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Low Cost Airline

Essay Topic: ,

Nok Air is a low cost airline in Thailand. Destinations of the flight are served within domestic with affordable price. Thai Airways International Public Company Limited holds 39% joint venture with the company.

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Thai Commercial Securities Co.

, Ltd. (Thai commercial banks. Co. , Ltd. (Thailand), CPB Equity Company Limited (Crown Property Bureau) and other shareholders include Krung Thai Bank (Thailand) holds 10%, Dhipaya Insurance Company Limited (Thailand) holds 10%, Pension Fund holds 10%, King Power holds 5% and Mr. Patee Sarasin holds 5%.The trademark ‘Nok Air’ was first established on February 10 th , 2004 under the company Sky Asia Co.

, Ltd. The name ‘Nok Air’ is simply and easily to recognize by people. Meaning ‘bird’ in Thai language it symbolizes friendship and freedom to travel, or ‘fly everywhere’. Yellow was chosen as the airline colour as it also symbolizes warmth and friendship in our Thai culture. On Jan 16 th , 2006, the company name was changed to ‘Nok Airlines Co. , Ltd’. Mission of the airline * To be the number one low-fare, high-value budget airline in both Thailand and Asia.

And to achieve this by being perceived by all who travel in Southeast Asia as affordable, yet offering with Thai hospitality, the best of all that is Thai. | | * To provide travelers with a point-to-point regional air service that is safe, reliable, convenient and true value-for-money. | | * Through cost-effective operations, to offer highest possible returns to shareholders. | | * To develop and motivate our people to have initiative and be highly productive. | | SWOT analysis Strength * High number of distribution channels * Strong backup * Best Human Resource * Best service quality Brand awareness * Effectiveness in space management on flight * High level of employee quality Weakness * Price * Low experience of management team * Bad cash flow problem * Low level of advertising Opportunity * High number of demand * Convenience and faster * Joint promotion * Higher growth rate * Growth rate increasing by Hong Kong and Ma Gout traveler with high number of booking rate * Government support open sky policy Threat * High number of competitor in the Market * Singapore government support low cost airline in the country * Price war with promotion war Boring about long time booking (behavior change) * Payment Policy * Confirmation Process * Fuel cost increasing * 20% increase for airline tax Business Competitors The four selected competitors of Nok Air are; * Thai Air Asia * One-Two-Go Airline * Tiger Air * Others Due to the destinations of those airlines mentioned above. They have similar destination to Nok Air and also same range of price. * Thai Air Asia is a joint venture between Air Asia (Malaysia) and Shin Corp (Thailand).

It is now has a little bit advantage in market share for low cost airline business.Due to the low price and serve more destinations than Nok Air, Air Asia also spread their route to international with low price. * One-To-Go is the first low cost airline in Thailand, held by Orient Thai Airline, was the first airline operating as an LCA between Bangkok and Chiang Mai. * Thai Tiger Air is a joint venture LCC to be established with partners that include Tiger Airways, 49% owned by THAI arch rival Singapore Airlines (SIA). Thai Tiger is planned for takeoff in the first quarter of 2011 with an initial fleet of three A320s, with plans to have a fleet of up to 25 aircraft. Others are the new born airlines, both local airlines and international. The airlines that have fewer routes but some route are the same as Nok Air and also the price is low.

Due to the new law of the government support open the sky policy. This cause around 100 new born airlines in Thailand. Market of Nok Air As for the goal, Nok Air aim to touch all their passengers with their friendly Nok Culture. At Nok Air they make a great effort to understand the needs and demands of passengers no matter how complex they may be. As a result they hope to give passengers a level of service that is beyond their expectations.Secondly, Nok Air would like to offer the freedom for everyone to have flying as an option, as a means of transport. In order to achieve this, they try to understand consumer behavior, and how the airline can make flying as easy and convenient for them as possible.

Lastly, Nok Air holds safety at the heart of the operation. Nok Air aircraft operations comply fully with the same safety standard as Thai Airways International. Its current aircraft are all newly leased from Thai Airways with highly experienced cockpit crews. The price of the air tickets will be competitive with other low cost airlines in the market.With this strategy, Nok Air hopes to be able to give those who have never flown before, a convenient and desirable means of transportation. At the same time, Nok Air offers the chance to those that already are enthusiastic travelers, the opportunity to travel even more often. For these reasons, Nok Air, hope that they are the choice for travelers.

