Contents

Contents.............................................................................................................................................1

1. Incorporation and History..............................................................................................................1

2. Vision & Mission statement .........................................................................................................2

3. Situational analysis ......................................................................................................................2

3.1. Macro environment (PESTEL) Analysis................................................................................2

3.2. Market size market growth & Cycle sensitivity ...........................................................3
3.3. Industry analysis (6 forces analysis) .....................................................................................4
3.3.2. Bargaining power of Suppliers .......................................................................................4
4. SWOT analysis .............................................................................................................................5

5. Target Market Segmentation ......................................................................................................7

6. Marketing and Sales objectives.....................................................................................................8

7. Major competitive advantages ......................................................................................................8

8. Marketing Strategy........................................................................................................................8

8.1. Alternative Marketing Strategy..............................................................................................8

8.2. Selecting Marketing Strategy................................................................................................10
8.3. Marketing Mix Strategy........................................................................................................10
9. Strategy Implementation..............................................................................................................10

1TimeAirlines Case Analysis

1. Incorporation and History

2.1 Following the attack on the twin towers in New York on 11 September 2001,
the world aviation market was cast in turmoil. Passenger volumes dropped and
aircraft values collapsed. This was the ideal environment for entrepreneurs to plan
the formation of a new aviation group.

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2.2 Many domestic competitors acquired aircraft prior to 11 September when the
value of the Rand was weak and aircraft prices were high. Consequently, the cost
structures of those airlines remain high. The strengthening of the Rand resulted in
an opportunity to start a new airline with a low cost base and a clean slate.
2.3 In August 2003, Glenn Orsmond, the then Financial Director of Comair,
resigned and teamed up with Rodney James, Gavin Harrison and Sven Petersen,
who owned aircraft maintenance company, to launch a new airline.
2.4 Michael Kaminski, an IT entrepreneur, and Mogwele, a BEE partner, were
attracted as additional investors.
2.5 1time Airline’s first flight took place on 26 February 2004 on the Johannesburg
– Cape Town route.

2. Vision & Mission statement

1Times airlines vision is “To make air travel accessible to those previously denied
the opportunities to travel by air” and its mission is “To consistently offer the lowest
air fares to the general public” with full commitment to the objectives and targets
set out in aviation transport charter.

3. Situational analysis
3.1. Macro environment (PESTEL) Analysis

PESTEL Favourable Unfavourable

Analysis

P (Political) Post 1997 • Past has political On 1, 2, 3 Positive

influence on political
 Stable stability
 Democratic
 Majority leadership
 Internal relations
cordial

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E (Economic) −Inflation controlled Income distribution Positive
and high inequality
-GDP growth  Low employment
Sound monetary growth
policy  Credit prone
 Credit policy population
 Diverse economic  Close vicinity with
portfolio European exchange
 Emergence of black markets
diamond
 Stock exchange

S (Social) -Multi racial  Threats of Moderately Positive

-Life styles and values xenophobia
- General population –  Crime rate high
44 – 46 million  AIDS

T(Technological) • Sophisticated • Less public Moderately Positive

booking systems transport for masses
linked to call
centres are
vitally important
to airlines.
Low-fare airlines
rely on call
centres and the
Internet for
bookings.
• deregulated • Force to bring rates • Weak or negative
L (Legal) domestic down for new market entry
but not for existing
market player
 For existing
positive pressures on
margin

Summary – conducive/ favorable

3.2. Market size market growth & Cycle sensitivity

3.2.1. Market size and market growth

Based on 2007 performance in South Africa passenger number grows by 34 %

compared to 15 % per annum for domestic air line market as whole 1 time is
estimated to hold about 12 % market share in domestic market and carries up to
120.000 passengers per month this means share of 1 time air line is altercative.

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But, since 2008 international air travel, air freights and revenues start to slash down
and are expected to decline in the coming year.

3.2.2. Cyclic sensitivity

Following the global recession the global air transport industry faces the worst
revenue since 50 years. This indicates that the air lines industry is sensitive to
global economic up & clowns.

3.3. Industry analysis (6 forces analysis)

3.3.1. Threat of new entrants

Though 1 time low cost carrier air line is the late comer in the industry generally it
is hard to start new air line business because of high start up cost.Therefore the level
of threat is low.

3.3.2. Bargaining power of Suppliers

At the time 1time airlines was established because of 9/11 terrorist attacks most airlines
companies are willing to sale their aircrafts at all time low price or alternatively to lease
with all time low fares for long term period due to this supplier bargaining power is very
low.
Bargaining power of Fuel, Finance & manpower suppliers should be
considered.

