The Impact of PR as a Communication Tool of U.K. Budget Airlines

Table of Content

Acknowledgements

Table of Figures

Table of Abbreviations

Abstract

1. Introduction
1.1 The UK Air Transport Market
1.1.1 Ryanair
1.1.2 EasyJet
1.2 PR in the Airline Industry
1.3 Research Aims

2. Literature Review
2.1 Public Relations
2.2 Consumer Behaviour
2.3 Budget Airlines

3. Methodology
3.1 Research Approach and Hypotheses
3.2 Research Method
3.2.1 Data Collection and Tool Design
3.2.2 Tool Pilot Phase
3.3 Sample Structure
3.4 Analysis
3.5 Limitations

4. Findings & Discussion
4.1 Respondent Profile
4.2 Findings
4.2.1 PR and Decision Making
4.2.2 PR as a Communication Tool
4.2.3 PR Perception in the Student Segment
4.2.4 Marketing of Services
4.2.5 Airline Selection Factors
4.3 Summary of Findings

5. Conclusion & Research Implications

Appendices
1. Survey Screenshots
2. Invitation E-Mail and Survey Start Page
3. Statistical Analysis
3.1 Frequency Distributions
3.2 Descriptive Statistics
3.3 χ2 Tests
3.3.1 χ2 Contingencies
3.3.2 χ2 Goodness of Fit

References

Table of Figures

Fig. 2.1: Airline / Consumer Relational Concept

Fig. 3.1: The Process of Deduction

Fig. 3.1.1: Hypotheses

Fig. 4.1.1: Sample Structure

Fig. 4.2.1: Most Frequently used Airlines

Fig. 4.2.2: Opinions on LCCs

Fig. 4.2.1.1: Booking Tools Frequency

Fig. 4.2.1.2: Booking Tools by Flight Group

Fig. 4.2.2.1: PR Tool Recognition

Fig. 4.2.4.1: Service Value by Flight Group

Fig. 4.2.5.1: Service Value Frequencies

Acknowledgements

Writing this dissertation would not have been possible without the help and support of numerous people. Firstly, I would like to thank my supervisor, Professor Graeme Drummond for his friendly advice and patience. Furthermore, Gail Handyside ensured the success of the primary research for this paper by distributing the invitation E-Mail to the student body of Edinburgh Napier University, which I am very grateful for.

In addition, I would like to thank my parents and family for their guidance and making these studies possible. Last but not least I would like to thank my friends and fellow students for the interesting discussions and their company while writing this paper. Studying at both Edinburgh Napier University and IPAG, Nice, was a memorable experience which contributed to my personal and professional goals. I am thankful that I had the chance to study in this highly international environment, which changed me to being even more open-minded and prepared me for life as a working professional.

Table of Abbreviations

illustration not visible in this excerpt

Abstract

The main purpose of this dissertation is to investigate how Public Relations are currently used as a communication tool within the UK budget airline industry, and how the student segment in the UK corresponds to these measures. To gain a holistic understanding of the topic, facts on the UK air transport market are introduced briefly, with a special regard to the two leading budget airlines, Ryanair and EasyJet. Furthermore, the importance of PR for the airline industry is addressed and the research aims defined.

To provide the theoretical background for the conducted research, chapter two focuses on scientific theory, highlighting the areas of Public Relations, Consumer Behaviour and Budget Airlines in particular. By choosing the deductive research approach, nine hypotheses could be developed to contribute to the overall aims and build a basis for the primary research. The latter is an online survey, using the convenient sampling method among the student body of Edinburgh Napier University. Results of the primary research are analysed using SPSS statistical software, conducting frequency distributions, descriptive statistics and chi-square tests.

With regards to the main findings it may be said that price is the most crucial decision factor and thus the strongest communication tool. In addition, there is a shift of recognized communication efforts, away from classic channels as TV or direct mail and towards the corporate homepage and E-Mails, which may be used in a low frequency as to not be perceived as disturbing. All in all, price seems to be more important than service, at least within the student segment. Beside that, the reputation of an airline seems to be important to the respondents, which underlines the need for proper communication efforts. In respect of the limitations and options for further research, there is room to repeat the study with a larger group of participants who are all born and raised in the UK to gain more detailed results. The use of E-Mail in terms of content and frequency might be the most interesting field for future research, as the Internet will be the communication tool of the future.

