The database will include obvious things
about name, address, job title etc. This information must be accurate and up-to-date in order
to be useful. The indispensable part of the database should be the particular preferences, such
as food, preferred seating etc, so the customer doesnt have to spell out these preferences
every time he or she books a flight. The database should also contain activity information
which describes what the customer buys from a company, where and when. Airlines need to
know the routes the people fly, the traveling-class of service in which they travel and the fare
types which they use. Obviously, it is very demanding and also costly to obtain all these data,
but computers help us to store and process the data easier and cheaper than it used to be in the
past. Regarding demographic information about potential and actual customers, the best data
is that which people offer voluntarily. Frequent Flyer Program is therefore a database with
every important information which are given voluntarily because every-one who wants to join
the FFP must provide the basic demographic information. All the information need to be
updated regularly which is very demanding therefore the carrier must ensure that their
customer contact staff always enters the data. (Shaw, S. 2004)

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Customer Relations.
Although complainers used to be considered as nuisance in the past and Complaint
Handling department was seen as career backwater known for poor quality and demotivated
staff, better airlines nowadays see this function as an important opportunity where problems
can be eliminated and relationships strengthened for the future. It is natural that airlines will
experience service failures from time to time. If these failures, however, are frequent, they
show that the company has serious problem which needs to be detected and eliminated
through quality management program.
Customers experiencing a service failure can be divisible into two: those who complain and
those who do not. In the past, companies appreciated those who did not complain, but this was
quite wrong. People who are not satisfied but do not complain are most likely to purchase the
product from different company and never come back. What is even worse, that these people
will become Destroyers, telling other people how bad the service of the company was. On the
other hand, those who complain and whose complaint is settled professionally are likely to
buy from the company again. In fact such an unpleasant experience can strengthen the
relationship towards the company. (Shaw, S. 2004)
Complaint dealing is very sensitive issue and must be done carefully, respecting certain rules.
At first, it must be easy rather than challenging for a customer to say his or her opinion,
therefore free phone numbers or E-mail addresses are quite valuable.
At second, each complaint should be following by very prompt acknowledgement. If the
complainant leaves a phone number, they should be contacted the day their call or letter is
received. The respond of the company has meaning only when a clear apology is given, which
should include the ownership of the problem. Once the apology is given, the company has to
offer a financial compensation, only then the strength of the customers relationship can be re-
established. The compensation may be in a form of a free ticket on an off-peak flight where
the airline knows it will have empty seats. Thus the airline will have a chance to show the
unhappy passengers their normal and much better standard of service. Another possibility is
that the passenger will get some extra points in their frequent flyer program account.
This generous form of compensation can of course lead to the possibility of abuse, when
passengers will complain a lot, hoping for the compensation. Therefore database information
should be collected on each person who complains. Thus it should soon become clear who is
doing so systematically. (Shaw, S. 2004)

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Using the Power of Relationship to Achieve High Performance.
Performance of a company often depends on relationships within the firm. Mutual
positive relationships among employees are maybe more important for smooth operation of
the company than anything else. Southwest Airlines is a pioneer in using the power of
relationships to achieve high performance. Judy Hoffer Gittell, an assistant professor of
management at Brandeis University and faculty member of the MIT Global Airline Industry
Program, wrote a book with management lessons from Southwest Airlines, the worlds most
profitable airline. Gittell is pointing out the keys to Southwests success which are high
performance relationships and compare their practices with the practices of other airlines in
USA. There are four basic factors of success of Southwest Airlines- Leadership, Culture,
Strategy, and Coordination.

Leadership.
Southwest Airlines is well known for the remarkable leadership of ex-CEO Herb Kelleher
who has helped to shape an unique culture for the organization, unlike that of any other major
airline within US. Kelleher has created a focus on relationships- relationships based on shared
goals, shared knowledge, and mutual respect. He has helped to develop the organizational
practices which strengthened relationships and his personal actions have exemplified the
importance of relationships to employees. (Gittell, J.H. 2005) It is quite difficult to describe
the personality and the management style of Herb Kelleher. As one pilot of Southwest said:
I can call Herb today. You dont just call and say theres a problem. Hell say, think about it and tell me the
solution that you think will work. He has an open door policy. I can call him almost 24 hours a day. If its an
emergency, he will call back in 15 minutes. He is one of the inspirations for this company. He is the guiding
light. He listens to everybody. Hes unbelievable when it comes to personal etiquette. If youve got a problem,
he cares. (Gittell, J.H. 2005)
Leadership, however, is not confined only to the CEO. Leadership is better understood as a
process that can take place at any level of an organization. (Ancona, D. n.d.) Indeed, every
organization needs the leadership to motivate, support, and enable employees to work
together in support of a set of shared goals.

