Keith J. Mason

Marketing low-cost airline services to business travellers

A number of EU low-cost airlines have reported their success in attracting business travellers on some of their routes. Recent research shows that business travellers working for small companies are more willing to trade in-flight service, frequency and FFP points for lower fares than those working for larger companies. A survey of short haul business travellers using a major carrier at Heathrow airport is compared with travellers of a low-cost airline at a secondary London airport. The hypothesis that business travellers using low-cost airlines form a separate market segment from business travellers using full-service airlines is not shown. Short haul business travellers are, en masse, becoming increasingly price sensitive. Travellers using network carriers use low-cost airlines and vice versa. Corporate influence in purchase decision making is more evident in travellers choosing network carriers and this is partly a function of the size of the company, with larger companies favouring such carriers. Marketing implications for both low-cost and full-service airlines are discussed.

THE PROPENSITY OF BUSINESS TRAVELLERS TO USE LOW COST AIRLINES

Abstract The liberalisation of air transport regulations in the EU has led to the introduction of a number of new airlines serving short haul point to point routes (e.g. easyJet, Ryanair, Debonair, Virgin Express, Go and others). While some of these routes are clearly leisure oriented (e.g. Palma, Ibiza, Venice and Nice), anecdotal evidence suggests that a significant number of travellers are using these services for business related trips. A number of recent studies suggest that pressure is being brought to bear on business travellers to reduce travel expenditure ( IATA, 1997. International Air Trasport Association, Press release, No. PS/13/9, 27 January 1997 ; Bender, A., Stephenson, F., 1998. Journal of Air Trasport Management 4 (2), 99–109 ; Mason, K.J., 1998. In: Selected Proceedings of the Eighth World Conference on Transport Research (forthcoming) ). This paper details a stated preference (SP) survey of European business travellers to assess the propensity for business travellers to use short haul low cost airlines. The study assess the utility placed by travellers on price, airline reward schemes, flight frequency and in-flight comfort service attributes. Price is shown to be the most important purchase factor followed by in-flight comfort and then flight frequency. The study demonstrates the effect of company size on travellers selection of these utilities.

SHORT HAUL BUSINESS TRAVEL IN THE EUROPEAN UNION: A SEGMENTATION PROFILE..

Business travellers tend to be charged a premium for the air services they consume due to the nature of demand, and therefore represent a potentially high source of revenue to airlines. Airlines are keen to secure and maintain executive travel business. The research investigates the short haul business air travel market in Europe, using a conceptual benefit segmentation model that addresses the industrial nature of the market. Three distinct market segments are identified; the schedule driven segment, the corporate cog segment, and the informed budgeter segment. A profile of these market groupings is given and implications for marketing strategy discussed.