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1. Introduction

This chapter will outline the overall background of the topic. A brief introduction to the UK air transportation business will be given subsequently, to generate a basic understanding of the market at which this paper is aiming. Following this, two leading airlines, namely EasyJet and Ryanair, will be presented as examples of key players in the UK budget carrier market. Then, a brief description of the topic will be given, illustrating the link of PR and the aviation business. Lastly, the aims of this paper are introduced with a concise outlook on the research process.

1.1 The UK Air Transport Market

Mason and Alamdari (2007) divide the travel market into two main segments: the leisure and the business markets. Interestingly, the latter changed significantly as the sale of business tickets started to decline from the year 2000, when many business travellers downgraded to budget airlines. Trends in the leisure market point to splitting up the annual holidays to a number of short trips, increasing the demand for valuable flights. But airline statistics show (BATA, 2010), that after a peak in 2005, the general passenger numbers in the UK are declining to currently level out at 23.3 million in 2010. Davison and Ryley (2010) state that in 2006, 69.5 million visits abroad from the UK had been made, of which 65% were holiday related, plus 17% to visit friends and family. Of the overall number of visits, 81% utilised air travel, which underlines the importance of this way of travel. 79% of all journeys targeted European destinations, using short-haul flights, which is the domain of budget airlines. To sum up the above, the air travel market in the UK is strongly related to leisure travels, which is a growing segment, as holiday and therefore travelling behaviour is changing, creating demand for short-haul flights. Consequently, the following chapters will focus on the two main budget airlines in the UK (Euromonitor, 2009), namely Ryanair (RA), which is Europe’s number one low cost carrier (LCC), and EasyJet (EJ), its strongest local competitor.

1.1.1 Ryanair

Euromonitor International (2011) provides very actual and comprehensive information about the Ryanair Holdings Plc. While based in Dublin, Ireland, the company offers its air transportation services in Western and Eastern Europe, with a world air value share of 0,8% in 2010. To keep ticket prices low, RA predominantly operates from secondary airports in Europe. Furthermore, the company secures ancillary revenues with e.g. in-flight sales or car rental agreements. With the acquisition of 29,8% of AerLingus in 2006, RA set its direction to grow strategically, whereas hostile bids in 2006 and 2008 have been cancelled by the European Commission to prevent the company from establishing dominance in the Irish air transportation market. RA operates on and emphasizes online ticketing, as online sales are much cheaper in terms of staffing; furthermore, commission payments to travel agencies are being avoided.

The Euromonitor International report also conducts a SWOT Analysis (Fine, 2009). RA’s leadership position in the market together with their first mover advantages, is identified as key strengths of the organization. In contrast to this, the highly competitive Western European Market and the often-poor customer service as well as employee relationships define RA’s weaknesses. Opportunities may be seen in possible strategic alliances with players like Wizzair or SouthWest and in the shift to operate with bigger and more central airports to attract business travellers. Threats to RA’s business are increasing aviation taxes and airport fees, as well as volatile fuel prices. Additionally, the report also highlights RA’s web strategy, which is of particular interest for this dissertation, as the future of flight bookings will be online (Ruiz-Mafé et al., 2009). Social media will as well be a crucial element of this new travel landscape, offering peer and travel company interaction for decision-making (Euromonitor International, 2011). RA is lagging behind in terms of social media, which is partly due to the fact that its company website receives 180 million visits a year and 99% of all bookings are made online. Likewise, RA need to catch up on the social media trend and avoid PR mistakes like calling a blogger an “idiot and a liar” (Euromonitor International, 2011).

In contrast to the lack of sensitivity towards social media, RA’s attention-seeking behaviour seems to be successful. Advertisements run by RA often show content -especially in their print advertising- (Euromonitor International, 2011) causing public backlash and formal complaint. Furthermore, the ads are associated with a low-budget production background while being very attention seeking, particularly when compared to industry competitors. It turns out that the main advantage of RA’s advertising is their fast response to current events, such as the royal wedding or the attack of publicity rival EasyJet. RA’s marketing in general (Ruddock, 2007) is often an expression of the humour of the companies’ charismatic CEO, Michael O’Leary (Creaton, 2004). He is famous for his often direct or even insulting -but entertaining- statements, which are also building the airlines’ brand.

Current news (Financial Times, 2011a) and (Financial Times, 2011b) state a rather unfavourable picture of the companies’ financial situation. Rising fuel prices and snow-caused airport closures led to loss of more than 10 million Euro. RA still wants to grow further. Beside the efforts made in reaching out for AerLingus, RA indeed did not target specific airlines, but has the ability and will to extend their business and building up new markets. A current example (Reals, 2011) for this is the price war on the Barcelona airports between RA and SpanAir.

