Eastern Airways
You will be completing these questions in timed conditions in class on Monday 11th March
You will be completing these questions in timed conditions in class on Monday 11th March
Eastern Airways is a small airline operating in a niche market. It targets business passengers, most of whom are flying between cities in the UK. In 2007, the company operated 31 aircraft and employed 420 people. The airline has expanded steadily since it was established in 1997 and, in 2007, launched eight new routes. Despite its growth, the company remains small in an industry with much larger, and financially stronger, competitors such as British Airways and easyJet.
Eastern Airways is a distinctive business supplying a high quality service. Its publicity describes ‘The Eastern Experience’ as including:
- convenient timings to meet the needs of business travellers
- attentive service with complimentary champagne and hot scented towels
- short check-in times, meaning less time spent at the airports.
Eastern Airways flights are also very punctual (see Table 1 below).
Table 1: Average delays to flights arriving at UK airports, 2006 and 2007
Airline
|
2007 rank
|
Average delay 2006 (minutes)
|
Average delay 2007* (minutes)
|
BMI Regional
|
1st
|
5.1
|
6.0
|
Eastern Airways
|
2nd
|
7.6
|
6.8
|
easyJet
|
20th
|
18.3
|
16.7
|
Flybe
|
21st
|
14.1
|
17.2
|
British Airways
|
20th
|
19.1
|
20.5
|
*January to September only
Eastern Airways’ prices are higher than many of its rivals, but it has won a number of awards including the European Regions Airline Association’s prestigious ‘Gold Airline of the Year Award’ in 2006/7. These awards are used by the company in its promotional materials.
Trading in this niche market has posed some problems for Eastern Airways. The niche might be too small when insufficient customers are wiling to pay the company’s high prices. A route to Brussels was withdrawn after a few months due to low passenger numbers. Equally, some business customers have been attracted away from the niche by lower prices. Eastern Airways withdrew flights from Norwich to Manchester in 2006 when the low cost airline Flybe set up in direct competition.
It may be that Eastern Airways needs to consider other operational targets apart from quality if it is to continue expanding. An increase in its capacity utilisation could help to ensure further growth, as could a reduction in its unit costs.
1.Explain one way in which Eastern Airways could measure whether it has achieved an increase in its capacity utilisation. (4 marks)
2. Do you think that quality should continue to be the main operational target for Eastern Airways in the future or should it focus on other targets such as capacity utilisation or unit costs? Justify your view. (15 marks)
