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The Aviation Market Share in Indonesia

   

Added on  2021-07-07

9 Pages4444 Words97 Views
436 THE MARKETING STRATEGY OF PT AIRASIA INDONESIA INCREASE SALES VOLUME TO HUB ROUTES (LOP) Sari Aprilia1*, Ferra Nur Shabrina2, Tito Warsito3, Vica N. Harahap4 1, 2, 3, 4 Institut Transportasi dan Logistik Trisakti, Jakarta, Indonesia *Corresponding author: sariaprilia411@gmail.com1.INTRODUCTIONSince the deregulation arranged air transportation in 1999, in the form of a series of deregulation packages, namely one of the transportation minister's decree number 81 of 2004 concerning the Establishment of Aviation Companies in Indonesia. With the competition between foreign and local airlines operating in Indonesia, directly creates intense competition. So that competition can be seen from various offers in the form of prices, promotions, and services to attract as many consumers as possible by the Airlines. It is estimated that 57 national airlines are operating in various routes with destinations both domestic and abroad. The aviation market share in Indonesia is an opportunity for foreign airlines to develop business markets by starting to open branches in the domestic section. The regions have considerable potential to be developed. It is estimated that flights will grow 5,7% per year. According to the Center for Aviation (CAPA), domestic air travel dominates the Indonesian market, accounting for nearly 75% of total passenger traffic. The high potential of the domestic market and the velocity of money in the aviation industry in Indonesia can attract foreign airlines AirAsia Group has 300 flight routes with the connectivity that reaches 23 countries. To domestic, AirAsia connecting 15 cities in Indonesia. The target of AirAsia to flight 8,5 million passengers per year, although AirAsia's market is still below 4%, it does not make AirAsia daunted to expand its targeted route. Low-cost carrier company makes the hub as connecting destination to expanding tourism, from western Indonesia and connecting in Asia. Where the four main hubs of AirAsia is Medan, Jakarta, Surabaya, Bali. Until 2019 AirAsia will be launch a new hub route that is Lombok. AirAsia observes changes in passenger behavior that customer changes buying behavior will continue to increase flight ticket prices, especially in the domestic market. Although AirAsia is known for its ticket prices that are more affordable compared to other airlines. There is price competition with other low-cost carrier airlines in domestic. Price competitor is cannot be avoided, competition make it more efficient to passengers, for example, the airline gives free baggage allowance compared to another low-cost carrier, and something unique to win the competition. To open a route requires a strategy to find out which competitors have entered competitors, in the case of sales at competitor prices, people's purchasing power, tourism potential, mix inbound and outbound routes. People can seeing good services offered by various airlines. To be the main choice of special consumers in the millennial segment, interest in traveling or in other words, traveling with the backpacker concept that runs from one place to another without relying on travel. They will be the targets of AirAsia to see the opportunity for relatively cheap ticket prices to a millennial backpacker with low budget traveling. Another advantage possessed by low-cost carrier airlines is the service from the track record, and on-time performance.Air Asia must maintain service quality so that trust is maintained. The background described above is quite interesting to be investigated with the research entitled “Marketing strategy of PT Indonesia AirAsia increase sales volume to hub routes (LOP)”.

437 2.LITERATURE REVIEW To face competition, corporation, and companies must develop strategies to ensure that in the future the company can still survive and develop. Strategy becomes a part that must be prepared as early as possible and implemented in such a way as to ensure the sustainability of the corporation and the company. 2.1.Hub Airport In the management of aircraft operation, the system is optimized when providing air service to a wide geographic area and many destinations. Passengers departing from any non-hub (spoke) city bound to another spoke in the network are first flown to the hub where they connect to a second flight to the destination. Thus passengers can travel between any two cities in the route system with one connecting stop at the hub, or, as one author described it, "from anywhere to everywhere" (Hansson, Ringbeck, & Franke, 2002, p. 1.)1. Inbound and outbound flights are tightly timed and coordinated to minimize connection time (McShan & Windle, 1989). 2.2.Strategic Management According to Fred R. David (2011), Strategic management can be defined as the art and science of formulating, implementing, and evaluating cross-functional decisions that enable an organization to achieve its objectives. Fred R. David explained that the strategic management process consists of three stages, namely, formulating strategies, implementing strategies, and evaluating strategies. 2.3.Marketing According to Philip Kotler(2001,p8) in, Marketing is a social and managerial process by which individuals and groups obtain what they need and want through creating and exchanging products and value with others. This definition is based on the core concepts of product needs, wants and demands, value, costs, and satisfaction, exchanges, transactions and relationships, markets and marketing, and marketers. 2.4.Law of demand The law of demand explains the nature of the relationship between demand for goods or services and prices. Therefore, we can state that the law of demand is a hypothesis that states the lower the price of an item or service, then, more of the demand for these goods or services. Otherwise, the higher price of an item or service, the less demand for that product or service (Sukirno, 2012:76). 2.5.Strategic Marketing Kotler and Armstrong (2008), interpret marketing as a social and managerial process by which individuals and groups obtain what they need and want through creating and exchanging products and value with others. Implementation of the marketing strategy through the following steps: a.Market Segmentation The act of dividing markets into different groups of buyers based on needs, characteristics, or different behaviors that may require different products or marketing mix. b.Market Targeting The process of evaluating the attractiveness of each market segment and selecting one or more segments to be served, setting a target market consists of designing strategies to build the right relationship with the right customers, or a large company might decide to offer a complete range of products to serve all market segments. Most companies enter

438 a new market by serving a single segment, and if this proves successful, they add segments. c.Differentiation and Positioning The company must decide how it will differentiate its market offering for each targeted segment and what positions it wants to occupy in those segments. A product’s position is the place it occupies relative to competitor's product in the consumers' mind, marketers want to develop unique market positions for their products. Generic competitive strategy (Porter, Competitive Advantage), a generic strategy is distinguished by its competitive advantage and the intended target market: -Cost Leadership This strategy, the company strives to achieve production cost capabilities and lowest distribution, so that it can provide a lower product price than competitors and won a competition in a large market share.-Differentiation The strategy a company to more focused on it is efforts in creating distinctive product characteristics as well as in marketing programs so that it can win the competition by creating its own image for consumers.-Focus This strategy, the company is focusing its efforts on serving a small market segment and does not serve the market widely. This effort is carried out by recognizing the target market in detail and implementation of the overall cost advantages or differentiation in these small segments. Michael Porter (1980) and has been modified and distributed to others. Michael E. Porter translates the analysis into a competitive strategy based on 5 (five) competitive forces,namely competition in the industry: 1.Threat of New Entrants From these competitive strategy, the players in the same industry must have goals, opportunities and resources that can support the company's position in competition. The company must be able to use these strengths to reach a profit. The seriousness of the threat of potential new entrants depends on two factors, barriers to entry and reaction from the company beforehand to its entrants. There are several types of obstacles when new entrants enter in terms of economy, cost and resources, experience, the inability of newcomers to use technology. 2.Bargaining Power of Suppliers The competitive pressure from the buyer is strong when the buyer is able to carry out the purchase and increase bargaining power over price, quality, service, or other attributes in the sale. Bargaining power, buyers are weak if prices move to substitute products. 3.Bargaining Power of Buyers The competitive pressure from the strong or weak provider depends on whether the provider can exercise bargaining power which sufficiently influences the relationship and conditions to provide goods of interest, can expand vendor collaboration in that industry.

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