Organizational Culture.
One of the explanations of Southwests success is its unique organizational culture
which has evolved over time from a culture that was idiosyncratic to a concrete time and
place (hot pants and LUV in the southwestern region of the United States in the 1970s, with
Come to Jesus meetings) to a culture that is highly inclusive and diverse.

26
Nevertheless, what has remained constant over time and what lies at the root of Southwests
culture is the focus on relationships. Although leadership, culture, strategy, and coordination
are critical factors of success, they are only a part of the issue. Relationship focus of
Southwest Airlines, its commitment and passion for shared goals, shared knowledge, and
mutual respect, joins with frequent, timely, problem-solving communication to form a
powerful force called a relational coordination. This relational coordination enables
Southwest to turn planes quickly, achieving industry-leading levels of aircraft and employee
productivity. (Gittell, J.H. 2005)

Shared Goals
Managers, supervisors, and frontline employees in all functional areas of Southwest
Airlines say that their primary goals are safety, on-time performance, and satisfying the
customer. These goals seem to be shared in the sense that they consider Southwest to be their
own firm. A southwest flight attendant purser explained:
Here its one goal- one hundred percent customer service. Whatever it takes. You can see it just walking
through the terminal. Rampers will even help board a flight. Theres a desire to be a part of the team.
Another pilot said:
Ive never seen so many people work so hard to do one thing. You see people checking their watches to get the
on-time departure. People work real hard. Then its over, and youre back on time. (Gittell, J.H. 2005)
According to James March and Herbert Simon, author of the book about organizations, shared
goals play an especially important role when different functions are involved in delivering the
same service. (March, J.; Simon, H. 1958)

Shared Knowledge
Work process of an airline company is demanding thus it is essential that employees
have reference to the overall process of flight operations. Interviews with Southwest frontline
employees showed that they understood the overall work process, especially the links between
their own jobs and jobs performed by their colleagues in other functions. Based on shared
knowledge, Southwest employees knew why or how the overall process worked. One pilot
clarified the companys strength with regard to shared knowledge:
Everyone knows exactly what to do Each part has a great relationship with the rest There are no secrets.
Every part is just as important as the rest. The lavatories included. Everyone knows what everyone else is
doing. (Gittell, J. 2005)

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Mutual Respect
Degree of respect shown by employees in the airline industry toward their colleagues
in other functional areas is very different. Arrogance and inferiority are very often since the
industry has a wide scale of positions, from which some are respected and some are
downgraded. There is a hierarchy on the ramp which starts with the highly paid mechanics
and ends with cabin cleaners. Although these positions are interdependent, there are certain
barriers due to the very different work performed by each function. As one pilot of American
Airlines said:
Pilots are great at being self-righteous. Its something about the job. The major airlines treat you well. People
do what you say. It brings out a certain decisiveness that becomes arrogance.
Comparing Southwest with American Airlines, one of the major air carriers in the USA, there
are some dramatic differences in the degree of respect. According to a station manager in
American, ramp workers have a terrible inferiority complex. Each status barrier between any
two functions has resulted in delays of the flights. Ramp workers also perceive a lack of
respect from flight attendants, and on the contrary they tend to put them down. According to a
ramp supervisor at American Airlines:
There are employees working here who think theyre better than other employees. Gate and ticket agents think
theyre better than the ramp. The ramp think theyre better than cabin services, think its a sissy, womans job.
Then the cabin cleaners look down on the building cleaners. The mechanics think the ramp are a bunch of
luggage handlers.
The tensions in relationships among the employees of American Airlines are not a rarity in the
industry. Status consciousness permeates the industry and the lack of mutual respect reflects
the flight delays and displeasure of the employees. Working environment at Southwest is
completely different; employees tend to treat each other with a great deal of respect. Here are
some utterances of Southwests employees:
Theres a code, a way you respond to every individual who works for Southwest. The easiest way to get in
trouble here is to offend another employee. We need people to respond favorably. It promotes good working
relationships.

No one takes the job of another person for granted. The skycap is just as critical as the pilot. You can always
count on the next guy standing there. No one department is any more important than another.

Some of us have degrees and some of us dont. But it doesnt matter. We need all these positions. (Gittell, J.
2005)

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Respect for the competence of other employees is essential to the coordination of work
process. Effective coordination requires frequent, timely, problem-solving communication
carried out through relationships of shared goals, shared knowledge, and mutual respect.
Relational coordination enables shorter turnaround times, greater employee productivity,
fewer customer complaints, fewer lost bags, and fewer flight delays. (Gittell, J. 2005)
Relationship management shouldnt only manage the relationships towards the customer but
also relationships among the employees. When the employees are happy they treat the
customers right and thus the customers are happy as well. They will come the next time and
buys the product again so everybody is happy: the company, the employees, the customers,
and even shareholders.

