Kulula

CASE STUDY – Low Cost Airline Industry

Prepared by: Silven Chetty

Question 1:

Identify what you believe are the KSFs (key success factors) for the low-cost airline Industry and provide an appropriate example of a strategic group map for the industry. (859 words)

Key Success Factors in the Low Cost Airline Industry:

Key success factors are those factors that within a firms market environment that determines the firms ability to survive and prosper (Grant, 2010, pg 86). A basic framework for identifying key success factors is presented in figure 3.6 (Grant, 2010, pg 88). This framework basically asks 2 questions:

• What does a firm’s customer want?

• What does the firm need to do to survive competition?

Using the case study on Kulula, we will attempt to identify key success factors in the low cost carrier (LCC) industry.

LCC’s strive to meet the basic demand of airline customers which is a safe air transport from one location to another location at a relatively low price. In order to be successful in this lucrative industry, LCC’s have to carry out their business from a certain value-based perspective, ‘less for much less’ and concentrate their attention on the following key success factors in order to survive and be profitable:

Overall low costs:   Overall low costs are essential to be able to offer cheap fares and they are achieved by several cost-cutting business practices such as:

-Point-to-point services (no waiting for baggage or passenger transfers, less complexity) LCC’s offer frequent point-to-point service on short-haul routes to secondary and regional airports in and around major population centers and travel destinations. The choice of only flying short-haul routes enable LCC’s to offer frequent service, while eliminating the necessity to provide frill services otherwise expected by customers on longer flights. Point-to-point flying (as contrast to hub-and-spoke service used by the traditional carriers)...