1.1.2 EasyJet

Euromonitor International (2009) offers key company data on the EJ LCC, established in 1995. Similar to RA, 95% of all bookings are made via the Internet, which once more demonstrates the strong online-dependence of the business that also will be part of the research of this dissertation. EJ operates 19 bases across Europe, of which 11 are in the UK. To create additional revenue, EJ sells car rentals, hotel and hostel accommodation and travel insurance through its company website. Despite the fact that EasyGroup holding company provides these services as well, EJ decided to develop strategic alliances outside the group, with e.g. Europcar as its main car rental partner.

Euromonitor International’s (2009) SWOT Analysis on EJ points out several strengths: While being the number 4 airline in Europe, EJ is the second biggest LCC after RA, with 51% of the passengers originating from outside of the UK. Continued growth is assured through the development of new destinations in Western and Eastern Europe, as well as in North Africa and Turkey. In contrast to RA, EJ operates from the main city airports, which enhances customer convenience and decreases the total travel cost. Furthermore the orange logo has strong brand recognition. Beside the common airline threats, such as the possibility of rising fuel cost and seasonal nature of the business, the report identifies high fix cost as one of the main weaknesses. This is mainly due to the fact that EJ serves primary airports, in contrast to its strongest competitor, RA.

Of all LCC, EJ has been the most successful in attracting business travellers, and targeting this segment is also one of the main opportunities for the future. In addition to this, the company might benefit from expanding their on-board shopping range, as this is a very healthy source of income for the airline. Due to the difficult economic situation, EJ may benefit from the fact that customer needs require less long-haul flights. As all of EJs flights are short-haul, this will satisfy the demand. Threats to EJ may be seen in the increase of taxes and regulations. Furthermore EJ has to adjust its security concept to cope with the current threats, which is a general challenge for the aviation business. Last, EJ recently developed a loyalty scheme, but (Euromonitor International, 2009) it is mentioned that the cheapest price is the only loyalty shown by most consumers. As price may be the marketing tool with the highest impact on the customer, the evaluation of this issue will be part of the research of this dissertation. EJ achieved growth through a combination of takeovers and organic expansion. In 2002 the company acquired the BA subsidiary Go! including a fleet of 25 aircraft. In 2007 the carrier grew by the purchase of GB airways, a British Airways (BA) franchise partner.

Concerning communications and advertising (Euromonitor International, 2009), EJ is following a strong but simple concept. The orange logo is reason for good brand recognition. The image follows a low-cost airline and no-frills service, which is often redefined by poster campaigns, which reflect the simplicity of the whole company concept. Like RA, EJ uses its website as the main communication tool, promoting special prices and targeting registered customers via e-mail newsletters. To enhance brand awareness, EJ appeared in a reality-TV show (Jones, 2007), which followed the day-by-day business of the company.

1.2 PR in the Airline Industry

The field of PR gains increasing importance (Pelsmacker et al., 2010) in today’s working environment. With the background of an economic crisis, companies need to be aware of their communications mix and push their marketing measures to stay in and enhance their business. Furthermore, good media relations can positively influence a company’s public image and should be desirable, as this is a marketing channel, which does not cause additional budget constraints. With a regard to budget airlines, it is thus of interest to investigate what the customers’ perception of the company’s PR efforts is. PR is an important tool within the promotional mix. It is a framework, which is applied to achieve tactical competitive advantage. Especially the two previously introduced key players in the UK LCC market, RA and EJ, distinguish themselves with unusual and conspicuous PR measures, such as using e.g. unusually informal language in their press conferences, or trying to insult one another in their advertising campaigns. It is the desire of being different -not necessarily being better- that seems to drive the companies’ PR efforts. Communication in the highly competitive LCC market means a daily fight for customers, most often using its utmost powerful tool: the low ticket price.

There is support to explore this topic further due to the lack of empirical research concerning the predefined areas. The paper is focusing on this gap within the corresponding literature of PR as a communication tool in the UK budget airline industry. Subsequently, the research aims will be introduced to build a basis and guidance for the study that will be carried out for this paper.

