KENT INSTITUTE OF BUSINESS AND TECHNOLOGY

CONDUCT MARKET RESEARCH

AIRLINE INDUSTRY

Prepared by: RUBEN LOPEZ IDARRAGA

ID:110324

Prepared for: Mahedi Kabir

Submission date: 28th Feb 2012

 TABLE OF CONTENTS

INTRODUCTION

OBJECTIVE

BACKGROUND OF THE AUSTRALIAN MARKET

ANALYSIS OF THE INFORMATION

FINDINGS

RECOMMENDATIONS

REFERENCES
INTRODUCTION:

The travel industry environment in Australia is a motivating growing and strong market,
which is looking to be more competitive with the arriving of new low cost airlines. In that
way when we try to understand the market, we have to analyze and have a look at
many information se relevant to open a new airlines competitor and which is the best
way to promote Australia as an amazing destination for International and local tourist.

Actually Australia is a robust economy with a strong currency, under those precepts let
them a good background to compete with many facilities on the market and also provide
to the customers new destinations with affordable prices.

With arrive of a new low cost competitor on the market the biggest issues are the high
price of the petrol, the cost of the tickets and frequency of flights. Even under this
conditions the market still competitive and attractive for customers.

We try to analyze basic information about Australian Aviation Market and do some
findings and how can they help with arrive of the new company.

OBJECTIVE:

Identify and analyze the information about the Australian Travel Market and how
competitive can be arrive for of new low cost airlines, showing data and giving the
opportunities and threats to be competitive and take an advantage of the strong and
growing Australian market.
BACKGROUND OF THE AUSTRALIAN MARKET:

a) Basically when we are talking about airlines the basic topics to cover are:

Cost of travel, booking of the flights, changes on those flights, reduced air service
an nowadays the changing of travel environment. In that way the background of this
research shows us the basic knowledge about the environment an also how is working
since last years. Australian case is under management of the Department Of
Infrastructure And Transport. Inside this department we can find the Bureau Of
Infrastructure, Transport And Regional Economics (BITRE) which is an entity who
provides economic analysis, research and statistics on infrastructure, transport and
regional development issues to inform Australian government policy development and
wider community understanding.

b) Under a very economic crisis around the world, the future expectative
for the aviation market is quite hard to describe. Even if the crisis is becoming worst
than ever, people and business have to continue every day, but unfortunately the high
prices of fuel and arrive of new competitors with low prices make hard to keep the
industry as we used to know. Under this situation Australia is a good market, because
its economy still strong and also growing up, which is a good indicator to have a look
and try to find new ways to explore this country. Is a good environment not just for
Australian people, is a good tourism and business place for all the countries around the
world.
Another important quotation about the market is the actual competitors. If we try to talk
about one of the most representatives is Virgin Australia, the second largest airline in
Australia. This one is a low cost airline which belongs to Virgin Group a big
multinational.
Strengths Weaknesses
Cost advantage Not diversified
Strong financial position Weak management team

Opportunities Threats
Innovation Competition
Product and services expansion Economic slowdown
Lower cost competitors or imports
Price war

From Virgin Australia web page

c) The first resource to find some information about Australian Aviation

market is the BITRE, but also we check some other web pages related with the industry
like: Information and Research Services for the Information, Analysis and Advice for the
Parliament and some web browsing at many Airlines web pages.

d) As a desk research the first and most important tool is the web.
Browsing on Internet we can find enough information to develop a good research and
find interesting results.

e) Because we are using information related with other sources we have

to recognize their job writing on the research their names or organizations let them
know how important their research to develop ours was.

f) From some of the data already analyzed we can have a proper look of the
Australian Air Travel environment and how important and growing is since last years.
About the space an also some routes to overseas destinations if they open more flights
the opportunities to develop new business and have more tourists could be a great idea.
Nowadays one of the big problems could be the strong currency but when people like to
travel or make business the most important thing is the facility to make a good
interchange between the parts.

