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Yunnan Lucky Air Case Study

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Yunnan Lucky Air is a Chinese airline headquartered in Kunming City District (Yunnan Province, PRC) operating in the field of domestic passenger traffic. Subsidiary of the conglomerate HNA Group. The carrier’s home registry and its main transit hub is Kunming Changshui International Airport. As the first low-cost airline in Yunnan, Lucky Air has made every effort to develop the overseas market, using the advantages of the province as an external “gateway” to create an extensive and integrated air network that makes a significant contribution to the development of Yunnan and neighboring regions (Berenguer et al. , 2008). Today, the airline has 45 airplanes, serves 99 routes (86 domestic and 13 international and makes flights to 70 cities (65 domestically and 11 abroad) in 30 provinces, municipalities of the country and 7 countries of the world. Yunnan Lucky Air’s best options are based on these values:

  • high efficiency of use of avia;
  • low prices, no frills;
  • prompt response to customer requests;
  • delivery directly to the destination (without transit airports), which reduces the cost of the ticket;
  • flexible distribution system.

Yunnan Lucky Air offers a unique integrated solution that includes a variety of payment schemes; additional services; loyalty management for users and agents; Yunnan Lucky Air; connection to metasearching systems; etc. helping airlines to move to modern shipping technologies. Selling additional services is one of the most effective ways to increase e-commerce revenues. The loyalty systems of the previous generation worked independently of reservation systems. The passenger, upon application, received a loyalty program participant card (UPL) and then had to write applications in order to receive points for flying.

The system belongs to a new generation. Loyalty management is one of the functions of Yunnan Lucky Air and is included in the general passenger service cycle, starting with ticket issuance and ending with obtaining information on the flight performed. All stages are serviced automatically, and the passenger should not receive the UPL card on a physical carrier. Ergonomics is the most important condition for successful e-commerce. Here is the outdated version of the airline engine with a separate selection of flights and fares (standard SITA engine). At first flights are offered, then to them fares. The visitor does not see not only the prices for the requested dates, but even does not see the prices of the selected flights, until he clicks the Continue button. With the help of this engine is difficult to find a flight with a cheap fare. The company relies on low prices, offering passengers a simple service:

  • lack of paper tickets;
  • identical leather seats for all classes of the salon;
  • free carry-on baggage;
  • low ticket prices are provided by the use of secondary airports and lack of food on board.

It can be obtained for a fee at the request of the passenger. Going beyond the borders of Internet sites of carriers, e-commerce (e-commerce) is quite capable of creating the prerequisites for combining competing companies based on the natural desire to reduce agency and other industry-wide costs on distribution channels. The appearance in e-commerce companies comes on the heels of the previously established sales structure. Accordingly, a redistribution of flows and powers arises, which is why the laws of bureaucratic inertia and resistance come into force. Therefore, in most of the commercial services of airlines, there is currently no structure that would be engaged in conducting electronic sales and would be interested in their growth and efficiency, acting as a customer of technological solutions from IT departments.

Often, a center for refunds is not created for e-tickets sold over the Internet. And the lack of control by the interested body leads to the risk of “double” returns in favor of the client, and besides, the refund is carried out by financial units that do not know the tariff structure and do not see the entire sales process via the Internet. There is a risk that the client will use the e-ticket after returning the money to the client. Separately, there is the issue of fiscalization of online sales. The executive team need to consider that the market is rather inflexible as most of the domestic destinations are assigned to specific airlines, and Chinese aviation structures will not allow business aviation operators to make direct flights on the specified routes.

