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?
Short Solution (Expand) (Collapse)
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?)
- Relationship marketing or customer loyalty
- Europe regulatory structure
- Effects of change in fuel prices
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