You explore the market segmentation strategy pursued by Silver Jet and speculate about the cause of its failure. Was it bad marketing, weak financing or bad timing? My assignment: Doing business on aviation industry is always operates the opportunities and interested profits to the investor who wants to take a chance on this potential market. However, it is not only the safety invest sector but also challenge the investor with many threated and hapless when they want to be success. It is also effect by marketing strategy and business factor such as market research, market segmentation and economic situation.
This essay will discuss about the market segmentation of one well-known airline and aims to examine the possible reasons behind the company collapse. In the modern life, the aviation industry has a rapid development. Flight has known as the most convenient transportation. There are three main of segmentation bases are economic, business and first- class typically used by global airlines.
Economic class is the most popular seat in flight which target on passenger who have the usual demand as traveling. In a similar way, economic class also designed for more cost-conscious travellers who want to save money. As a consequence, business class bases on passengers who want to rest in the flight within high-quality services to make a good preparation for their business trip. Thus, it cost more money but have much better services. Finally, first-class will bring customers to the high-end quality on flight with luxurious services and specific preferential right from booking to landing. It has the highest fare and designed for the high society.
Silver Jet Airlines was known as a British all-business class airline which created on 2006 by Lawrence Hunt. It achieved the Sunday Times award for Best Airline of Year 2007. In the same year, it had recognized by Esquire, Condé Nast and also the Environmental Award. (Silverjet Press Release, Nov 2007). For a short term, they were known as very success airline that has performed a differentiated market segmentation strategy.
They focused on business-class segment only, offering many suitable options and good customer services for their passenger. In my own opinion, Silver jet concentrated only business passenger which is belongs to demographic segmentation. They aim to become a leading on high standard segment of aviation industry. It means they were understand their customer needs, their social class and beyond it is customer’s self-actualization.
They could have implemented their business as cost leadership strategy which is offer top quality service at lower price. Anderson (2007) proposed that Silver jet offers specific customer services such as $2,200 cheap price compare with $8,800 of others, own private terminal, over 30 minutes check-in and high end customer service on flight. In 2007, breakeven point of Silverjet was at 65% load factor which means they always made profits. It might be a good demographic market segmentation example for all other airlines to follow up to be success.
In January 2007, Silverjet was awarded by The Institute of Transport Management of “Environmental Aware Airline 2007”. They were claimed as a first carbon neutral airline. The total fare was includes within a mandatory carbon offset contribution as $20 on every ticket (Anderson, 2007). This was a smart and creative strategy to be recognized as green airline. They were giving passengers environmental peace of mind in knowing that the “Carbon Safe” that they earn during flight time will be put back into numerous of “nature-friendly” projects which will protects the environment.
Even though the right marketing strategy had been followed represents a significant success of Silver jet, the causes of its failure later remains the strongest argument due to some reasons. Firstly, Silver jet had a robust and smart marketing strategy but they had faced with many competitor in this filed. British Airways and American Airlines were known as their strong competitor in business-class aviation segment. Both of them have extremely discounted tough plans, loyalty and corporate customers. (Field , 2008). Those airlines are all strong competitor which have large fleet, frequently flights, landing slots, global network of alliance. They were initially competing with two other airline in the same segment are Eos and MaxJet who have already gone in collapse wave of low-cost business aviation.
Secondly, economic crisis 2007 had impact to many industry and global business. Consequently, business people had limited their trip oversea then it makes a significant effect for Silverjet. It can be seen that this airline launched on bad-timing without prediction of economic situation. Thirdly, the taxes and fuel prices are extremely increase. Silverjet was a small airline compare to others, they lack to cover all their fleets, high dependent on fuel providers and landing slots. Due to, they also face to tough competitive conditions came from a numerous of larger airlines. US-EU Open Air Commitment signed had open their market for only larger and strong financial airlines also created bad threated for Silverjet.
As a consequence, my personal opinion now is that Silver Jet had chosen direct marketing strategy. They had a robust segmentation and it all describes through their aims and marketing process. Ritson (2008) argues that the most viable way to be success on carrier industry is to target and concentrated to the current economy condition and the business passengers. He also claims the failure of some airlines who continue to operate an un-focus service and mixture of both offering for their passenger. From the evidence provided, it seems that Silver Jet might have good strategies but the weakening global economy, the rapid rise of fuel prices and the high competition of major airlines were causes the failure of Silverjet.
1. Anderson, D. Upgrading the business class jet Fortune International (Europe) 15th October 2007 p B-5 http://www.harbottle.com
2. Field, D. Premium model alive and kicking Airline Business February 2008 p11
3. Ritson, M. – Airlines count cost of one- track mind Marketing 28th 2008 p25.