1.3 Research Aims

The overall aim of the dissertation is to generate an understanding of how Public Relations are currently used as a communication tool within the UK budget airline industry, and how the student segment in the UK corresponds to these measures. Furthermore, the following five objectives will be assessed in detail:

a) The influence of PR on the consumer decision-making process shall be evaluated, including a focus on distribution channels, such as company websites or ticket price comparison websites.
b) The use of PR as a communication tool with specific interest
in the budget airline industry shall be displayed.
c) The importance and perception of PR as a communication tool shall be measured, with a focus on the student segment.
d) Marketing of Services: Do consumers favour online bookings? Implications on further marketing strategies and the future of print advertising media shall be developed.
e) The selection factors and stimuli of a student customer choosing an airline shall be evaluated to form a holistic picture of the decision making process.

Based on the overall aim and the five additional objectives introduced above, hypotheses will be developed and presented in chapter 3.1. The hypotheses will then be researched using an online questionnaire. The analysis of the obtained data will be given in chapter 4, where findings will be displayed and a connection to the subsequent chapter, the literature review, will be made. Lastly, the conclusion -chapter 5- will link all, aims, hypotheses and findings, to draw implications for working professionals. The following section will provide the reader with the literary background of scientific theory linked to the topic.

2. Literature Review

This chapter will provide the reader with the background and academic theory related to the topic. The fields of Public Relations, Consumer Behaviour and Budget Airlines in general have been identified as most relevant and will be assessed in light of the dissertation topic and aims.

Fig. 2.1: Airline / Consumer Relational Concept

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The adjacent Fig. 2.1 may display the basic interrelations of the different elements, which will be the content of the subsequent chapters. The following chapter will give an insight into the field of Public Relations, with a focus on the airline industry.

2.1 Public Relations

Public Relations (PR) is used in a wide range of industries, each of them requiring different skills and competencies. As a result to that fact, there is no general applicable definition of PR, but Tench and Yeomans (2009, p. 4) cite an academic definition of Harlow, which outlines the topic quite well: “Public Relations is a distinctive management function which helps establish and maintain mutual lines of communication, understanding, acceptance and cooperation between an organisation and its publics; involves the management of problems or issues; helps management to keep informed on and responsive to public opinions; defines and emphasises the responsibility of management to serve the public interest; helps management keep abreast of and effectively utilise change; serving as an early warning system to help anticipate trends; and uses research and ethical communication techniques as its principal tools.”

Tench and Yeomans (2009) mention the main three tasks of PR or corporate communication, according to Fombrun and Van Riel. First, management communication is aimed at the development of a shared vision, the establishment and maintenance of trust in the leadership, management of change and the motivation of employees. Second, marketing communication supports the sale of goods and services, including advertising, sales promotion, direct mail, personal selling, online and mobile marketing as well as market-oriented PR or publicity. Last, organisational communication usually covers activities at a corporate level, which do not have to be located in the PR department, e.g. public affairs, investor relations or corporate advertising.

Haywood (1991) gives a very holistic insight on the various fields of PR. It is interesting, that those campaigns are most successful, are “closest to reality”, generating credibility for the company. In his opinion, an effective promotional campaign must coordinate all the elements that contribute to the corporation personality. Haywood concludes that PR is supporting marketing in many areas, namely awareness improvement, projecting credibility, combating competition, evaluating new markets, creating direct sales leads, reinforcing the effectiveness of sales promotion and advertising, motivating the sales force and distributors as well as wholesalers and retailers, the introduction of new products or services, building brand loyalty, dealing with customer concerns and in many other ways.

Haywood also refers to the close link of PR measures to sales support. Due to PR activity, the sales staff will spend less time and effort with the customer, as the reputation of the company is already well established. If the customer knows the company name due to its appearance in a specific professional journal, this journalistic pre-selection will support the whole communication process. In the same way, PR might help the company or brand getting a good name in a potential market to open up new sales opportunities.

Xavier et al. (2005) demonstrate that PR professionals show various ways to contribute towards organizational goals; they point out the ambiguity if these reporting structures are matching real outcomes. To tackle this problem, the study combines evaluation practices and industry data to make PR accountable. The findings are that practitioners are still focusing on outputs, not outcomes of PR, and continue to rely heavily on media-based evaluation methods.

The work of L’Etang et al. (2007) focuses on the interrelation between tourism and PR. They show that the field of tourism is rather unexplored by PR research, which also shows that this dissertation will be a scientific contribution that will help to fill this research gap. L’Etang et al. (2007) suggest that future research may develop an agenda that incorporates cultural and critical perspectives, drawing on media sociology, cultural studies and tourism literature. In their opinion, tourism PR shall not only focus on traditional instrumental perspectives, but also recognize the “bigger picture”, involving a broader social, political and cultural perspective. By applying that, tourism public relations research would overcome the restricted traffic between other disciplines.

