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International Research Symposium in Service Management ISSN 1694-0938

PASSENGER PERCEPTIONS AND UNDERSTANDING

OF THE LOW-COST AND FULL-SERVICE AIRLINE

MODELS IN SOUTH AFRICA AND THE

IMPLICATIONS FOR SERVICE STRATEGY

A case study involving South African Airways, British

Airways (Comair), Kulula.com, Mango and 1time

Colin Diggines

Senior Lecturer

Centre for Business Management (CBM)

University of South Africa (UNISA)

PO Box 6948

ANSFRERE

1711

South Africa

0027124293940

0027826612847

[email protected]

[email protected]

Le Meridien Hotel, Mauritius, 24-27 August 2010 1
mailto:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]

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PASSENGER PERCEPTIONS AND UNDERSTANDING OF THE LOW-

COST AND FULL-SERVICE AIRLINE MODELS IN SOUTH AFRICA

AND THE IMPLICATIONS FOR SERVICE STRATEGY

ABSTRACT

Purpose:The study, which duplicates a study conducted in Europe and Asia, was conducted to gain

an understanding of the perceptions South African passengers have of the low-cost carrier model and

the full-service carrier model and establish how these perceptions relate to choice of airline when

deciding to fly.

Design/methodology/approach:The research is exploratory in nature and used the survey method to

collect data at Cape Town and Johannesburg international airports in South Africa. Passengers were

interviewed with proportionate representation across the two full-service carriers, and the three low-

cost carriers operating in the South African market. A service quality measurement instrument was

added to the questionnaire to rate the perception of service delivered by each airline.Findings: It is shown that passengers have a limited understanding of the difference between the two

models. Fare was an important issue for low-cost passengers, with full-service passengers indicating

that quality and safety were more important than the fare. Although low-cost airline passengers have

a highly favourable perception of low-cost airlines, they are highly price sensitive and would readily

switch to a full-service carrier should the full-service carrier offer a lower fare. Passengers on full-

service carriers are significantly less price sensitive, with a majority choosing not to switch to a low-

cost carrier, even if the full-service carrier increased their fare by as much as 30%.

Managerial implications:The findings of the study relate directly to competition between low-cost

carriers and full-service carriers and have a direct bearing on airline marketing activities. Key areas

that need to be considered by the low-cost airlines include their pricing strategies (and how they are

communicated) and importantly, the design and implementation of their loyalty programmes.

Originality:Limited research has been undertaken on the impact of the entry of low-cost carriers into

the South African market. This research seeks to identify the South African flying public and the

influences on their carrier choice decision to assist service providers in identifying and reaching their

target markets.

Key words: Low-cost airlines, Full-service carriers, price sensitivity, service quality, price

perceptions, customer loyalty

Paper type:Research paper


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1. Introduction

Growth and expansion in the South African airline industry has been fuelled by the emergence of

low-cost carriers over the past 7 8 years. Prior to this a number of so-called cheap fare airlines

arrived and departed only presenting a short term irritation to the existing full-service carriers before

they collapsed due to the aggressive competitive pricing strategies followed by the incumbent full-

service carriers. The new generation of low-cost airlines however, presented a different challenge and

they have been extremely successful in the saturated South African market. The characteristics of the

low-cost model should have forced the traditional full-service carriers to reconsider their models and

make the necessary adjustments to their strategies in order to compete more effectively in a crowded

market. This should have included paying more attention to identifying and understanding the

characteristics of their markets/customers and their perceptions and expectations of the services on

offer.

The aim of this paper is to compare passengers selection criteria between full-service carriers

(FSCs) and low-cost carriers (LCCs) within the South African market. In this regard, a number of

critical questions will be addressed: What is the level of understanding of the concept of a low-cost

airline? How do the passengers perceive the two models in terms of the service offered? What are

the main reasons behind a passenger choice of airline? What role does ticket price play in the buying

decision for the consumer?

This paper contributes to the literature by examining the differences in passengers perceptions

between the two airline models in the South African market and thereby highlighting key issues to be

considered when establishing pricing strategies for the services and developing their general product

strategy including the development of loyalty programmes.

