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Airline, Travel Agency and Tour Operations
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The travel and tourism industry is one of the leading service sector in terms of revenue. The basic purposeof this assessment report is to elaborate the tourism industry aspects, especially the consumer decision-making. The analysis of the factors that influences the customers' decision-making process. In addition to this, an evaluation of the strategies employed by the EasyJet airlines will be done. An investigation of tour operations industry will be carried out, wherein different kinds of tour operators will be elaborated. Moreover, industry structure will be outlined and explained thoroughly. Some related legislation for the tourism industry and the role of trade bodies will be elaborated. For instance, ABTA, FTO, AITO, and EU Package. In the last section,the description of the role of the travel agent and the retail travel environment will be elaborated. In addition, different travel agencies will be elaborated.
L01: Analyse the factors that could influence passengers to travel decisions
The airline sector is very complex and it is one of the major sectors of the tourism field. It often gets affected by the factors, such as rapidly changing demand of the customers and ever-changing technology. As per the case study, EasyJet is the leading low-cost European airline that is known for cost advantage and operational efficiency along with offering friendly services(Becker, 2016).These factors are enough to grab the attention of the customers. However, to cover and analyse the factors, one has to dig deeper into it. The factors that are to be covered in this section are explained below:-
- Appeal - Due to the remarkable rise in the competition worldwide in the field of travel and tourism, companies are making use of unique methods of appealing to the customers. They are spending a large amount of their revenue on advertising in order to mark their presence in the mind of the consumers (Bhatia, 2012). They try to make an influence over the potential customers through emotional and rational appeals. One benefit of this approach is that marketer can target their influencers instead of the whole target market. These influencers have the abilities to influence other people. The criteria for identifying these influencers comprises expertise, thoroughness, persuasiveness, independence, and market reach.
- Convenience - According to Bhatia (2012).,76% of consumers seek convenience and quality while making the booking. The easier it is for them to make arrangements and bookings, the more they will be loyal to that brand. In today's day and age, the digital technology has made it very convenient for people to make bookings from their favourite travel booking website. The more is the hassle-free process of booking, higher are the chances of them returning for their next booking. This increases customer loyalty, unlike the earlier period where price is the one and only concern of people making travel bookings (Horner and Swarbrooke, 2016).
- Prior experience - Since EasyJet provide travel and tourism services of different types, such as economic class and business class services, prior experience of the people affects the decision making in the future. Prior experience is some sort of feedback of previous purchase that has been a part of the traditional model of customer behaviour. It plays an important role in information processing. It has been noticed that consumer who is familiar with the services will put less effort into researching the services in the future. On the other hand, moderate experience individuals do more research in order to gather the information and rely less on previously acquired knowledge. If the consumers have a great experience of the services offered by EasyJet, then they will be making their future bookings with it only. Prior experience affects psychological characteristics.
- Price - Nowadays, the consumer wants the best quality services at a pocket-friendly price. Its role is very significant in consumer decision-making. Price has an influential and complex role in the decision-making. Many researchers have used it as a cue to quality. It is the best way to grab consumer's attention and increase the customer base. EasyJet makes use of price advantage by offering the low-price services to people. This has resulted in strengthening its competitive position in the market(Horner and Swarbrooke, 2016). This is also a psychological effort from the company. If a consumer believes that organisation is offering the same quality of services as that of the peers at a lower price, then this would trigger the booking. Lowering the price can have a huge impact on the organisation. Price-conscious customer will see it as a great opportunity to travel. However, the elite class may assume it as the poor quality service.
- Purpose of trip - The purpose of the trip also affect the number of bookings for EasyJet. For example, business trips are usually sponsored by companies. The travel arrangements are done by the companies. If it's a self-sponsored trip, then people would like to make a decision between the most convenient and budget-friendly mode. Organisations need to understand tourist motivation i.e., why do they travel? It can be a business trip, a study or religious trip, or any reason for voyaging (Grant, 2016). It’s a psychological factor that pushes people to travel. In order to grab their attention, EasyJet can provide a special discount on a particular purpose.
EasyJet has a plethora of opportunities if it considers and emphasises on the aforementioned factors while making its marketing strategies. Majority of these factorsare related to psychology. If EasyJet provides seasonal rebates and special discounts at the time of festivals, then this may increase its sales. In addition to this, improving the quality of services offered byEasyJet will also serve the purpose as it would improve the experience of the customer and result in increased loyalty (Evans, et.al, 2012). Advertising by making use of social media and other effective ways of appealing can be very useful for the company in increasing its appearance among customers.
LO2: Using Porters Generic Strategies discuss each of the forms and suggest the most suitable strategy for EasyJet to adopt, highlighting the benefits and potential challenges the company may face.
The relative position of EasyJet is highly dependent on its profitability. If the profitability is better than the industry average, then this would mean a long-run sustainability. The sustainable advantage is of two types, namely differentiation and low cost. There are three generic strategies as classified by Porter. These are differentiation, cost leadership, and focus. The focus strategy is further classified into differentiation focus and costs focus.