3.3.3. Bargaining power of Buyers

Customers in the case of airlines business are passengers and their bargaining power
is relatively high the chance of these customers leaving 1 time air lines is relatively
high because so many related companies can offer the same services the customer
and there.

3.3.4. Threat from Substitutes

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Because the distances traveled are shorter, the customer can choose to travel by
land, by car/bus/rail as they might prove to be cheaper alternatives and other airline
companies who are ready to offer the same service in the industry are the major
threats from substitutes and the level of threat is high.

3.3.5. The intensity of rivalry among existing competitors

The intensity of rivalry among existing competitors in the airline industry is very
high. Competitors including kulula mango, comair, SAA industry 3A cepress SA
air link and 1 time air line low cost carriers brands have had bigger more
established brands of SAA following low- cost manner are competing in the market.
Because market is declining the competition gets fiercer as each one tries to nab
customers from the other in order to keep their capacity utilizations at acceptable
levels.

3.3.6. Threat of barriers to Exit

The exit barriers are high because it is difficult to dispose off grounded planes’ as
there would be few buyers.
The above competitive forces analysis together indicates that the industry is not
attractive.

4. SWOT analysis

Strengths – S
- experienced leadership who desire to
do things in different ways
- effective and open business plan
- Innovation of industrial requirement
of aviation industry that is low-cost
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Weaknesses – W
- Turn back and landing of air
plane after taking off due to
engine trouble /poor maintenance
service/.
 Carrier requirement. - Lack of promotion to increase
- Appropriate start up time for low- cost customers perception
carrier business
- Does not serve meals
- First introduced as low fare, therefore
known as low-fare leader - Domestic flights only
- Comfortable and convenient passenger - Short runway and short to
cabins
medium range route
- Low fares and low cost provider
- Share holder multi disciplinary profession - No frequent flier program
which can be useful to 1 time
- Low ground clearance reducing loading cost
- High utilization one of the secretes to offer
low fares
- Vertical integration with its maintenance
company
- Best passenger legroom
- Ticketless internet booking system
- Very successful and well cared call center
to handle queries ticketing and all aspects to
customer generated contact
- Provide additional service attributes of play
station for entertainment
- Strong motto “More Nice. Less Price”
- Operates only one aircraft type
- Optimistic income from aircraft maintenance
division
- Has sight on Africa and beyond

Opportunities – O Threats – T

- Law air craft acquisition cost due to - Global recession of 2007-8

terrorist attacks
- Strong purchasing power of local currency
- Availability of 7.5 million airline passenger
per year who are paying high prices for seats
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- Drop of international air travel by
4.6% in 2008
- Decline of passenger growth from
7.4% to 1.6%
- Air freight dropped by 22 % in
- Growth in new routes destinations and
passenger number
- In 2007 Passenger number for international
flight has increased by 34 % perineum
compared to 15% perineum for domestic
passengers.
- Possibility of funding for further acquisition
and growth opportunity
- Declining fuel prices
- Secure long term teases of air craft
extremely favorable rates
- Good economic condition
- Technological development
- Availability of routes not yet covered
- High cost structure of competitors
- The establishment of private airlines
industry is legally allowed
5. Target Market Segmentation
The South African airlines market has two segments:
Segment -1, Country’s truly reaches Market
Segment-2, Country’s Middle and Low income group Market
Among the two segments 1time airlines identified country’s middle and low income
group. This segment is attractive to low cost carrier airlines because customers in
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2008
- Worst revenue of air line
industry 2008
- Strong competition
- Expectation of losses by African
air lines in 2009
- Challenge to defending market
becomes the main challenge.
- The provision of additional
service attribute play station may
create in convenience and
destitutions on 48% of passengers
who are parents and prefer quiet
and well be have child for
pleasant and hassle free flight.
- Lower ranked customers
perception on important attributes
such as safety, punctuality &
reliability
- Subsidy given by government
owned airlines to help them
compete below cost
- Low ranked customers perception
for important attributes of airlines
services.
this segment need low fares but this segment constitutes large portion of the total
market.1time airlines found this segment to be attractive as usage rate is high, costs
are low and routs covered are shorter.