Complaints have been going on for a long time, but, in spite of everything, the airspace of China is controlled by the military, although the Air Service Directorate clearly implements CAAC directives. China’s domestic routes are served by 10–15 airlines. When using a foreign business jet, there is a mandatory rule for the presence of a representative of the domestic air navigation service, to whom the business jet operator pays a salary and incurs all expenses during the flight. At present, access to the airspace of China is limited, there is one from the Russian Federation, two from Anchorage. During the flight from Shanghai to Beijing, you need to obtain the appropriate permission and consent of the guarantor. China has 500 airports, most of which are military bases. The implementation of flights on China’s international lines, according to pilots, is fraught with difficulties. First of all, the pilots note the lack of direct flights. In addition, airport services are often asked to fly lower than the pilot requests. Another complication is the long distance between the spare airports. Control over the airspace of the state is entrusted to the People’s Liberation Army of China (PLA). The military services make decisions on the movement of civil airliners, including their place and time. The last time there are simplifications. For example, it takes 12 hours to get permission to fly, not just a few days, as it was before. Other issues that need attention are: the long distance from the parking lot to the control terminal and the time spent on catering on board the airliner. From the crew of the aircraft is expected that two hours before the flight, he should be at the airport. On the other hand, progress has been made in the supply of fuel, a number of suppliers are ready to provide their services. With the exception of Hong Kong, there is no service for business aircraft in China. This complicates the maintenance of aircraft, since it takes time to deliver the necessary components from abroad. Companies travel with their own mechanic in order to avoid unnecessary loss of time during the repair of an airliner.

In case of emergencies, the dispatcher is forced to rely only on aircraft manufacturers. Chinese state authorities are demanding payment of a compensation fee for flights with the intention to land in the state. The size of such a tax reaches $ 3, 000 if the aircraft is not registered in China. Hong Kong companies are not exempt. Payment is also required for damages, the amount of tax is equivalent to the cost of air tickets and can be $ 6, 000. Each airport has airport charges, for example, the price of arrival for arrival and departure can be up to 1500 US dollars. In other words, a fee is charged for everything. Lucky Air’s experience and that of low-cost airlines elsewhere shows that today low-cost airlines have reached the threshold of profitability, therefore marketing factors play an increasingly important role in the struggle for the customer. Especially need to pay attention to the slogan. In the slogan of Air Asia “Now Everyone Can Fly” there is not only an indication of the main advantage of the brand – low prices, but also a call to action. At the same time, the call does not sound indicative, but more delicately, as an invitation to use the services of the airline. The slogan of Air Asia X is consonant with the brand name and sounds like “Now Everyone Can Fly Extra Long” (“Now everyone can fly for an incredibly long time”). The word “long” in this case bears two meanings at once, describing the benefits to the consumer:

An indication of the company’s long-haul routes, which expands the possibilities of travelers;low prices for flights allow to become a regular customer of the airline and use its services for a long time. In the very name of the brand “X” (“extra”) also has two meanings:

Focus on leadership and company benefits;

A promise that can be associated with additional comfort, services and other benefits to the consumer. For example, the choice of colors for the Air Asia logo is logical. In Asian culture, red symbolizes luck, happiness, love, nobility. Therefore, this color is not accidentally present in almost every flag of the countries of Southeast Asia.

The choice of the form of the Air Asia logo is also determined by the mental attitudes of the target audience. Circle for residents of Southeast Asia are symbolic values:

– The sun. One of the most revered characters in Asian countries. The sun is depicted on the flags of Japan, Laos, Malaysia, the Philippines, Nepal, Bangladesh and occupies a central place in the mythology and religious doctrines of other states in the region.

– Enso. In Buddhism, it means enlightenment, the “face of reality” and one of the most important religious doctrines, the “primordial nature of the Buddha. ” The circle also symbolizes the Wheel of Sansara. Therefore, for the airline, whose clients mostly practice Buddhism, the choice of the shape of the logo is successful. Celestial sphere is binding to the subject of the brand. It connected to eternity and infinity, which with regard to a brand may indicate such quality as reliability and confidence. Later, this symbol began to be associated with innovation, adaptability, luxury. This pattern can be traced by examples of logos of popular brands.

Thus, sales growth is determined by the rate of penetration of the Internet into China, the growth in the number of credit card holders and the increase in the number of flights supported by electronic ticket technology. But this is only an extensive way to increase distribution, now companies need to consider various methods for intensive growth in e-commerce.

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"Yunnan Lucky Air Case Study." GradesFixer, 16 Mar. 2020, https://gradesfixer.com/free-essay-examples/yunnan-lucky-air-case-study/. Accessed 29 May 2020.
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