Cost Leadership - it is all about being the leader in the industry by charging a lower price for the services or products in the market. In this strategy, an organisation sets a low price for its services in order to beat the competition. The cost advantage is highly dependent on the structure of the industry. This may consist of proprietary technology, economies of scales, and access to the raw material(Evans, et.al, 2012. Since EasyJet already has the low-cost advantage, it means it has achieved sustainable cost leadership and is performing at par industry average. The organisation can achieve cost leadership in two ways:-
- Improving profits by minimising cost while charging the average prices of the industry
- Improvising the percentage of market share by setting up the lower price while reaping enough profit on the sale.
Differentiation - This strategy is all about being unique and differentiated from the competitors. This helps the customer to identify the services and grab their attention toward the brand. In order to be a successful master of differentiation strategy, an organisation needs to focus on the structure and feasibility of the strategy (Evans, et.al, 2012. These include:-
- A deep research, innovation, and development
- The capability to provide top-notch quality products and services.
- Effective sales and marketing in order to make the customer aware of the offers offered.
EasyJet can select one of the many attributes that customers perceive essential, thereby uniquely position its strategies to achieve those needs. This may be qualified in its travel and tourism service. Customers can even pay higher prices if the quality justifies the cost.
Focus - Companies that implement focus strategy can focus on specific niche markets and by understanding the customer needs along with the market dynamics. It can build its large customer base based on the uniqueness in the quality. It is of two types, differentiation focus or cost focus. The success of the focus strategy is heavily dependent on whether an organisation is adding something more to the target customers in order to grab their attention. The focus strategy can be used along with the other two generic strategies that are cost leadership and differentiation as adding something extra can result in a reduction of cost or improves the differentiation of the services through the in-depth knowledge of the customer's needs.
Talking about the selection of any of the three generic strategies, it is important for EasyJet to first identify the needs of the customers’ need. The company should understand that their choice of selection depends on strategies it wants to underpin. However, Porters was against using more than a single strategy. The reason being that each strategy is for different kinds of people who have varying needs. EasyJet should focus on differentiation approach as it is already a low-cost travel company. In order to increase its consumer base, it has to focus on adding uniqueness in its services. Differentiation demands a highly creative and outward-facing approach. Before zeroing down on any decision, EasyJet needs to carry out its SWOT analysis (Christopher, et.al, 2014). This would help in determining the strengths and weaknesses along with the threats and growth opportunities. Once this is done, it will be very clear that the organisation is going to make a success of certain generic strategies.
LO3: Investigate the tour operations industry within the travel and tourism sector
At this point of the report, it is important to understand the meaning of the tour operator. He/she is the one who controls, devises, and books the trip. They develop a holiday package by combining different elements of the tour, such as travel booking, hotel, restaurant, etc. There are different types of tour operators that are described below (Christopher, et.al, 2014):-
- Outbound operators - These operators organise multinational tourism. They make travel arrangements from their native country to another overseas destination.
- Inbound operators - These type of operator organise trip within their own countries. They operate from different cities and offer assistance to the tourist visiting their country. They are often called "receptive tour operators." They offer services, such as airport pickup, travel and accommodation arrangement, local guide services, etc.
- Domestic operators - These operators do not deal with the foreigners but provide tourism services to the local residents of their country within the national boundaries.
- Specialist operators -These tour operators provide services for a particular geographical area and offer their top-class services to the niche market.
- Mass-market operators - These market tour operators organise trips in bulk and large volume. They purchase services from the suppliers in a large number and sell them to the customer at a low price.
- Direct sell operators - These tour operators directly deal with the customer by avoiding any involvement of mediocre or travel agent. They avoid paying commission to the third party, thereby offering their services to the customers at a cheaper price.
- Structure of Travel and Tourism Industry - The travel and tourism sector is very complex due to a large number of stakeholders involved. The major organisations that are the pillars of this industry are explained below:-
- Public Sector Organisation - The main of these organisations is to promote tourism in the region. These are run by the local or central government and funded by them only. They also safeguard the rights of the tour operators and the tourists.
- Distributors - These comprise aggregators, travel operators and agents who provide various and unique integrated services such as hotels and transport services. They have the power to drive the price of the tour packages.
- Lodging - This includes motels and hotels where tourist can stay and eat during their visit to a particular destination. The tour operator makes the arrangement in the hotels as a part of their holiday package.
- Transport - It is one of the vital elements of the structure of the tourism sector that consists of road, sea, and air transport. Both public and private organisation provide transport services within London in order to facilitate tourist to go for site seeing.
- Tour operators - these are the companies or people who create holiday packages and services to be offered to the people. They develop a holiday package by combining different elements of the tour, such as travel booking, hotel, restaurant, etc.
- Regulatory Bodies - The governing bodies in the field of travel and tourism, such as ICAO, ABTA, UNWTO, AITO, etc., are formed by the government in order to formulate policies and regulation in order to promote ethical consideration within the industry (Duffy and Stroebel, 2015).
- Visitors - They are the drivers of the tourism industry as all the services are designed for them only. The main idea and focus of the organisation are to grab more attention of the visitors and increase the customer base.