III. Methodologies and Procedures Used in the Study

The thesis is an evaluation project to determine whether Air Slovakia follows the latest
trends in the field of Airline Marketing, Management and Customer Relationship
Management. Information important for the project were collected from the web sites of the
company as well as from the articles written about the company in Slovakia and abroad. As a
representative of Air Slovakia, I have been working for the company as a flight attendant
since June 2004; I have flown more than 1000 flight hours during which I have gained many
experiences. Face to face, as a member of the customer-contact staff, I have faced passengers
opinions, requirements, complaints, and compliments. I know where the critical points of the
company are, and what the company is good at. I can also compare the products and services
of Air Slovakia to the other air carriers. I am keen on following the latest trends and news in
the airline industry and I can compare the real situation in Air Slovakia with the actual
requirements of the customers within the airline industry. Following the guideline provided by
relevant sources of scientific literature I compared fact after the fact the practices in Air
Slovakia with the recommended marketing and managerial techniques. The results obtained
from the evaluation were summarized in the conclusion and recommendation for Air
Slovakia.

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Air Slovakia BWJ
Air Slovakia BWJ was established in 1993, when the group of independent people,
who had been working in aviation business, having necessary skills and knowledge, but
especially the enthusiasm about enterprise and serve to passengers, joined together. The first
regular flight (Bratislava - Tel Aviv) was opened in January 1994.
Air Slovakia BWJ with 12 years existence, is the Airline with the longest operating in Slovak
Republic. During this period Air Slovakia BWJ got a stable position on Slovak and also
foreign market.
Results in the year 2004:
Carried Passengers: 111 342
RPKM: 409 439 000
Use of seat capacity: 72 %
Kilometers flown: 3 495 593
Hours flown: 4 116
Number of Flights: 710 regular flights
246 charter flights
93 irregular flights (www.airslovakia.sk)

The company had recently been operating three airplanes, one Boeing 737-200 with a
capacity of 123 passengers and two Boeings 757-200 the largest airplane operating by a
Slovak air carrier, with 14 seats in Business Class and 177 seats in Economy Class. Although
it is Slovak company, the major part of the flights is flown for Indian partners, connecting the
city Amritsar in India with Birmingham and London in Great Britain, Milan Bergamo in
Italy, and Cologne in Germany. The bulk of the passengers are from Punjab and Punjabis
from Europe. Each flight has a stopover in Bratislava. Grace to high demand for flights
between Amritsar and European cities with densely populated Indian communities such
flights are perspective and Air Slovakia is a competitor for British Airways and Alitalia, but
mostly for Air India, Uzbekistan Airlines and Turkmenistan Airlines which connect the same
cities.
Other regular routes connect Bratislava with Tel Aviv, Larnaca and Kuwait. Flights to popular
summer destinations such as Egypt, Greece, Bulgaria and Turkey represent the charter flights
flown for major Slovak tour operators.

30
Open Skies Treaty about European air space enabled Air Slovakia to connect any two
destinations within European Union. Thus the company often flies as a substitute for the
airline partners in Slovakia as Slovak Airlines or SkyEurope Airlines; partners from abroad
such as Dutch Bird in Netherlands, Air Britannia, First Choice, Travel Service from Czech
Republic, Fischer Poland and many other air carriers and tour operators from Italy, England
and Ireland. Slovak Army as well as armies from other European countries often order Air
Slovakia to transport their soldiers.
In October 2006, Air Slovakia was purchased by an Indian-born businessman Mr. Harjinder
Singh Sidhu, who has been living in Great Britain since his 16 years of age. The new owner
wants to transform Air Slovakia into a Punjabi Experience, which means that the cabin
crew members as well as food, and in-flight entertainment will be from the northern Indians
state of Punjab. Regional headquarters will be based in the Punjabi city Jalandhar. The
intention of the new owner is to brand Air Slovakia as an airline with Punjabi ambiance and
flavor. (Soutik Biswas, 2006)
Along with the new owner of the company, a new tour operator called Air Slovakia Holidays
has been registered in Great Britain. The operator wants to offers holidays in Goa, the tourist
destination in the Western Coast of India by the Arabian Sea. During the stop in Bratislava,
tourists from neighboring countries could join the passengers and the airplane would continue
to Goa. By the spring of 2007, another development of the carriers fleet is expected. The fleet
should be enriched of two Boeing 737s-300 for European and Near-East routes. The company
has plans to gain inter-continental airplane Boeing 767 for more than 200 passengers which
could fly on a new Toronto-Bratislava-Amritsar service for Punjabis in Canada. The future
growth and development of the company is expected in the upcoming years with the
assumption of the fleet consisting up to nine Boeings. (Blazej, J. 2006)

