The competitive stugle between Air Canada and Westjet
Canada is the second largest country in the world, which ranks 28th in terms of population. The population density of Canada approximately is three persons per square kilometer. Canada's 30 million population is located in the area which is 10 million square kilometers in size from the Atlantic Ocean to the Pacific. Therefore, Canada needs fast and efficient transportation for such a wide surface area and great population. There are air, surface and marine transportation in Canada. Air transportation is the most popular one because it offers fast and efficient travels with the developed route network in Canada. Country's air transportation industry is highly competitive because of the deregulation by government bodies in 1984. At that time, much freer regime was expressed in the National Transportation Act which accepted an air company automatically to a market if it is at least 75% Canadian owned or controlled, has enough fleets, and can meet Transport Canada's safety requirements (McArthur, 2004). This regime has created a highly advanced competitive environment where air companies can easily enter a market but hardly compete in it. For example, Roots Air failed to fill its planes and became bankrupt after a moth
"Freedom", which is the next one in the price category, provides priority check-in, boarding and baggage handling, bonus air mile and access to airport club. On the other hand, "Latitude" offers refundable fare with no change fee, no advance purchase requirements, and also reservations for other flights. The competitive struggle of these two companies can be presented by their general business profiles and marketing structureGeneral Business ProfilesDomestic air industry in Canada presented by the five major and other 30 air carriers (Air liberalization, 2004). Some additional services offered by AC are passenger, cargo, and ground handling services for other airline companies (Air Canada [AC], 2004). AC also offers cargo and engine maintenance services, tour packages, loyalty program, and internet site for travelers. The next, more expensive fare is "Fun" which has similar advantages as "Tango" and includes additional full air mile credit and ability to assign seats in planes (McCartney, 2004). The members of this program are rewarded for flying by AC. The marketing strategy of these two companies in such competitive environment is determined to keep old and obtain new customers by bringing high quality of service and low fares for them. The company targets markets by its subsidiaries which are ZIP, Tango, and Jazz. com), the Sales Super Centre, travel agents, and WestJet's airport counters (WestJet [WJ], 2004). Therefore, WJ saves money on operational costs to provide low fares and intensively invests into better customer service; on the other hand, AC offers simplified fare structure that offers differentiated values. The new promotional campaign of simplified fare structure is based with slogan "You and I Were Meant to Fly" and involved Celine Dion, who is the famous pop star (Westhead & Prashad, 2004). The charters for professional sports teams and corporate clients are also offered by WJ. Recently, another innovation was also announced that the carrier is going install the Live TV entertainment system in the one of its Boeings 737-700 (Vieira, 2003a).
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