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Air Transport Economics - Coursework Example

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It is a small airlines company that contains about 20 aircrafts, which mainly operates in the short haul European routes with some long haul aircrafts. Over the past few years, the company has been suffering from…
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Air Transport Economics
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Therefore, it is inherently necessary to implement and adopt the most efficient strategies that will help the company to earn maximum profits and sustain among its competitors (Akyuwen, 2011; Varnes, 2010). An effective pricing strategy is very essential in order to attract larger volume passengers towards Longways airlines. Since the company has for once, suffered from financial crisis, it is necessary to set the fares of their aircraft in such a way that the passengers are also benefited and the company also does not incur any loss, i.e. at the point wherein the company can balance its profitability and customer satisfaction efficiently (The Chartered Institute of Marketing, 2015).

To be noted, Longways is a small airlines company with many competitors dominating the European market. Thus, it is quite necessary for the company to set competitive prices, maintaining parity with the fare charged by its competitors (Intervistas, 2015). To be noted in this regard, after the financial crisis, the company is left with only two aircrafts that provides the facility of both economy class as well as business class seating arrangements. While one of its aircrafts contain only economy class seats, the other aircraft hosts 50 business class and 200 economy class seating arrangements.

As the economy class is meant for the common middle class people, the price of the fair should be kept to some extent lower than that of its competitor’s fair without compromising the quality of services provided (Knorr & Zigova, 2004). However, the business class is meant for the higher-class people and therefore, the prices may be kept higher, as they would not hesitate to afford a comparatively higher fare. Moreover, this will also help the company to adjust with losses that the company suffered from lowering the price of the economy class (Bloomberg, 2015; Malighetti & et. al, 2009;

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