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IV. Results
Air Slovakia is relatively a newcomer in the airline market although it has been
operating for already fourteen years. Since its establishment, Air Slovakia has always been a
private company, operating without any financial help from the Government. Starting with
Boeing 727 and two Boeing 737s, in 2003 the company hired two Boeing 757-200s which are
still the largest airplanes in Slovak air market, enabling to carry up to 200 passengers to
destinations distant more than 7000 km without stops. However, the company has been
recently going through very difficult period during which both of the airplanes were not able
of flying, even due to technical problems as well as legal reasons. The future of the company
had been unclear until October 2006 when Mr. Sidhu, entrepreneur from the UK, bought Air
Slovakia. The new owner has commercial plans to pull the company round. The financial and
technical problems of the company are just a result of incorrect managerial procedures within
the company.
It is about a time for Air Slovakia to develop its own marketing plan and define the mission,
vision, and the goals the company wants to achieve in the future. Following up the latest
trends in the Airline Marketing and Management is inevitable for Air Slovakia in order to
recover from the crisis it had undergone recently, and maintain its position in a highly
competitive airline market. According to the guideline from the Review of Literature section,
the results of the company are following:

1 The Customer market size, demographics, customer requirements


and attitudes.

Business versus Leisure Air Travel Market


Taking into consideration the extent of Air Slovakias flights, it is obvious that the
majority of the passengers belong to the Leisure Air Travel Market. Even though there is a
demand for Business Class tickets on the companys flights, passengers flying in the Business
Class are rather more solvent than businesspersons. Most of the passengers are price-
conscious, especially those flying to and from India. Businesspersons usually cannot afford
the necessary stop in Bratislava on the way to and from India, especially when comparing the
product to the competition-Air India operates the Delhi-Amritsar-Birmingham-Toronto
service. Business travelers, of course, would prefer the flight without stop, which Air India
can offer, even though the price is higher. However, price-conscious travelers prefer lower
price of the ticket to the non-stop flight.

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Factors for choosing the Airline Company
Except of flights to India and its connecting flights to European destinations such as
Birmingham, Cologne, and Bergamo, there are only three regular flights operated by Air
Slovakia from Bratislava: Larnaca in Cyprus, Tel Aviv in Israel and Kuwait City in Kuwait.
Most of the flights are not operated every day, for example Kuwait City is flown once per
week, and direct flights from Bratislava are certainly a competitive advantage. Slovak
passengers flying to Israel or Kuwait, as well as those from Israel and Kuwait flying to
Bratislava, appreciate that they dont have to fly to Vienna or Prague. It is more comfortable
for them to fly directly to Bratislava; therefore it is good reason to choose Air Slovakia for
their flight. The most important criteria for choosing the particular airline according to the
Corporate Travel Survey carried out annually by IATA International Air Transport
Association are:
- Frequency and Timings
- Frequent Flyer Benefits
- Punctuality
- In-Flight Service

In-Flight Service:

A separate Business Class cabin


The Business Class in Air Slovakias Boeing 757s is not separated from the Economy
by any curtain or partition, which is quite unusual on long-haul flights. The Business Class is
in the front compartment of the airplane, but the compartment is shared with the Economy
Class, ratio 14 Business and 21 Economy seats. The seats are not leathered and the chairs
certainly need re-upholstering. The Business Class seats dont have individual TV screens so
the Business passengers dont have any advantages compare to Economy Class passengers.
What is even worse that the entertainment system doesnt work, neither in Business or
Economy Class. The pitch between seats is insufficient. Regarding meals, Business Class is
served the same amount of meals as the Economy, only the portion is little bit bigger. There
are only two choices of the meals- Vegetarian and Non-Vegetarian. The meals are served on
plastic trays, beverages are poured into plastic cups and the cutlery is plastic as well. The
passengers are served alcoholic drinks; however an offer of fine wines is missing. The width
of the seat which is not even leathered and the own lavatory that is provided for passengers
are the only differences between the Business Class and the Economy Class.

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Of course, there is one flight attendant for 14 passengers, which is nice, but generally, the Air
Slovakia Business Class is far behind the average.

Cabin comfort
Cabin comfort matters very much and when it fails to satisfy the customer, they will
not purchase the product again. There are three main problems about the cabin comfort of Air
Slovakias airplanes.
The most important matter is that the number of lavatories is quite insufficient. There are only
two lavatories for 177 passengers in Economy Class. Seven-hours-long flight is too long for
such a small number of lavatories.
The second problem is that the seats are made of cloth, not leather. Leathered seats may have
higher initial costs; however, return on the investment is indisputable. These seats are easy to
maintain, they are comfortable and they look very well which contributes to an overall
pleasant feeling of the passengers.
The third problem deals with the entertainment system.