2. Background

The low-cost airline model has been in existence around the world for many decades. However, it is

only since the late 1990s that it has really sprung to prominence as a successful model that has made

waves around the world. Airlines like Southwest in the USA, Easyjet and Ryanair in Europe, and Air

Asia in Asia are generally considered the trailblazers of the modern day low-cost model. The basic

premise of the low-cost model is that the airline cuts out all the unnecessary costs and frills from its

product offering and thereby minimises its cost of operations and offer it more scope to offer

competitive fares. Some of the most common cost savings include using the internet as the main

distribution and booking system, eliminating free food and drink onboard, careful selection of the

most appropriate airports and aircraft, no business class, and non-participation in alliances or other

cost generating programmes. These carriers have over the years evolved to a point where they are


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unbundling their products and services and offering the passenger the option to purchase those

components that they require. As the model has evolved some low-cost carriers have added the

option of a number of frills like frequent flyer programmes in order to generate additional loyalty and

revenue. The vast majority of the so-called low-cost carriers are evolving into this new hybrid model

(Kretschmer, C. 2008).

In 2001, kulula.com was the first low-cost airline to enter the South African market. They achieved

immediate success and grew the market by as much as 8%. South African Airways response to this

was aggressive pricing tactics, which proved to be unsustainable and unsuccessful despite their

dominant position in the South African airline market. The success of kulula.com in an already

saturated market led to the arrival of additional low-cost carriers in the form of 1time in 2004 and

Mango (a South African Airways offshoot) in 2006.

In the context of the South African market, seven major domestic airlines operate in South Africa.

These include the full-service carriers British Airways (operated by Comair) and South African

Airways, the low-cost carriers kulula.com, Mango and 1 time, and the smaller regional carriers SA

express and Airlink. A number of smaller charter airline companies also operate but fall beyond the

scope of this study. In terms of airports Oliver Tambo international airport (ORTIA) is the air

transport hub of Southern Africa, handling 17.6 million passengers in 2009. Cape Town International

is the second-largest airport in South Africa and the third largest in Africa handling 7.725 millionpassengers in 2009 (Air transport intelligence, 2010).

The arrival of the low-cost model in South Africa presented a number of unique challenges to the

incumbent full-service airlines. Important decisions had to be made on how to respond to the low-

cost carriers way of doing business and their appeal to the broader South African flying population.

The low-cost carriers also had a number of crucial issues to tackle if they were to succeed in a market

dominated by South African Airways. Each operator had to identify an effective way to compete in

the market without resorting to full-out price wars, which would have damaged them all.

From a business and a marketing perspective, a logical option would be to identify specifically who

the flying public is and what their needs are. This needs to be taken back a step to firstly establish the

consumers understanding of the concept of a low-cost carrier and their perceptions and expectations

linked to the model. Once the marketer has an understanding of these issues, they will be in a better

position to identify how to compete in the market effectively. Whilst a number of studies (O Connell

& Williams, 2005; Park, 2003; and Turner, 2003.) of this nature have been conducted in Europe, the

USA and Asia, the work in this field is lacking in the South African context. An attempt to directly


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apply the findings of the foreign studies to the South African market will invariably lead to failure as

there are a number of unique circumstances and conditions in this market that need to be accounted

and adjusted for.

To gain this greater understanding of the South Airline passenger market requires that they be

surveyed on their levels of understanding, their perceptions of the services on offer as well as the

determinants and influences on their choice of airline or decision to travel. The concept of perceived

service quality and the model of total perceived service quality were introduced by Gronroos in 1982.

This model measures the extent to which the customers experience meets their expectations and helps

businesses understand how consumers perceive their product or services (Gronroos, 2007). This

concept is integrated into the framework of the questionnaire and serves as a key tool to establish how

the consumer perceives the airline services and the underlying influences on choice. The importance

of these perceptions of the product and its features on the part of the consumer can not be under-

estimated. It has been shown that the better the perceived product/service quality, the lower the

propensity of the consumer to switch to another provider and the greater the chance of achieving

customer loyalty and consumer willingness to accept a slightly higher price (Lovelock & Wirtz,

2007).

3. Methodology

The research duplicated the methodology used in the study by O Connell and Williams in their 2005

study. Permission was obtained from the authors to duplicate their study in the South African

environment. The questionnaire was based on the questionnaire used by OConnell and Williams

with minor adjustments being made to accommodate the research specifics and the South African

market. An additional section was added to rate the perceptions of service delivered by the airline

(low-cost or full-service) being travelled on as well as the passenger perceptions of the opposing

category of airline.

Surveys were undertaken to determine why passengers are selecting one particular airlnel over

another specifically relating to their choice between a low-cost carrier and a full-service carrier. The

passengers were surveyed in the domestic departure terminals at Cape Town International Airport

(CTIA) and O.R. Tambo International Airport (ORTIA) in Johannesburg. Permission was obtained

from the ACSA to conduct the interviews at the airports. Of the passengers surveyed whose final

destination was within South Africa, 42.4% were flying to Johannesburg, 18.8% to Cape Town and

18.5% to Durban.


