.1 from their own pockets. On the contrary they

.1 Buyers segmentation:

It is important to know who our
buyers are, before you know their bargaining power. Airline industry divides
buyers into different segments and each segment has different bargaining power
according to their level of need. We have discussed five of those segments
here:

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2.1.1 The
Business traveller segment:

Business travellers do not pay
their own fare, it is paid by companies. They cannot predict timing of their
travel in advance and they have to travel more frequent. This is why they are the
most valuable customer for airline industry. And since companies are buying
tickets for them they prefer to travel in business class. They have less
bargained power as price is inelastic for this segment.1

2.1.2 The
leisure travel segment:

Leisure travellers pay their own
fares and travel through economy class. They travels for vacations with their
family or alone. This segment is elastic to price, which gives them high
bargaining power. Any increase in fare may result in the negative.2

2.1.3 The
personal travel segment:

This segment has one aspect
similar to leisure travels segment in which they pay fare from their own
pockets. On the contrary they have tighter timing and route constraint’s which
requires service like business travellers segment. E.g. emergency travels
brought up by some family matters. Bargaining power is low in this segment as
quality of service require is high.3

2.1.4 The
religious travel segment (Hajj, Umrah, Christmas):

This segment travels at specific
dates, but it is huge in numbers4. They pay their own fare
and travels with their families. Bargaining power is low in this segment5.

2.1.5 The
guest worker travel segment:

Guest workers are expats working
outside their country. They travel at work in different countries, companies’
pays for their annual tickets fare. They travel using economy class. Bargaining
power in this segment is medium.6

 

2.1.6 Cargo
segment:

Air cargo accounts for only 1% of
whole cargo industry, but the values it transports, is worth 35% of whole
industry. They are valuable customer for airline industry. Goods they are
transporting is valuable commodities and requires unique services e.g. Capacity
considerations (volume, weight, hazmat, and dimensional), highly controlled
transport, direct routing and reliability. Since it requires premium service to
transport such good, airlines are charging high price and customers have less
bargained power.7

 

1 (Kassem M. S., 1989)

2 (Kassem M. S., 1989) (Alessandro
Borgogna, 2016)

3 (Kassem M. S., 1989)

4 (Smith, 2017)

5 (Kassem M. S., 1989)

6 (Kassem M. S.,
1989)

7 (Boeing,
2015)