Europe Rail Tunnel

Europe Rail Tunnel Europe Rail Tunnel
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Problem Definition

The airlines covering the Cologne to London route are facing a competitive threat from a new rail tunnel connecting Britain and Germany by train.

Which all factors do you think the airlines should consider before reacting to this threat?

Solution

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The airlines should evaluate the following factors -

I. Service Differentiation

Along with looking at the journey duration, the carriers should also evaluate passenger's comfort in both means of transportation and the frequency of trains/airplanes to have.

II. Customer Convenience

Factors such as ease of reaching station/airport, boarding should be considered. The airlines should also analyze how much would different customer segments be affected by this new rail tunnel.

III. Price &Cost

It is important to analyze the price sensitivity of different customer segments and the price advantage of one form of transport over another.

Implications of a price war should also be analyzed.

IV. Operations efficiency

The airlines should also focus on the efficiency of their operations. (Example - Would the firm be able to shift to a smaller airplane in case the market share decreases?)

A great answer would also include the following factors:
  • Relationship marketing or customer loyalty
  • Europe regulatory structure
  • Effects of change in fuel prices

Difficult Questions

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4.2k
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