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The airlines were divided into their categories of low-cost carriers (kulula.com, Mango and 1time)

and full-service carriers (British Airways and South African Airways). Respondents would be

restricted to passengers flying on these airlines as they operate on the same routes and thus serve to

provide a direct opportunity for comparison of passengers flying on those routes and airlines. SA

Airlink and SA Express were excluded as they are small regional operators operating routes to smaller

towns not served by any of the full-service or low-cost carriers.

An initial 30 questionnaires were administered as part of a pilot study to ensure the questionnaire was

correctly formulated and understandable by the respondents. A number of minor refinements were

introduced as a result of this process.

A team of four fieldworkers were involved in collecting the data. The fieldworkers were briefed on

how to approach the survey in the domestic departure hall. Additionally, they were briefed regarding

the number and spread of surveys required across the various airlines. The fieldworkers conducted

the surveys across the full day to ensure an even spread of traveller types. They did find that the

queues where travellers were checking-in was a favourable point for getting respondents. In other

cases, the areas demarcated for travellers to sit whilst waiting for their departure time was too

successful an area. Here travellers were relaxed and happy to partake in the survey. It was found that

very early in the morning (5.00am 7.00am) when the airport was very busy, travellers were not

forthcoming to participate. British Airways queues were found to be shorter than the other airlinesmaking it more difficult to get travellers to participate due to the shorter waiting time. This was due

to the fact that the majority of their passengers booked in via e-ticket (online). A total of 732

responses were collected at the two airports (Cape Town International Airport (305) and O.R. Tambo

International Airport 427), 30% of which comprised SAA passengers, 22% BA, 18% kulula.com,

16% Mango and 14% 1 time.

4. Survey findings

In line with European and Asian study, low-cost carriers attracted a high number of younger people,

with 29% of the passengers surveyed being in the under 24 years age group. Of this age group, 86%

were travelling for non-business purposes that included visiting family and friends and holiday.

Parents mostly paid for these trips. For the 25 plus age group, this represented 71% of those

surveyed, passenger choice changed in favour of the full-service carriers.

4.1 Understanding of the differences between the low-cost and full-

service model.


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Passengers were asked to describe their understanding of low-cost and full-service airlines.

Passengers perceived low-cost airlines to be a cheaper, no frills service where refreshments needed

to be purchased. Full-service airlines were perceived to be a more expensive service where

everything is included, refreshments are complimentary and more luxury and comfort is offered.

It is evident from the data collected that the passengers have a limited insight into the real differences

between the two models. This was seen from the fact that 27.6% view price alone to be the key

difference. Of those interviewed, 12.7% were not able to explain the difference at all. Table 1

highlights some of the key answers given by respondents when attempting to explain their

understanding of the difference between the two models. It also identifies some of the answers that

highlight that respondents do not understand the models.

Coun Percentage

All inclusive 19 2.7%

Baggage allowance 2 0.3%

Better treatment 3 0.4%

Charge extra for baggage 1 0.1%

Class 6 0.9%

Comfort 26 3.8%

Cost 191 27.6%

Destinations 5 0.7%

Don't know 88 12.7%

Facilities 2 0.3%For business 6 0.9%

Frequent flyer programme 2 0.3%

Gets you where you want to go 4 0.6%

Heavy penalties for cancellations or changes 2 0.3%

Limited food and drink 1 0.1%

Luxury 11 1.6%

Meals included 111 16.0%

Age of planes 4 0.6%

No difference 9 1.3%

No frills 24 3.5%

No reserved seats 2 0.3%

Pay for toilet 1 0.1%

Provides for sports people 2 0.3%

Quality 7 1.0%

Reliability 8 1.2%

Safety 5 0.7%

Service 123 17.8%


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Table 1: Passenger understanding of low-cost and full-service airlines selected

answers

4.2 Choice of model and airlineAn important element of this research was to establish the principal reason why each passenger had

selected a particular airline be it a low-cost carrier or a full-service carrier. Whilst fare constituted

the primary reason for selecting a low-cost carrier, it was interesting to note that in contrast to the

study conducted by O Connell and Williams (2005), quality and reliability featured quite highly for

most low-cost passengers. Quality was the primary reason for selecting a full-service carrier with fare

coming second but significantly lower than the level indicated by low-cost passengers. The evidence

from this survey suggests that passengers choose a full-service carrier for a variety of reasons,

focussing mainly on quality, safety, fare and reliability. Surprisingly, service featured low on the list

for both models.