Entertainment system
The reality in Air Slovakia is that the entertainment system doesnt work and if it
would the company wouldnt have an interest to buy movies and audio selections that would
be following the latest trends. It is inevitable for an airline company to entertain the traveler
on a long-haul flight even by magazines or by fine movies. A high-level entertainment system
would certainly please all passengers.

2 The Marketing Environment


Marketing policies of Air Slovakia reflect the structure of its market. From all the
factors of marketing environment, Air Slovakia is particularly influenced by two of them:
terrorism and opening of the European airspace.

Terrorism is one of the biggest threats for the airline industry.


Air Slovakia has implemented new ways of security improvements on board. All flight
attendants have undergone a special training about aviation safety organized by PYRA
Agency in Bratislava. Each cabin crew member is trained how to defuse explosives and they
have been also trained how to deal with the problematic passengers who could be terrorists.
The training is taken each year and besides the theoretical knowledge also trains the flight
attendants practically. The new policy of security checklists was introduced as well.

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It means that before each flight, every flight attendant performs an inspection of a particular
part of cabin. The inspection is focused on searching for dangerous and suspicious items. The
security checklist is performed after the flight again. Vigilance of each member of the crew is
essential and the company tries to do their best to prevent from any incident which could have
fatal consequences.

Deregulation and Open Skies Treaty.


Deregulation through the Open Skies Treaty means that an airline company
registered in any European country can operate within any two other European countries. For
example, before Open Skies came into force, Air Slovakia could fly only from Slovak
airports to any European airport. However, after the treaty has come into force Air Slovakia is
free to operate a service between London Stansted and Larnaca in Cyprus, for example. The
treaty has enabled European air carriers to have unlimited opportunities for business. Ryanair,
easyJet or SkyEurope Airlines can operate like they do only thanks to the treaty. Air Slovakia
often operates on behalf of tour operators and airlines from abroad, for example Dutch Bird,
Britannia Airways, Airjet and others. This is an exceptional opportunity for cheap advertising
because many passengers carried by Air Slovakia instead of their home-based air carrier
would have never experienced Air Slovakia if their airlines had not asked Air Slovakia for
flying for them. Thus a passenger from Amsterdam, for example, who has never heard of Air
Slovakia before, spends several hours on board of Air Slovakias aircraft. It is, on the other
hand, also the opportunity to hurt or damage the reputation when the service on board doesnt
correspond to the standards of air carriers abroad. Passengers from Western Europe are quite
sensitive about cleanness of the aircraft, about the age of the aircraft, its equipment,
furnishings, entertainment system, and last but not least the friendliness and professionalism
of the cabin crew.

3 Airline Business and Marketing Strategies.


Once the airline company understands the needs of its customer and the marketing
environment the next necessity is to choose the most suitable strategy for the business.
Several strategies in the airline industry were already mentioned. Air Slovakia is a small
company and it would certainly manage to combine several factors from each strategy in
order to satisfy the customer and increase the profit.

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A Cost Leadership Strategy in the Airline Industry.
One of the most fundamental requirements for successful low cost air carrier is
achieving and sustaining simplicity in business process. (Shaw, S. 2005) There are several
basic features of this strategy:

Low Fleet Costs.


Air Slovakia operates one Boeing 737-200 and two Boeings 757-200. The airline
company that operates short-hauls and long-hauls flights can only hardly rely on one type of
aircraft only. Therefore this feature of the strategy cannot be used for Air Slovakia.

Short Turnarounds / High Aircraft Utilization.


For Air Slovakia it would be impossible to use these rapid turnarounds on long-haul
flights to India, Kuwait or Israel. However, there are certainly some routes, like the Collogne,
Bergamo or Birmingham, for example, where the rapid 25-minutes-long turnaround wouldnt
be a problem with a smaller airplane. Boarding of Indian passengers is also lengthy; there are
always problems with too much hand-luggage and with old and invalid passengers who fly
with Air Slovakia very often. Short turnarounds are impossible to achieve when long-haul
flights are operated.

Limited On-board service.


Air Slovakia could charge passengers relatively high fees for their meals on the short-
hauls flights. Even on the flights to India or Kuwait, the company could charge for items like
headphones for entertainment system or a duty-free sale. The company spends incredible
amount of money for the meals packaging which are not recyclable. This leads to very high
costs.

Point-to-Point Only.
Except of flights to India Air Slovakia operates all flights point-to-point. Flights from
Birmingham, Bergamo or Cologne to Amritsar have a stop in Bratislava. When arriving from
the first destination in Bratislava, all passengers are requested to disembark to the transit hall
at the airport. Then, when the crew is changed and the plane is cleaned and ready for the next
flight, the passengers continue in their journey. Passengers using service of Air Slovakia on
its other flights have to be aware of the point-to-point flights.

