How Air France could be differentiated from low-cost carriers?

Résumé du document

The objective of this investigation project is to show, analyse and discuss about the way that Air France would fight against low-cost carriers in the same market. In our contemporary world, the airline industry is one of the most important tools in globalization, making possible travels and communications. After the 11th September 2001 the airline industry had several changes. It needs to reinforce its place in the market because of this event the global image of the market had been injured. Business generally travellers are influenced by airport commodities, service on board, and convenience of timing whereas leisure travellers are influenced by price and airport convenience. A third sector exists: charter travels, it can be assimilated in leisure segment. This segment is working linked to travel industry, and according to the official report from DGAC (2005) (French civil aviation authority) the traffic involved is less and less important, and it can be easily assimilated in leisure segment. Thanks to Porter's forces (1980), we can consider that charter travels are not real substitutes of Air transport (because of their product itself).

Extraits

[...] Air France is one of the major airlines in France, its business is in favour position but there exists a major threat of substitutes coming from low cost airlines and French TGV. Air France has a big brand identity through transportation travel and transportation business (thanks to its famous TV advertisement which had been awarded several times). Its service has an important product differentiation thanks to the airport lounge, beautiful and smiling staff, and excellent service. There exists also a element which have to be taken in consideration, it`s the fact that flying it`s obviously more than ever transportation medium. [...]

[...] According to Scott D. Nason (2006), long run airlines are like manufacturers”, it shows that the airlines have to equilibrate supply with demand to maintain profit high. According to Berkley (YEAR) many services the customer plays a role as partial employee” because he provides information about how he would perceive the service and he provides information about how he wants to use the service. In addition to that Porter (1995) said that essence of strategy is choosing to perform activities differently than rivals It could be a good way of retaining customer for Air France to keep its strategy as product and service differentiation by offering more of one to one service. [...]

[...] In airlines segment this environment is in favour to traditional airlines which provide a real service from point A to point B (whereas low cost airlines provide service from to which are not big cities). Vigoureux stated in Le Figaro (2008) that the major French traditional airlines are having some trouble to compete against its main competitor: the French TGV (which opened new lines in 2007). It shows that traditional airlines are competed by lot of different types of competitors. To understand the business, it would have help to understand and to apply the concept of the Porter`s 5 forces. We look at this model by using Air France supplier profile. [...]

[...] Bradford, UK : Emerald Group Publishing Limited P 6. [Online]http://site.ebrary.com/lib/staffordshire/Doc?id=10132654&ppg=7 MINTEL Database, July 2007, No-frills/Low-cost Airlines UK Segment Performance http://academic.mintel.com Blair J. Berkley, Ami Gupta, May 1995, Identifying the information requirements to deliver quality service International Journal of Services industry management, Vol pp24 Anon, February 2005, Perspective d`évolution du transport aérien en region PACA à 2020, Airclaims and DGAC. [Online] http://www.debatpublic- lgvpaca.org/docs/pdf/autres%20etudes/annexes_dgac.pdf DGAC, updated 20th February 2008, Liste des companies aeriennes interdite en France [Online]http://www.dgac.fr/html/oservice/liste.htm Scott D.Nason, 13th September 2006, Forecasting the future of airline management Journal of Revenue and Pricing management, Palgrave Macmillan, Vol 6 PP 65 Porter M.E What is strategy? [...]

[...] This concept has been developed in all sector, for example Easy Group (2008) has developed lot of services with the same rules: No frills. Understanding the business Martin Fojt (2006) stated in Strategic direction that in the airline industry there are some “core expectations that the customers are not willing to be flexible .To understand more this state we need to consider the core service of airlines according to Hamel and Prahalad (1990) .Airlines are providing transportation for a person from point A to point indeed the person has to be alive with its luggage, which is airline's core competency, we can also add some core expectations like safety, punctuality, baggage delivery. [...]