Microenvironment (Organization analysis) Nok Air is a low cost airline. It is a joint-venture between Thai Airway International Public Company and private company. The airline has combined between the service beyond expectation at this price and the worthiness of flying together.In order to deliver difference to consumers and creates premium quality to this low cost airline. Mr. Patee Sarasin Chief Executive Officer Mr. Piya Yodmani Chief Operating Officer Mr.

Sommit Loungvara Executive Vice President Finance and Accounting Capt. Sanjai Boonma Executive Vice President Flight Operations The List above is the Name of the CEO of Nok Air. Mr. Patee Sarasin is the leader of the organization. He is one of the famous brands building in Thailand such as DTAC. Therefore, the main Strategy Of Mr. Patee Sarasin is building image and Nok Air brand to be well known for consumers.

Nok Air brand and advertise have been launch to the market before the airline is ready to run the business. Just because of he did not want to leave the range of competitors, which recently opened the first flight to the previous 10 days. 5 months later Nok Air had launched the first flight. The planes that Nok Air uses are the rental plane from Thai Airway. It is the advantage of Nok Air that has Thai Airway as a joint venture because Thai Airway is national airline and also well known for Thai People. Thai Airway wants to have more market share in domestic.Therefore, Nok Air is launched as a player among competitors in low cost airline market.

??? ???????????? ????????? – ????????????????????? Macro environment (Trend Analysis) Business trend Competition in airline business is severe after an introduction of low cost airlines. In Thailand, three low cost airlines occupied one-third of domestic market at the end of 2005. Their growth rate, 47 percent, surpassed the industrial growth rate at the expense of full service airlines. One million passengers of full-service airlines were lost to low cost airlines in 2005. The competition drives airlines to clarify their market segments.Passenger information is crucial for retargeting and repositioning. Low cost airlines in Thailand have emerged at the right time just before the massive flow of Chinese tourists flooding the Greater Mekong Sub-region (GMS).

By the year 2020, China was forecasted by the World Tourism Organization (WTO) to be the world’s biggest exporter of 100 million tourists to the world (WTO, 2004). Thailand as well as the GMS have considerable potential to benefit from this trend due to their geographical proximities and positions as half way stations from China to other continents (Mingsarn and Akarapong, 2005).The establishments of LCAs in Thailand are among the first steps of the expansion to the GMS for the readiness of welcoming Chinese tourists in the region. Market trend Low cost airline gain more consumers than full service airline because of their price. Consumers have chosen travelling in domestic more than the past because they have more options. The market of low cost airline is the consumer in the middle level who concentrates on budget in their pocket. Sometimes it is about a life style of those who wants to simply the higher level of life by travelling by plane.

However, the lower price of low cost airline business allows people having more convenience and time saving. Over 6 million per year people travel with low cost airline. Market share in August(2010) shows that in domestic market Thai Airway has 32%, Air Asia has 27. 5%, Nok Air has 16%, Bangkok Airway has 15. 8% and One-Two-Go has 8. 4%. Half of the market share in domestic range is taken by budget airline and low cost airline.

This shows that consumer in the middle level is a big market for the business. Even though they have limited on budget but still have bigger number of consumers.Meso Environment (Competitors analysis) Consumer Behavior The factors that influence passenger’s choice of low cost carriers are the market presence, service quality, frequency flyer membership, fare levels and travel restriction, and schedule convenience provided by each available flight. Understanding passengers’ carrier choice behaviors is a significant issue for low cost carriers. Consumer behaviors of Thai people do not like taking a seat on the jammed plane. Although even they paid for low price but they are still want a convenience. There are other factors for individual differences between consumers are; * Gender Monthly income * Occupation * Education Segmentation Positioning Positioning of Nok Air is brand building.

The airline wants consumers to get familiar with their brand to build trust with customers. Whether it is security and Total value of services in convenient. Therefore, it must be communicated to consumers through various advertising media. The radio show is sponsored activities, including collaboration with partners. Eg. collaborating with Thai commercial banks to offer new services to receive payment through bank counter fare. This year, Nok Air, had spent budget of 30 million baht for rebranding.

Highlighting the safety standards at the same airline, Thai and comfort received from the services of employees who started before boarding. Higher Price Nok Air aims their self as a premium low cost airline. Premium does not relate with the price but the premium service that the customers get at this price. Therefore, the price is higher than normal low cost airline around 200 baths. They will not promote that they have lowest price but the customers get the value and worthiness they will get.

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