Figure 1: Passengers most important reasons for selecting an airline

4.3 Booking methods

Low-cost passengers are more likely to use the website (45.6%) to book a flight than Full-service

passengers (37.9%). Many full-service passengers used a travel agent (29%), whereas this type of

booking channel was only used by 12% of low-cost passengers. The carriers are significantly

associated with the method of booking.


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Trave

l

agent

Purcha

sed at

airport

Airline

call

centre

Friend/famil

y member

booked my

ticket

Airline

website

Other

travel

website

Office

booked

ticket

Other Total

Low-cost 12.3 8.2% 5.8% 9.1% 45.6% 3.8% 9.1% 6.1% 100.0Full- 28.7 6.6% 5.0% 4.2% 37.9% 2.6% 13.4% 1.6% 100.0

Table 2: Booking profiles as a percentage of airline model

4.4 Fare paid

On average, full-service carriers were 53% more expensive than their low-cost competitors were

(table 3). Outliers were removed from this sample to maintain the data integrity. These outliers

included connecting passengers who stated the total fare paid which included the long haul

international leg of their journey. Surprisingly, there is no apparent linear relationship between the

cost of the fare and when the booking was made.

Questions Data Filter Count Mean

How much did you pay for your ticket?

SAA

Mango

Kulula

BA

1time

All Data

155

94

106

111

83

552

ZAR 2039.41

ZAR 1026.53

ZAR 1261.22

ZAR 2251.49

ZAR 942.08

ZAR 1605.24Table 3: Average fare paid by passengers

Questions Data filter Count Yes No

If you booked the ticket yourself, did you do

price comparisons before you made the booking?

SAA

Mango

Kulula

BA

1time

All Data

198

100

115

134

87

636

45.5%

73.0%

69.6%

37.3%

72.4%

56.1%

54.5%

27.0%

30.4%

62.7%

27.6%

43.9%

Table 4: Price comparison prior to purchase

Fare constituted the principle reason for choosing a low-cost carrier (35%) while quality constituted

the primary reason for choosing the full-service carrier (20%). It is clear that passengers travelling on

low-cost carriers place great importance on price as 72% of passengers did price comparisons before

making the booking (table 4) and for 51% of low-cost passengers the trip was directly influenced by

the fare (table 5). This indicates that passengers are not loyal to a particular brand and will look for

the best fare. A total of 42% of the full-service airlines passengers questioned stated that they had

looked at other carriers offerings prior to booking their flights.


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Questions Data Filter Count Mean Yes No

Was your trip Influenced by the

fare?

SAA

Mango

Kulula

BA

1timeAll Data

200

97

115

137

93645

1.21

1.54

1.57

1.26

1.421.36

21.05

53.6%

56.5%

25.5%

41.9%36.1%

79.0%

46.4%

43.5%

74.5%

58.1%63.9%

Table 5: Influence of fare on trip decision

For both airlines models, the majority of passengers paid for their own ticket, but 31% of full-service

passengers flights were paid for by their employer. Low-cost passengers booked their flight on

average 34 days prior to departure, while full-service passengers booked 42 days prior to departure

(table 6).

Questions Data Filter Count Mean

How long ago did you book the ticket?

SAA

Mango

Kulula

BA

1time

All Data

200

103

115

126

92

638

53.25

40.79

41.08

38.86

27.65

42.50

Table 6: Advance purchase data

4.5 Passenger perception of the two models

Passengers were asked to rate their perceptions of the features and service offered by low-cost airlines and

full-service carriers. Using the dimensions of quality (empathy, responsiveness, assurance, tangibles and

reliability) as a basis, they were asked to give their rating on a seven point scale; where 7 represented

excellent and 1 poor. On average, passengers rated low-cost carriers 4.92 (65%), versus an average of

5.73 (79%) for full-service airlines. From figures 2 and 3, it is clear that passengers travelling on full-service

carriers have a less favourable view of low-cost airlines than they do of full-service carriers. It is evident that

passengers travelling on low-cost airlines have a significantly higher perception of the features and services

offered by low-cost airlines than do passengers on full-service carriers across all dimensions. It is however

noted that although passengers on low-cost airlines have a highly favourable perception of low-cost carriers

and the features and services that they offer; they have an even higher rating for full-service carriers. This

finding can be directly linked to the reasons for selecting an airline by low-cost passengers fare. Passengers

on full-service carriers have a high perception rating for full-service carriers and significantly lower

perception ratings for low-cost


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carrier

Figure 2: Perceptions of low-cost airlines of passenger on low-cost and full-service carriers

