Working Papers (University of Stellenbosch Business School)

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Browsing Working Papers (University of Stellenbosch Business School) by Subject "Airlines -- Cost of operation -- South Africa"

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    A strategic analysis of the latest entrant into the South African low-cost airline industry - Mango
    (Stellenbosch : University of Stellenbosch Business School, 2007) Staisch, I.
    Over the past five years, the South African airline industry has grown by more than 50 per cent. In 2001, the domestic market comprised fewer than 7 million passengers, compared to almost 12 million in 2006 (Sobie, 2006). This increase in the market is mostly due to the rise of the black middle class, good economic growth, and the advent of low-cost carriers since 2001. The demand for the air tickets of low-cost carriers has been overwhelming and, consequently, the low-cost airline industry has managed to grab approximately 30 per cent of the domestic airline market (Mtshali, 2007). The future prospects for this early growth industry look promising, although it will be rife with competition, and a future shakeout is likely for the weakest players. Mango has recently entered the industry with a unique business model. Their competitive advantage is that they claim to have the lowest operating costs in the airline industry and can therefore offer the lowest prices in the market. They have managed to cause the change in the traditional business models of major airlines hereby causing dissonance in the industry. Mango have had success upon entering the industry, mainly due to their large financial support. Customers in this industry shop according to price, therefore it is of utmost importance that Mango remain efficient in their value chain and focus on continuously improving the industry key success factors such as punctual and reliable service,good prices, and safety records. Customers in this market are not necessarily brand loyal as there are not many incentives to stay with one particular airline, therefore customers will base their decision on which airline to use accord ing to the factors mentioned above.