Macleod (2010) evaluated the connection of PR with the Internet. She emphasises the point that the process of information gathering and reputation building has been simplified, as there is a shift from the earlier process -involving the analysis of media outlets and stakeholder opinions- to give the power of reputation building to the hands of small groups or even individuals, which may communicate without boundaries in time and space. This fact is particularly interesting for this dissertation, as the majority of today’s airway travel tickets are sold online (Ruiz-Mafé et al., 2009). Due to the strong evolution of Internet usage, Macleod mentions that the more known a brand name is, the more vulnerable it is. This could mean an Achilles heel to some companies, as consumers tend to exchange information faster.

Public Relations may affect companies in various ways. Alves and Barbot (2010) found interesting interrelations between the announcements of new routes of travel from EasyJet that may affect the share price of Ryanair. The impacts may be positive or negative. At the core of this paper is the finding that route announcements -which are PR measures- may be used to influence stock prices of competitors.

Public Relations come to importance in particular when companies have to handle a crisis or critical situation. Greer and Moreland (2003) put their attention to the online crisis communication of United and American Airlines, following the September 11. terrorist attacks. Based on crisis communication theory they examine how the two airlines use their websites as a communication tool within three weeks after the incidents. On the one hand, the carriers communicated clear facts. On the other, they communicated their commitment to the event with a series of condolence messages.

The work of Ni (2006) also focuses on the impact of PR, while relating it towards companies’ organizational strategies. His qualitative research is based on interviews with 33 Chinese PR managers, to explore relationships as organizational resources and their contribution to strategy implementation. Ni found that relationships bear the following key features as resources and advantages: Valuable, rare, difficult to imitate and hard to substitute.

Processes within companies benefit from structured planning, as it identifies long-term opportunities as well as threats and mobilizes the resources to address them. As a result, Forbes (1992) emphasizes the link of strategic management to PR. He mentions that in a strategically operated company, the senior PR manager has the task to harmonize all external and internal publics. This goal may be achieved by applying a six-step process. The first step is to scan and build awareness of the future. It will be to the organizations benefit to predict trends covered within the PEST-Analysis (Basu, 2009) for one decade ahead. Since it is impossible to certainly predict the future, the next step includes scenario planning for optimistic and pessimistic developments, as well as a situation in between the two, to function as a basis for contingency planning.

As a result, a mission statement might be written on the review of the possible scenarios. It should be re-assessed annually to cope with current changes. Fourth, this statement may be translated into objectives and policies that serve as a framework to the overall strategy. Step 5 covers the implementation of the strategy, by the execution of detailed action plans and the allocation of budgets to carry out the objectives set by senior management. Last, the strategy needs to be reviewed and updated where necessary. The application of this process helps organisations to stay ahead and enables them to respond to upcoming business developments in a flexible manner.

The work of Hauss (1993) is of particular interest for this dissertation, as she gives implications on how the impact of PR may be measured. It is said that the media has a lot of influence on the way people think, buy and vote. To show how the impact of media content can be measured, research had been conducted during the 1992 presidential election in the USA. Scientists evaluated the influence of good and bad news and how people would respond to this with their votes, finding significant correlations. Another way to measure the PR impact was the link between inquiries and the ROI of product-sales driven organizations. The Windows-based program “Sales Projector” lets users estimate the amount of actual closed business a company's sales leads are likely to produce. The software is able to distinguish the number of leads coming in with a relation to PR or other Marketing efforts, with the result that PR is the number two lead generator after trade shows. With the use of the program it was proven that PR turns into sales at a predictable rate.

Vogel (1994) puts a focus on how mass communications work and introduces the “Relativity Model of Mass Communications”. According to him, PR experts decide on budget allocations of corporate messages through the answer of three questions: First, how important are the messages for the company? Second, how important are the messages we want to emphasize to the people we want to reach? Third, how well informed are those people about these messages? By using this approach it is assured that budget is spent on the messages that are important for the company as well as for the audience.

According to the “Relativity Model of Mass Communications”, there are two main market segments for each message. One is the audience that is interested in the topic and agrees with the authors’ point of view. The other are the people that think the message is important, but do not have any distinct opinion about it. The rest of the audience is simply not the market for the message. However, the model categorizes the audience as follows: active opponents, active supporters, disinterested opponents, disinterested supporters, potential converts and the uninvolved. Only the active supporters and potential converts are good candidates for messages under normal circumstances. After having classified the audience in this manner, communication priorities can be set in a cost effective way, as the budget may be allocated with the groups that expect the most favourable impact. This leads to the setup of a successful strategy, which was predefined earlier in this chapter.