Legislation in the travel and tourism industry
- EU Package: It is applicable to the package sale to the consumer. A package is a type of booking that includes at least two travel components, for instance, a flight and a lodging, or an inn and vehicle procure. One thing to note here is that any reserving for a solitary thing, for instance, a flight just reserving, isn't secured by the PTR.
The PTR makes two requests to the business for sales of its packages:-
- The organization pitching the package to a buyer must have ensures set up that should the merchant, or any of its providers stop to exchange, the client gets a refund or replacement.
- In the event that the client is on furlough at the season of the default, the merchant must ensure client repatriation.
- ABTA - It’s one of the most trusted organisations in the World. It offers advice and guidance to the travelling public, as well as leading the travel industry in supporting high service standards, working with the members on health and safety, and promoting responsible tourism at home and abroad (Duffyand Stroebel, 2015).
- It offers support, protection and expertise mean you can have confidence in ABTA; and a strong trust in our Members. These qualities are core to us as they ensure that you remain confident in the holidays and travel experiences that you buy from our Members
- AITO - The Association of Independent Tour Operators (AITO) is an integrated association that speaks for 122 of Britain's best autonomous travel administrators. The employees have some expertise in goals or kinds of occasion about which they are especially energetic, which means they are remarkably set to give customized counsel dependent on direct understanding. All AITO individuals are required to give the most elevated amount of consumer loyalty by focusing on three primary columns: Choice, Quality and Service -as revered in our Quality Charter.
- FTA - It global network of the tour operator and travel providers serving the religious travel advertise. The World Tourism Organization gauges that around 330 million visitors visit the world's key religious locales consistently. The members of FTA will have great exposure and support.
LO4 (a) Describe the retail travel environment and the role of a travel agent
Lo4 (b) Examine the different types of travel agencies and the relationships that exist within retail agents
Talking about the travel industry, it comprises a number of related industries, such as restaurants, airlines, travel agencies, hotels, auto rentals, gifts shops, and many more. Being a service-oriented industry, it serves people in many ways. There are many intermediaries in the travel sector and the most important among them is retail travel agents.These people act like a sales outlet for wholesales and supplier from whom they get their share as a commission for per unit bookings(Lu, et.al, 2015). In addition to this, they persuade and advise travellers on their journey and how they should travel. They are simply the sales person who are looking some clients to whom they can sell their quota of booking and get a commission for the same. The travel agencies date back to the late18th century. Talking about the growth of travel agencies, it can be linked to two trends that occurred just after the WW-II(Lockyer, 2013). The first one was the rise in international travel and the increase in personal amusement. Both of this reason have demanded the needs of travel agencies as people lacks the expertise to make their own travelling arrangements.
Talking about the varieties of travel agents, there are six different travel agencies. Below a description of their services provided has been given:-
- Independent Travel Agents - These agents operate independently through both online and offline mode and customise the travel arrangements according to their clients as per their choice (Lu, et.al, 2015).
- Online Travel Agents - In the digital era, there has been a remarkable growth in their numbers. They create packages and promote them online on social media. Travellers make bookings online and these agents get their share.
- Visitor Information Centres - Travellers when need any information regarding their journey, they rely on the Visitor Information Centres. They provide comprehensive details about the region quickly and help in making the travel arrangements (Lockyer, 2013).
- Hotel and Concierge Services - Concierges are used in order to get local and personalised recommendations. Tour operators work with them in a particular region in order to make their work easy and hassle-free.
- Inbound Tour Operators - These type of operator organise trip within their own countries. They operate from different cities and offer assistance to the tourist visiting their country. They are often called "receptive tour operators." They offer services, such as airport pickup, travel and accommodation arrangement, local guide services, etc.
- Global Distribution Systems - These agents operate in a number of countries and increase the online bookings and distribution of travel bookings. One can make bookings through them via online and offline mode.
There are two types of relationships that exist between retail travel agencies, namely horizontal and vertical integration. These have been elaborated below:-
- Horizontal Integration - In this type, a travel company or operator acquires the other in order to expand its operation and increase the market share. Mostly, it is done to gain a monopolistic advantage by minimising the competition and create a particular economy of scale.
- Vertical Integration - In this type of integration, a company with a particular supply chain buys another firm within the same chain. For example, Airlines Company purchases a hotel and lodging company (Becker, 2016). This is done to reduce the overall cost of providing services and speed up the process.
In thisreport, the tourism industry aspects, especially consumer decision-making had been elaborated. The analysis of the factors that influences the customers' decision-making process was also done. In addition to this, an evaluation of the strategies employed by the EasyJet airlines was done. An investigation of tour operations industry will be carried out, wherein different kinds of tour operators were elaborated. Moreover, industry structure was outlined and explained thoroughly. Some related legislation for the tourism industry and role of trade bodies were elaborated. For instance, ABTA, FTO, AITO, and EU Package. In the last section, the description of the role of the travel agent and the retail travel environment were elucidated. In addition, different travel agencies wereexplained.
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