36
B Differentiation in the Airline Industry.
Air Slovakia unfortunately has no sign of differentiation; there is not anything that
would distinguish it from other average airlines. Taking into consideration the Boeings 757-
200 which are the largest airplanes operated by Slovak air carrier, allowing a Slovak company
to carry Slovak passengers direct from Bratislava to any exotic destination, range of aircrafts
is the only sign of difference from the rivals in Slovak air market. This is, however, pitiably
too little. There are several areas where the differentiation could take place in Air Slovakia.

C Focus Strategies.
Air Slovakia is currently focusing on flights to India or flights for Indian communities
in European cities. However, this type of focusing doesnt offer anything special to
customers, not even the Indian ones. Taking into consideration that the passengers get Hindu
meals and when the entertainment system works, they can watch Indian movies there is
nothing else that would be different from other rivals. To top it all, one of the main rival, Air
India, flies the same route with bigger and more comfortable Boeing 777 which provides
more lavatories and fine entertainment system, Hindu speaking crew and no annoying stop in
Bratislava. However, the pricing policy of Air Slovakia is on their site. The price for ticket is
lower than the one of Air India or British Airways.

4 Product Analysis in Airline Marketing.


The basic elements of the chosen marketing structure should be transformed into
product design process. The frame of reference will focus on the Air Slovakias point of view
to sell interesting product which the company will be able to manage financially, because
attractive product are often very expensive to produce.

Network, Frequencies and Timings.


Air Slovakia should also concentrate most of its charter flights during nights so the
regular scheduled flights could be flown during the day. Of course, sometimes it is impossible
to arrange it, especially with long-haul flights.
Air Slovakias passengers on those flights to or from India have the intermediate stop in
Bratislava. It might seem annoying for them; however the stop is needed for several reasons.
First of all, the type of the aircraft would not be able to fly non-stop from UK to India, and
since it is a Slovak company, the crew needs to be changed in its base which is Bratislava;
otherwise it would be complicated for the crew to be based outside Slovakia.

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Anyhow annoying the intermediate stop in Bratislava seems to be, the passengers are aware of
it when they are buying the ticket. Apparently, lower price for the ticket compare to other
airlines is adequate compensation for longer journey.

Punctuality.
The best punctuality can be obtained only when the company operates new aircraft of
proven technology. (Shaw, S. 2005) Air Slovakia owns one Boeing 737-200. The version
200 is the oldest version of the 737 series and from 2007 the major European airports will
not allow them to land. The airplane is very old. The aircraft doesnt look well from the
outside, not even from inside. The interior is quite dingy and there have been events when
passengers refused to fly in that aircraft and they rather gave up their flight-tickets. The new
owner of the company, Mr. Sidhu, has plans for purchasing two younger 737-300s and
replaces the old 200 with them. These plans should be realized as soon as possible in order to
prevent difficulties resulting from the age of the aircraft. The other Air Slovakias planes, the
Boeing 757s, are both in their 21st year of operation. The very high age resulted in the summer
2006 Season to constant breakdowns which had put one of the aircrafts out of service for
several months. At the time of writing, both airplanes were able to fly, however the company
cannot expect anything else than periodic breakdowns unless the planes are changed for
newer ones.

Controlling Product Quality.


Air Slovakia as well as other airlines uses a special form called a Report from the
flight where cabin crew informs the management of the company about certain problem that
occurred on board during the flight. Thus the cabin crew is insured and protected against
passengers complaint in case that the staff is not responsible for the emerged problem.
However, these forms should serve primarily as a tool of detecting and eliminating the
particular problem. Therefore there is a need to constantly deal with these information and try
for instant remedy. Controlling Product Quality has a meaning only in the case the company
is ready to take an action to remedy the problem, otherwise it is useless.

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5 Relationship Marketing.

Taking into consideration size and focus of the company, Air Slovakia is not prepared
for its own Frequent Flyer Program. It is a small company dealing with many problems,
preparing for potential growth. The FFP would be impossible to attain.
The company should concentrate rather on building the advocate relationship and complaints
dealing. Relationship towards the customers is not the one and only type of relationship.
Relationships that really matter a lot are those among the employees within the company. Air
Slovakia is a small air carrier and the employees usually know each other. However, the
management of the company doesnt know its customer-contact staff and the cabin attendants
and members of the customer-contact staff dont know the people from the management
either. Only one meeting of the cabin crew with the new owner took place in October 2006.
Otherwise, people from the management are not used to meet their employees on a regular
base. On the contrary, Herb Kelleher, the ex-CEO of Southwest Airlines knew most of his
employees by name. For the information, Southwest has around 32,000 employees, Air
Slovakia over 60.
Shared goals, shared knowledge, and mutual respect should also be a part of organizational
culture of Air Slovakia. As long as Air Slovakia is s small company and employees know
each other, the level of mutual respect is very high. Well organized outline for achieving the
shared goals and knowledge should be made up and presented to every employee of the
company.
More or less problems to deal with, Air Slovakia has been on market for more than 14 years.
It is a small company and the competition is very tough, however, the company has a chance
to succeed and to survive. Something needs to be done in order to differentiate the company
in the eyes of customers. Something needs to be done in order to build the Advocate
relationship with the customers. The company indispensably needs to define its marketing
strategy and follow up the latest trends in the airline industry when it wants to survive in the
future.