ANALYSIS OF THE INFORMATION:

a) Find the opportunities and threats to develop a new low cost airline in
Australia an also help them to analyze the best market, cities or destinations that
Australians love the most or which destinations could be a nice place to visit and still
without promotion.
b) The arrive of a new low cost airline in Australia can increase the
market and also make a better offer to the customers with new destinations and better
prices, at the same time take a piece of the market and in the future be more
competitive with the traditional brands
c) The Bureau of Infrastructure, Transport and Regional Economics is an
entity who help to develop statistical information from the aviation market in Australia an
also its development, in that way it’s the best resource to find the correct and actual
information to analyze and have a good research.
d) Basically web browsing is the first and most important tool, also is the
cheapest one. If we try to develop a feedback from the airlines or just do some
questions to the users at the Airport is a little and not too much representative research
to develop a good result from the Australian industry.
e) Every single country around the world has some entities that are in
charge to develop and take under control of some industries. In this case the
Department of Infrastructure and Transport leave this task to BITRE. So BITRE is the
organization in charge to show to the new companies or public the real stage of the
industry.
f) First of all reliability, tradition
 g) Fill a database in Excel with the information can also have a backup in
a USB at home to be sure I’m always taking the data under control.
h) As I told before most of the info become just from very recognize
resources like the Department of Infrastructure and Transport of Australia.
i) Basically with a basic package of Microsoft software is enough to develop a
good research, excel to do the mathematical calculations and word to write all the
important findings.
j) The best way to summarize the data is just having look at the most important
information that we have and then try to explain the context and find the new
opportunities. The next graph show the seats operated on international scheduled
passenger services at main airports from 2007 to 2010. We can use some of the most
basic statistical techniques to analyze the graph, for that reason we can understand
how important is the participation of cities like Melbourne, Perth or Gold Coast during
this period as a good destination for new business people or tourist, and also the big
potential that Adelaide, Darwin or Cairns can have in the future if the Airlines explore
those regions and also explode them as a nice destination. Sydney as the largest and
most important city is a good destination as well but is a very competitive place so must
be careful to go in this one.
 Graph from International Airline Activity report from BITRE in 2010
With this basic information we can analyze an know how competitive and
growing is the Australian market, trying to give a bit view of the data and understand the
importance of the arrive of new competitors.
k) Some of the data is already provided by the BITRE so they have all the info in
their web page.
l) This is a qualitative research because we have the information already took for
the BITRE and we are just going to analyze this to develop new alternatives to
show the importance of the market an how we can develop new opportunities to
start new low cost airlines.
 m) Next is a table with some information about Travel Management Problems
realized by Browne,Toh & Hu (1995)

Corporate Identification of Travel Management Problems

Management problem Percentage

Cost of travel 44
Fully booked flights 35
Flight schedule changes 17
Confusing fares 15
Others 12
Reduced air service 11
Frequent-flier programs 10
Changing travel environment 9

With this information we can identify the basic problems that new airlines have to handle
to be competitive on the market.
 Graph from International Airline Activity report from BITRE in 2010

With the high volume of passenger who likes to arrive in Australia the market is an
attractive destination for all the people around the world. They come for everyplace
even if they have to do 1, 2 or 3 stops to be here.

FINDINGS:

 Australian market is not just a competitive alternative for low cost airlines is also
a strong market with people hungry to travel and good salaries. If we understand
this point like the most important one we can help to develop a new company just
with the basic data and a simple analysis of the travel environment
 Tourist from around the world have Australia as a nice destination to have
business or holydays, so if the travel agency’s try to explore and find new places
to show Australia the market can increase and also be more competitive
  Not many companies are involve in the low cost airline market in Australia so the
arrive of a new competitor can develop new opportunities for customers to travel
more and have more business

RECOMMENDATIONS:

Is a competitive and attractive market to be develop, we really recommend to be part of

this growing and strong industry, many opportunities and a strong economy could help
to have a profitable and long term company. Also in future new potential participants of
business people and tourist can be an important part of the low cost airline been loyal
and traveling with more pleasure spending less and having a good service as well.

REFERENCES:

Browne, William G, Toh, Rex S & Hu, Michael Y. (1995) Frequent-flier programs: the
Australian experience. Transportation Journal.
American Society of Transportation and Logistics, Inc. Web:
http://www.freepatentsonline.com/article/Transportation-Journal/18173308.html

Department of Infrastructure and Transport. Bureau of Infrastructure, Transport and

Regional Economics (BITRE). Web: http://www.bitre.gov.au

Virgin Australia. Web: http://www.virginaustralia.com/au/en/