BS1106 Business Environment - Essay Example

some of the recurring costs that an airlines industry requires to survive. The airlines industry is a complex one. It is a high risk industry as is known after the incidents of 9/11, yet it is a highly lucrative industry with potential of high profits. Huge investments, high risks, squeezing profit margins, growing competition are some of the major barriers to entry in this industry. The global economic downturn has also severely affected the expansion of the airlines industry worldwide. As a result of decreasing profit margins and to consolidate their position, a major trend within the global airlines industry has been for companies to seek strategic alliances with other airlines and benefit from synergies in operations.

The success of low cost airlines and the increasing airline alliances has in general resulted in contributing towards improvement in the airline industry (Datamonitor, 2005). With the opening of economies and market driven forces taking over the business prospects, the customer has become the real king in the airline industry. Now companies do everything possible to invite the customer towards them by offering them good bargains, club memberships, loyalty programmes, sumptuous meal and goodies on board.

The customer relationship management (CRM) has to play a key role in managing and retaining the customer as the customer has become very demanding, and resorts to bargain prices before purchasing the ticket. The top 10 leading names which have successfully made use of this trend are shown in the table below; With more low cost airlines dotting the airspace, the industry is further reaching towards saturation. Brand name and frequent flier point programmes also play a role in the Airline industry1.

An airline with a strong brand name and incentives can usually be enough to lure a customer (even if their prices are higher). The figure below lists some of main customer satisfaction determinants (Ipsos