Marketing strategy at the large airline air argentina

Market Background:

The international aviation market has experienced a great increase in its demand in the last decade. This has resulted in the creation of new airlines and the coverage of routes not previously covered.

In the Argentine Republic this demand has been covered by companies with a national level (LAPA, SW and DINAR), and others at a regional level, among which in this area we can mention the company »GRANDE AIR».

National companies such as Aerolineas Argentinas and Austral, which in the past covered all destinations in Patagonia, have rescheduled their flights for economic reasons, which caused air isolation between these cities.

Official companies such as Transportes Aeronavales (Armada Argentina) and LADE, although they cover the stopovers of Patagonia with their flights, do not cover the demand for the number of passengers due to lack of seats and schedules (they fly once a week for demand from the own forces)

This local company covers the Río Grande - Ushuaia - Río Gallegos route, with a demand that has met expectations, which led management to think about expanding and therefore covering new air routes in the province of Santa Cruz and Chubut. Analyzing regional transport, we observe that there are 3 land transport companies (TECNI AUSTRAL, LIDER AND TOLKEYEN) which have a demand of approximately 3,500 passengers per month. The prices from Río Grande to Ushuaia and vice versa are $ 15.00 for the round trip, and $ 25.00 round trip.

There are no means of land transport between Río Grande and Río Gallegos «GRANDE AIR», it occupies a third of this traffic. This means that it transports approximately 1,200 people between the mentioned stops.

The airfare costs are:

RIO GRANDE - RIO GALLEGOS $ 47.00, $ 52.00 and $ 60.00

RIO GRANDE - USHUAIA $ 24.00, $ 27.00 AND $ 30.00

USHUAIA - RIO GALLEGOS $ 60.00

(Prices depend on the advance with which the ticket was taken )

Cost analysis:

Commercial offices.

It does not have direct sales commercial offices. The reservation and sale of tickets is done through travel and tourism companies, which obtain a percentage of the sale.

Tickets can also be purchased at the offices of the respective airports.

The dispatches of people, luggage, and loads are carried out by personnel hired directly by the company. For this, there are 3 people per airport, 1 dispatcher and 1 ground mechanic / signalman and 1 porter.

Total people affected: 9

Flight staff

2 crews, pilot and co-pilot for a total of 4 people. These personnel are hired by the company.

Mantenance staff

Maintenance is carried out in the city of Río Grande, through a service contracted in an aeronautical workshop authorized by the National Aeronautics Directorate.

Businesses Administration

Two people hired directly by the company.

Aircraft that are used

To fulfill the task, the company has two Metro II turboprop aircraft, with capacity for 19 passengers and a 4-hour flight range that allow it to carry out current and future flights (maximum flight time on the Río Gallegos - Comodoro Rivadavia scale approximately 2 hours).

Summarizing:

Company staff: 15

The aforementioned costs plus those incurred by fuels, lubricants, aircraft rental, spare parts and operation at airports; represents total operating costs of $ 680.00 an hour of flight.

These costs are satisfied with the sale of 12 tickets, also having a profitability of 10%. The current demand largely complies with this operating minimum, expecting an increase in the paid load and possible agreements with other companies for the transfer of correspondence and parcels from the private mail company (Correo Argentino, OCA, Andreani, etc.)

Regulations in force

Currently air traffic in the Argentine Republic is regulated by an »open skies» law. This indicates a deregulation of the air market, that is, the existence of free competition between the different operators.

Within the regional market there would be no airline determined to compete with our company.

Given the current economic situation in the country, there are no subsidies for any type of airline, as there was in the past.

Identification and determination of the organization.

The airline "GRANDE AIR" has been engaged in air and cargo transport for two years, with its activities having a regional scope in the province of Tierra del Fuego. As a result of what has happened worldwide and nationally, the demand for air tickets has increased in recent years. To this we must add the security and speed of aviation with respect to ground transportation.

The legal figure of the commercial organization is that of a Public Limited Company, made up of local capital.

The entire organization is formal, finding both the management and the staff in line with the laws and regulations in force. The sales and expenses documentation, being very small, is analyzed and classified by the manager / director of the company through books, diskettes and statistics.

Definition of the Mission

The air transport company «GRANDE AIR» transports personnel and cargo between the cities of Río Grande - Ushuaia and Río Gallegos on a daily basis in order to satisfy user demand.

Marketing Management Process

Analysis of market opportunities

The airline "GRANDE AIR" seeks for its near future a greater penetration in the regional air market in order to take advantage of the idle capacity of an airplane, generally on the ground, and the increasing demand for tickets and cargo.

To this end, it is determined to achieve the objective of a greater share of the market and to this end will apply the marketing strategies necessary for its achievement.

Selection of the target market

The measurement of demand is clearly established with the current demand for air tickets. Therefore, it is not necessary at the moment to hire external consultants or specialized marketing companies.

Future demand is given by the discovery of the advantages of air travel (time savings and greater security) and the drop in ticket prices due to competition from other companies. The latter is not directly applicable in this region, but it is not ruled out given the profitability of the business.

Market segmentation and target market relationship

Given the generality of the product that the company sells, it is necessary to cover the entire market for passenger traffic between the different cities of the Patagonian region.