Figure 3: Perceptions of full-service carriers of passenger on low-cost and full-service carriers

4.6 Switching sensitivities

An attempt was made to assess the cross-price elasticity of demand between full-service and low-cost

carriers. Figure 4 provides an indication of what proportion of a low-cost carriers passengers would

switch over to a full-service carrier if the full-service provider reducedits fares respectively by 10%,

20% and 30%. The results show that if SAA and BA were to reduce their fares by 10%, then 11% on

average of Kulula.com, Mango and 1times passengers would switch over to them. A further

reduction to 20% would persuade 23% more and a reduction of 30%would persuade 51% more (85%

cumulative). 15% would not switch due to loyalty or convenience. Those passengers that stated that

they would consider switching would do so if the fare was cheapest (58.6%), or would switch because

they feel full-service airlines are more comfortable, provide better service and include a meal and

drink. Those passengers that stated that they would not consider switching felt that low-cost would

still provide a cheaper fare and that they were happy with their airline. This, in conjunction with

other findings presented in this paper, supports the fact that whilst fares are the reason they select low-


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cost carriers, they still have aspirational tendencies and do want to experience the perceived increased

luxury of the full-service carrier.

Figure 4: Fare sensitivity of low-cost airline passengers

Figure 5 provides an indication of what proportion of a full-service carriers passengers would switch

over to low-cost airlines if they raised their fares by 10%, 20% and 30%. The data show that fare

increases of 10% and 20% would persuade approximately 16% and 21% of the full-service

passengers to switch to low-cost carriers. If the fare was raised by 30%, a further 15% of passengers

would switch, thus 35.8% of passengers would switch to low-cost carriers if the fare increased by

30%. Passengers were also asked why they would consider switching. The majority (93.6%) of those

that said they would switch said they would consider switching due to the cost of the airfare. Another

noted observation is that 48% of the full-service passengers would remain loyal. A large number of

reasons were put forward in this regard. The main reasons were due to passengers being happy with

their current airline or passengers not paying for the ticket/ the company deciding on the airline.

Other significant factors mentioned include service and reliability. Some passengers are clearly

willing to pay more for these features. This supports the fact that price was not the main reason for

selecting the FSC over the LCC. This information also provides an indication of the amount of fare

flexibility that full-service carriers have and identifies the point at which passengers would begin to

shift their custom to low-cost carriers.


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The findings of the price sensitivity relating to the behaviour of passengers on low-cost airlines are

inline with the findings of the study of European and Asian passengers. The main difference is the

relatively low number of passengers (15.48%) that would not switch at all compared to 28% and 40%

of European and Asian passengers respectively. This suggests higher levels of price sensitivity for

South African low-cost passenger and lower levels of loyalty towards South African low-cost carriers.

Figure 5: Fare sensitivity of full-service passengers

Regarding passengers travelling on full-service airlines, the findings were inline with the previous

study when looking at the 10% and 20% fare increase categories but showed significant differences

for the 30% fare increase category and not switch category. The findings of the European and Asian

study showed that at a 30% increase in fare, 43% and 47% of passengers respectively would switch to

a low-cost carrier, but in the South African study only 15.25% stated that they would switch. For thenot switch category, European and Asian passengers indicated that 35% and 34% respectively

would not switch, compared to the South African finding that 47.74% would not switch. This finding

does take the company paid passenger into account. This clearly indicates a high level of loyalty to

the airlines, in this case particularly for the British Airways passengers. Looking at figure 5, it does

also suggest that those passengers on the full-service carriers can be split into two distinct categories

those that are highly price sensitive and those that are extremely loyal.


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Coun Percentage

Comfort 2 1.4%

Cost of fare 132 93.6%

Not much difference between low and full-service airlines 2 1.4%

Not much difference in quality 2 1.4%

Price too high for services/ quality/ safety/ comfort/ food 2 1.4%Short flight 1 0.7%