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V. Discussions, Conclusions, Recommendations

As long as the Customer Relationship Management is a tool of differentiation in the


eyes of customers Air Slovakia must define its mission and vision. Traveler must know to
place the company easily, and on the other hand, the company must easily define who its
customer is and what the customer values about the company. According to the new owner,
Mr. Sidhu, the primary focus should be concentrated on Punjabis from India as well as from
Punjabis communities in Europe and Canada. However, Air Slovakia is still a Slovak
company and it will serve also Slovak passengers on its regular or charter flights. There will
be still passengers from abroad, neither Slovaks nor Punjabis. The aim of the company is
quite wide, hence more difficult. Whenever the passenger flying on Air Slovakias flight will
be from the goal of the company should be the highest possible level of satisfaction and at
least one thing that the passenger would remember. If there is only one positive thing to
remember, then the CRM of the company works well and the company thus differentiates
from the rivals. The management should find anything that would make a flight with Air
Slovakia different from the competition. The minimum what the company can do in order to
assure the comfort of their passengers is behavior of the customer contact staff- cabin
attendants.

There are several areas which Air Slovakia should focus on and make an effort to improve the
currents conditions. From all the marketing strategies presented in the thesis, the
Differentiation Marketing Strategy seems to be the most suitable for Air Slovakia. The
main goal is to differ somehow from the competition- it is, as well, the heart of the matter of
the Customer Relationship Management.

First of all, the entertainment system should be working flawlessly. Passengers do not need a
good entertainment system on short-haul flights and the companys rivals- SkyEurope
Airlines and Slovak Airlines, operate only short-haul flights. When passengers during the
long-haul flight have nothing to do, they are bored. Although the longest flight operated by
the company, flight to India, is not used by Slovak citizens very often, there are other flights
that Slovaks take advantage off, especially Larnaca, Tel Aviv, Kuwait, or holiday destinations
like Hurghada or Sharm El Sheik in Egypt. All of these flights are longer than three or three
and a half hours, ergo enough time to play the passengers a good movie. The company could
concentrate on movies from Czechoslovak cinematography. Thus the long flight to a holiday

40
destination could be spent very pleasantly and travelers would definitely remember flight with
Air Slovakia and maybe they would even demand flying with Air Slovakia from their tour-
operator or travel-agent. Thus the travel-agents would prefer Air Slovakia from the
competitors. The real situation is rather different. The entertainment system doesnt work and
despite of insistency of the cabin crew the management of the company has no effort to repair
the TV screens, speakers or Video-players. Obviously, the entertainment system is one of the
less expensive ways how to make the long flight pleasant. In-flight magazine is also a nice
way how of entertaining the passengers. The magazine can be also a very good form of
advertisement.

Another sign of differentiation could be a little-bit loosey-goosey behavior of flight


attendants. Southwest Airlines, already mentioned low cost carrier from United States is a
typical example of easy and unbuttoned behavior of its contact-staff. Passengers of
Southwest Airlines were often surprised by the Spirit of the company. On some flights, flight
attendants offered magazine pictures of gourmet meals to passengers for a dinner. Cabin
attendants were encouraged to have a fun; they sang songs or even safety instructions, jokes
about pilots salaries and funny flight announcements. One of the funny announcements was
the one about non-smoking policy were a steward had said that smoking would be allowed
during the flight on the wing while the movie Gone with the wind would be played.
Another flight attendant had a habit of popping out of overhead compartments as passengers
wanted to place their luggage, until the day she scared an older passenger who called for
oxygen. Herb Kelleher, in that time the CEO of Southwest, had once served the in-flight
snacks dressed as the Easter Bunny. (OBrian, B. 1992) The Southwest Spirit accompanied by
company communication and friendliness was highly valued by passengers as well as by
employees of the company. The recommendation to Air Slovakia is not to make a circus on
board, but to make the flight funnier and more entertaining. The company could think of a
strategy to create an unique Company Spirit that would be appreciated not only by passengers
but also by employees.

