2015/03/29Jack BassettBSSJAC007South African Budget Airline

A true budget airline has great potential in South Africa where the average monthly gross wage is a mere R14 911 (Trading Economics, 2015). Rollin King established the first ever budget airline, Southwest Airlines, by providing a uniquely fun service to customers while focusing on employee satisfaction and efficiency of operations. Kings business concept of providing an enjoyable service while charging fares competitive to other means of travel (Thompson & Gamble, 2003) played an important role in shaping the airline industry that we know today. This paper will firstly analyze the budget airline competition within South Africa by means of SWOT analysis. After which it will apply lessons learned from Southwest Airlines to form a business strategy for a South African budget airline focusing on business operations, general employees and management.

Currently, South Africa has 3 budget airlines Kulula, Mango and SkyWise. Kulula is the most similar to Southwest Airlines, thus, it will be used for the following SWOT analysis.

Strengths - Operates under Comair, which enables Kulula to book tickets in conjunction with British Airways for the same flight - sharing flight costs. - Offers a no frills fun service- Partnered with hotels, car rental companies and Discovery Medical Aid to offer discounted services to customers

Weaknesses - Does not offer global flights- Uses old planes- Has controversial adverts

Opportunities- Further use of technology for managing bookings- Airline industry is expected to grow- Expansion into other countries

Threats- Increasing fuel price- Decrease in customer confidence due to recent aeroplane crashes- Increase in labour costs as a result of South Africas aggressive trade unions

From the above analysis it is clear that there is an opportunity for a South African low cost airline that bears similarity to Southwest Airlines. The proposed budget airline (hereafter referred to as Budget Air) will capture the budget airline market by offering a service that focuses on getting its customers to their desired location efficiently, on time and at a low cost while meeting the all the basic needs for the business and leisure traveller making it entertaining and enjoyable from beginning to end.

As a low cost airline, Budget Air will adopt various cost control techniques. Firstly, to reduce idle time, all staff will be trained in multiple disciplines so they can transfer between duties where needed. Budget air will incentivize the staff to get as low turn around time as possible reducing the need for multiple gates and ground staff at airports while increasing the number of flights per aircraft each day. No hot food will be served onboard. Instead, Budget Air will offer drinks and snacks for sale, all profits of which will go to charity. This will not only reduce turn around time, as less supplies will be need to be loaded each stop, but will also improve the brand name. One make and model of aircraft will be used to reduce the amount of spare parts required, time spent on maintenance and training of onboard staff.

In order to keep the price of air tickets as low as possible, Budget Air will only fly to high traffic cities i.e. Johannesburg, Cape Town and Durban. Budget Air will run special prices on less popular flights to increase occupancy. Also, a frequent flyer club will be established that will continuously make Budget Air the airline of choice by allowing members benefits such as free food onboard and the ability to change flights for free.

Budget Air will attract customers by outshining competitors with simple acts such giving passengers Easter eggs on Easter. A quirky advertising campaign will be launched that will promote Budget Airs attention to the small things that make passengers feel at home while onboard. Partnering with hotels, car rental companies and taxi services, a mobile app will be created that that will allow customers to book all travel arrangements at once getting a discount for every additional service booked. Also, Budget Air will attract travelers with onboard giveaways such one free flight to one passenger per route everyday.

The general employees of any service business control its success or failure. Thus, Budget Air will equally weight the importance of the employees and customers. At Budget Air the employees will be hand selected based on their ability to provide an entertaining, yet effective service. Only team players that are able to increase the morale of their coworkers will be employed. All employees, from pilots to bag loaders, will be trained on how to interact with each other and passengers. Furthermore, flight attendants will be given classes on how to entertain customers while performing their various tasks. Employees at Budget Air will go the extra mile to ensure that passengers feel welcome and relaxed by, for example, telling jokes, complimenting passengers, announcing passengers birthdays or humorously responding to passengers questions.

Employees at Budget Air will be treated as family. Frequent social events and sport leagues, such as action soccer or netball, will be hosted for its employees - allowing the employees to get to know each other better while increasing their teamwork abilities. The employees will be given share options early on in their employment to incentivize their contribution to the growth of Budget Air. Also, employees will be financially rewarded for innovative ideas that either create a new service to be offered by Budget Air or save Budget Air money. Select employees will receive management training to facilitate in house promotions.

Budget Air will employ managers who are innovators and have the ability to act on the needs of their employees and customers. The managers will adopt a hands on approach. All managers will spend one day performing a different role (flight attendant, bag loader, check-in assistant etc.) within the business each month to ensure that managers understand the needs of employees and customers. Employees will be able to approach the top level of management at any time to discuss possible issues or suggestions. Management, not a call center employee, will follow up on customer complaints in order to improve the reputation and services of Budget Air.

It is quite evident that there is an opportunity for an innovative low cost airline in South Africa. As the economy and the airline industry grow, more people are accepting air travel as the most cost effective and time efficient way to travel. By following Southwest Airlines in implementing strategies to reduce costs, increase employee morale and attract travelers with an enjoyable service at a competitive price, Budget Airline could capture the South African airline market.

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References

Thompson, A & Gamble, J. 2003. Southwest Airlines: Culture, Values and Operating Practices

Trading Economics. 2015. South Africa Average Monthly Gross Wage. Available: http://www.tradingeconomics.com/south-africa/wages [2015, March 28].