Table 7 Full-service passengers reasons for switching to low-cost carriers if SAA/ BA increased

fares

Coun Percentage

Accommodate for sports people 1 1.0%

Always travel with airline 4 3.8%

Availability of flights 1 1.0%Business Class 1 1.0%

Comfort 4 3.8%

Company pays/ company decision/ traveller does not 18 17.3%

Connections/ airport destination 5 4.8%

Convenience 2 1.9%

Food quality 1 1.0%

Frequency of flights 1 1.0%

Frequent flyer programme 1 1.0%

Happy with airline 24 23.1%

Loyal 4 3.8%More luxury 1 1.0%

Price not an issue/ fares are fine 5 4.8%

Provide me with what I need 2 1.9%

Quality 3 2.9%

Reliability 7 6.7%

Reputation 1 1.0%

Safety 2 1.9%

Service 13 12.5%

Sponsored flights 2 1.9%

Value 1 1.0%

Table 8 Full-service passengers reasons for not switching to low-cost carriers even if SAA/BA

increased fares


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Coun Percentage

Availability of flights 3 1.4%

Better airline 3 1.4%

Better experience with full-service 1 0.5%

Comfort 18 8.2%

Connections and airport destinations 1 0.5%Convenience 2 0.9%


Facilities 1 0.5%

Frequency of flights 1 0.5%

Meals included 10 4.5%

More for less 6 2.7%

More lenient with luggage restrictions 1 0.5%

More luxury 7 3.2%

Patriotic 1 0.5%

Prefer airline 3 1.4%Quality 4 1.8%

Reliability 3 1.4%

Reputation 4 1.8%

Safety 2 0.9%

Service 15 6.8%

To experience full-service airline 4 1.8%

Work for airline 1 0.5%

Table 9 Low-cost passengers reasons for switching if SAA/BA (full-service) reduced fare

Coun Percentage

Better attitude to customers 1 3.3%

Company pays/ company decision/ traveller does not 1 3.3%

Convenience 1 3.3%


Happy with airline 8 26.7%

Humour 1 3.3%

Loyal 1 3.3%

No need to go with a full-service airline for short flight 1 3.3%

Services are similar to full-service 2 6.7%

Table 10 Low-cost passengers reasons for not switching if SAA/BA (Full-service) reduced fare

5. Management implications

Price is clearly an important issue in the selection of an airline service for low-cost travellers and to a

certain extent for full-service carrier passengers. Plenty of evidence has been presented to support the

fact that price not only affects the type of carrier selected but also whether the trip is actually

undertaken. The willingness of low-cost passengers to switch to a full-service carrier if the price is


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reduced lends further support to this point. At a superficial level, this implies that the low-cost

airlines should focus on providing the lowest price if they want to reach their target audience.

Practical airline economics and common sense however dictate that this cannot be the case unless of

course you are an airline like Ryanair. In a restricted market like South Africa, with a limited choice

of domestic destinations to fly to, competing purely on price will push the low-cost airline into a

corner and force them to ensure that they continuously provide the lowest price or face the wrath of

the consumer. To the consumer, the concept of a low-cost carrier immediately suggests that the price

of a ticket is cheaper than that of a full-service carrier. It is a fact of life that the consumer views the

concepts of price and cost as interchangeable and therefore they will continue to expect low prices

from low-cost carriers. This limited understanding of the concept of a low-cost carrier is universal

and will not be changed. Further review of all the data gathered suggests that whilst price is an

important concept for the low-cost carriers to manage, a more important concept is perceived price.

This means that it is important low-cost carriers manage customer perceptions of their model by not

necessarily being the lowest fare provider, but that their fares on average are perceivedto be lower

than the full-service carriers. The focus of their brand and image building in their marketing

communication should address other areas of importance for their passengers; for example quality,

reliability, service and an overall good experience that matches the persona or character of the brand

that has been developed.

The higher level of pricing sensitivity for low-cost passengers and thus the greater tendency forswitching in reaction to fare increases suggests a lot of work is required for loyalty development,

brand development as well as a multitude of other strategy elements to connect to the market. On the

other hand, full-service passengers were seen to be either highly price sensitive or extremely loyal

despite fare increases. This presents are more difficult situation for the full-service carriers than for

the low-cost carriers. Whilst clearly identifying the target market is important for both models, full-

service carriers have two very different types of passengers and this requires carefully targeted

marketing efforts to ensure that they retain and develop both of them. A balance needs to be

maintained between satisfying the price sensitive traveller whilst attempting to maximise revenue

from the loyal and less price sensitive traveller.

ReferencesAir ports company South Africa. http://www.acsa.co.za/home.asp?pid=228 Accessed 15/07/2010.

http://www.acsa.co.za/home.asp?pid=228http://www.acsa.co.za/home.asp?pid=228

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Le Meridien Hotel Mauritius 24 27 August 2010 17

Air Transport intelligence. 2010. Airports. Accessed 15/07/2010.

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