6. Marketing and Sales objectives

1. To hold about 12% market share

2. To carry up to 120,000 passengers per month
3. Targeted 25% black empowerment shareholding
4. Committed to consistently offering the lowest air fares

7. Major competitive advantages

• First introduced as low fare, therefore known as low-fare leader
• It has a low cost structure resulting from the following:
– started with a clean slate with no historical overhead structure;
– Low aircraft acquisition costs at the time of establishment (2003);
– standardised fleet;
– Maintenance operations are owned; and
– Continued strengthening of the Rand since establishment has minimized aircraft
acquisition costs;
• The airline’s ancillary sources of revenue;
• Easy to use Internet-based booking system where passengers only require
their identity book for check in purposes;
• Owner orientated management; and
• Its experienced staff.
• Ticketless internet booking system

8. Marketing Strategy
8.1. Alternative Marketing Strategy

Several authors (David, 2001; Pearce & Robinson, 2003; Strickland &

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Thompson, 2003) propose five generic strategies for outperforming other
organizations:
• A low-cost provider strategy: appealing to a broad spectrum of customers based on
being the overall low-cost provider of a product or service.
• A broad differentiation strategy: seeking to differentiate the company’s product
offering from rivals’ in ways that will appeal to a broad spectrum of buyers.
• A best-cost provider strategy: giving customers more value for money by
incorporating good-to-excellent product attributes at a lower cost than rivals; the
target is to have the lowest (best) costs and prices compared with rivals offering
products with comparable upscale attributes.
• A focused (or market niche) strategy based on lower cost: concentrating on a
narrow buyer segment and out-competing rivals by serving niche members at a
lower cost than rivals; and
• A focused (or niche market) strategy based on differentiation: concentrating on a
narrow buyer segment and outperforming rivals by offering niche members
customized attributes that meet their tastes and requirements better than the
products of rivals.
In addition, Strickland & Thompson (2003: 69) detail three tests that can be used to
evaluate the merits of one strategy over another:
• “The goodness of fit test – a good strategy has to be well matched to industry and
competitive conditions, market opportunities and threats, and other aspects of the
enterprise’s external environment. At the same time, it has to be tailored to the
company’s resource strengths and weaknesses, competencies, and competitive
capabilities. Unless a strategy exhibits tight fit with a company’s external situation
and internal circumstances, it is suspect and likely to produce less than the best
possible business results.
• The competitive advantage test – a good strategy leads to sustainable competitive
advantage. The bigger the competitive edge that a strategy helps build, the more
powerful and effective it is; [and]

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• The performance test – a good strategy boosts company performance.
Two kinds of performance improvements are the most telling of a strategy’s calibre:
gains in profitability and gains in the company’s competitive strength and long-term
market position”.

8.2. Selecting Marketing Strategy

8.3. Marketing Mix Strategy

9. Strategy Implementation
10. Feedback and Control

Marketing

Marketing can be described as a process for (McDonald & Dunbar 2004:9):

 Defining markets
 quantifying the needs of customer groups (segments) within these markets
 determining the value propositions to meet these needs
 Communicating these value propositions to all concerned in the organization and
gaining their cooperation with regard to their role in the initiative
 Playing an important part in delivering these value propositions (usually only
communications)
 Monitoring the value actually delivered
This definition of marketing can be regarded as a function for strategy development,
as well as for tactical sales delivery. A map could be drawn to visualize the above in
order to clarify how marketing effectiveness can be measured.
Market segmentation

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Market segmentation is a process of partitioning a market into a number of distinct
sections, using criteria that reflect different and distinct purchasing behavior and the
motives of customers (Proctor, 2000).
Needs-based segmentation
Needs-based segmentation entails segmenting the market based on understanding
the needs of the customers (Greengrove, 2002).
Characteristics-based segmentation
Characteristics-based segmentation is based on characteristics, attitudes or behavior
of the customer and the characteristics of the area in order to segment customers
(Greengrove, 2002).
Marketing strategy
Marketing strategy specifies the target market and a related marketing mix. It is a
‘big picture’ of what a firm will do in a specific market. Two interrelated parts are
needed: 1) a target market — a fairly homogeneous group of customers the
company wishes to appeal to; 2) a marketing mix — the controllable variables the
company puts together to satisfy the requirements of the target group (Perreault &
McCarthy, 2002).
Strategic marketing plan
A strategic plan is defined as a plan that covers a period beyond the next fiscal year,
usually between three and five years (McDonald, 2002).
Tactical marketing plan
A tactical plan, or operational plan, is defined as a plan that covers in detail the
actions to be taken, and by whom, during a short-term planning period; usually one
year or less (McDonald, 2002).
Target market
A target market can be defined as the market or market segments which form the
focus of the firm’s marketing efforts (Proctor, 2000).
Positioning

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Positioning refers to the way customers perceive proposed and/or present brands in
the market (Gwin & Gwin, 2003).

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