The company could also combine some factors from other strategies. According to the new
owner of Air Slovakia, Mr.Sidhu, the plans are to focus on the Punjabi community in India as
well as in other European countries with dense population of Punjabis. The new owner wants
to transform Air Slovakia into a Punjabi Experience, which means that the cabin crew
members as well as food, and in-flight entertainment will be from the northern Indians state of

41
Punjab. Regional headquarters will be based in the Punjabi city Jalandhar. The intention of
the new owner is to brand Air Slovakia as an airline with Punjabi ambiance and flavor. It will
certainly be a sign of Focusing Marketing Strategy.

So called Low-Cost strategy offers the possibility of limited service on board. It means that
meals on the short-haul flights could be paid by passengers. This is impossible, of course, on
long-haul flights, however, there is a possibility to sell duty-free products on board of the
aircraft during the flight. Thus the company can earn more money.

Regarding the Product Analysis in Air Slovakia, the company should improve following
things:
Business Class needs to be renovated. It needs to be separated from the Economy by a curtain
or a partition. The seats should be leathered and they certainly need re-upholstering. The
Business Class seats need to have individual TV screens. The pitch between seats should
enable the passenger to recline the seat into semi-lying pose. Regarding meals, Business Class
has to be served at least two meals at the choice from each type, Vegetarian and Non-
Vegetarian. The meals should be served on a porcelain, beverages should be poured into
glasses and the cutlery should be stainless-steel. The passengers would certainly appreciate
also a selection of fine wines.
Comfort of the Economy Class passengers would certainly be assigned if more lavatories
were on board, especially on those long-haul flights. The company cannot do anything about
it unless the new aircrafts with different configuration are purchased. Old and unreliable
aircrafts in the companys fleet should be replaced by newer ones not only because of the
cabin comfort and safety but also in order to improve punctuality.
The best punctuality can be obtained only when the company operates new aircraft of proven
technology. Airlines should have a policy of replacing their old airplanes after a few years. It
is proven that aircraft dispatch reliability tends to decline with the age of an airplane once a
certain threshold has been passed. (Shaw, S. 2005) The new owners has plans to purchase
other 757s and even one Boeing 767 aircraft. The recommendation would be to focus on as
young airplanes as possible in order to maintain smooth operation.

Regarding Controlling Product Quality, Air Slovakia should definitely dwell on contact
staffs observations and inferences. Members of the customer-contact staff, most common
cabin attendants have to solve all kinds of problems and passengers complaints on a flight.

42
Their pieces of knowledge are important indicators of areas which need an improvement.
Questionnaires and in-flight surveys are also very helpful to know the passengers opinion
about the quality of the service. The Complaint Handling Department should be established to
process the complaints and based on it build an Advocate relationships with those travelers
who have experienced a service failure.

One of the most important marketing areas which needs to be considered is the power of the
Internet. As long as Air Slovakia operates in the Global Environment, the Internet is
inevitable. Thus Air Slovakia can sell its products and services through and at the same time
promote and advertise itself on international level by the easiest, cheapest, and most
convenient way.

In order to achieve high performance, following Southwest Airlines example, Air Slovakia
should use the power of relationships. First of all, the style of managing the company and the
employees should follow the model of Leadership by Example. The superordinates in
higher functions should build up a relationship with the rest of the employees. The leading
persons in the company should know each employee personally in order to create a
relationship based on trust and natural respect. An open door policy should be commonplace,
especially when taking into consideration the small size of the company.
Employees of Air Slovakia should be treated well and they should have a true interest in the
company, in the customer, in the civil aviation. They should consider Air Slovakia to be their
own firm. This can be achieved even by a careful selection of new employees and by the
managerial style of the companys management. When the company treats employees right,
they treat the outside world right, thus the customer is satisfied and buys the product again,
which means that the company is successful and everybody is happy.
The reference to the overall process of flight operations is inevitable for the employees in
order to smooth running of the company. It is called shared knowledge and it means that the
employees should have links between their own jobs and jobs performed by their colleagues
in other functions.
The airline industry has a wide scale of positions and this leads to the fact that some positions
are respected and some are downgraded. Arrogance and inferiority are inadmissible in the
company. Respect for the competence of all employees and positions are essential to the
coordination of work process.

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Effective coordination requires frequent, timely, problem-solving communication carried out
through relationships of shared goals, shared knowledge, and mutual respect. Relational
coordination would enable Air Slovakia shorter turnaround times, greater employee
productivity, fewer customer complaints, fewer lost bags, and fewer flight delays.

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VI. Bibliography

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Dobson, A.P. (1995). Flying in the Face of Competition. Ashgate Books

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Mach, J.G., Simon, H.A. (1958). Organizations .New York: Wiley.

OBrian, B. (1992, October 26). Flying on the Cheap. Wall Street Journal, p.A1

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Shaw, S. (2004). Airline Marketing and Management.(Fifth Edition). Aldershot: Ashgate

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