Business

Introduction

It is said that low cost doesn’t equal to a failure in gaining margin. On the contrary, if is well operated, a low-cost airline industry can make a great fortune. However, since the profits gained is relatively lower than others, any tiny change, internal or external, may have an influence on the industry. Therefore, effective management in low-cost airline industry need to pay attention to any factors that may have an effect on the company. A professional marketing management has to take all the factors into consideration, conduct a responsible analysis on the marketing environment and then make an effective management accordingly (William, P&O.C.F, 2006). This essay will first discuss how different conditions in the economic environment affect the low-cost airline industry. Following that, it will conduct a SWOT analysis of China Southern. Finally, it will explain several measures to manage a low-cost airline industry.

Conditions in the economic environment affect the low-cost airline industry.

Financial crisis decreases demands. After the prosperous growth in airline industry in the past few decades, along with the financial crisis, a recession leads to a decrease in airline demand. For a low-cost airline industry, if it wants to keep earning a profit, a necessary certain amount of passengers is an insurance. However, due to the financial crisis and stagnant employment rate, people are worried about the economic future and meanwhile reducing their expenditure to make sure their life won’t be affected a lot. As a result, the decrease in demand lessens benefit while the cost remains the same, thus leading to a reduction of margin gained by the industry.

Fluctuated oil price increases cost. Erratic oil prices have become a paramount factor in low-cost airline industry (David, C&D, 2006). As the shortage of oil has become obvious, each county is busy importing oil, thus raising the price a lot, which, on the other hand, increasing the...