How challenging it may be to measure the actual impact of PR procedures is as well mentioned in the research of Beth (1994). According to him, PR may have two general sides -internal and external- where numbers in sales, productivity and profit are being supported through the work of PR professionals to seize every opportunity. These numbers symbolize the behaviour of people. Just as sales represent the behaviour of consumers, productivity reflects the behaviour of employees. Beth argues further, that a PR specialist focusing on employee relations may have an indirect positive impact on the companies’ bottom line by improving employee morale, thereby increasing productivity and lowering the number of absence days. The author mentions that the key drivers to an improvement of employee morale are recognition, money and information. As PR may affect recognition and information, it may as well have a positive effect on the companies’ bottom line.

Last, another crucial role of PR is the communication during a crisis. An example is the “Good Words” campaign of American Airlines (Downing, 2004), which was offered internally to employees after the 9/11 terrorist attacks, in order to support emotional needs. But instead of helping to handle the crisis like in the previous example, PR may also help to prevent critical developments. Christen (2005) attributes the failure of AT&T to properly manage their restructuring phase to two main reasons: First, AT&T was not able to construct a shared system of beliefs that made sense of the need to downsize. Second, the company demonstrated an inability to cope with the conflicting demands of key external publics. Proper PR management would have been able to identify and solve these issues beforehand, leading to a streamlined process and a better corporate image.

To conclude the above, it becomes clear that PR is a crucial factor to the success of a business. It helps to build up a shared vision, helps to drive sales and product awareness. Technical development might shift values to give power to a few opinion leaders; that is why PR professionals need to focus on online communication. PR needs shall be part of companies’ strategic planning to ensure long run success. Bearing in mind that PR is that essential, it is remarkable that the field of Tourism PR is rather unexplored. Furthermore, the difficulty of measuring PR impacts has been pointed out by Hauss (1993) and Beth (1994), who either measured voters’ opinions with a regard to current news or referred to rather soft factors like employee morale improvement, leading to bottom line improvements. The next section will address Consumer Behaviour literature, as well partially regarding the airline industry.

2.2 Consumer Behaviour

Evans et al. (2006) cover the various aspects of Consumer Behaviour (CB) as a whole, by assessing individual and group aspects of the topic and linking them to integrated approaches of CB. As for the individual, the main shopping motives for buying a ticket from an LCC, the pleasure of bargaining, anticipated utility -provided benefits- and choice optimization -the right product to satisfy demand- may be identified. According to the authors, consumers follow a certain hierarchy of communication effects when responding to marketing actions: exposure, attention and perception, learning attitude, action and post-purchase. PR measures are then related to the beginning of this hierarchy, the exposure and the attention part. Evans et al. (2006) further write about social groups, which are of importance for the research of this dissertation, as it will be targeted to the informal group of students living in the UK. Many of them will also be members of virtual groups in online communities, which can be linked to company PR in form of e.g. Facebook groups as well.

Wright (2006) highlights the importance of CB. He mentions that if management understands customer responses better than the competition, this will generate a source of knowledge, leading to competitive advantage. As markets open and technologies develop, they also become more competitive and less product driven. To achieve and maintain a leading position in an environment like this, companies have to understand the variety of internal and external influencing factors as well as problem-solving processes that will affect the product, brand and service purchase decisions. This topic is directly linked to (Singleton, 2010) the concept of customer segmentation, as all marketing measures may be used and targeted more efficiently if the company is aware who their customers are in terms of e.g. gender, age or disposable income.

Mudie and Pirrie (2006) focused their work on a crucial element of CB, the marketing of services, which also relates to the nature of the airline business. Core to the business with services is that they are intangible and cannot be owned or processed, meaning that the potential consumer is often unable to perceive the service before -and sometimes during and after- the service delivery. This implicates that the customer has to be physically present in many cases to benefit from the “production” of a service. Mudie and Pirrie further mention the perishability of services, meaning that e.g. unsold airline seats or empty hotel rooms may not be reclaimed, as services are performances and cannot be stored. Beside the well-known 4-P marketing concept (Jobber, 2010), which includes Product, Price, Promotion and Placement, the marketing of services may be extended to a 7-P concept (Mudie and Pirrie, 2006) to better respond to the characteristics of services, namely People, Physical evidence and Process. Beside that, the authors highlight the role of services communication, stating that communication can add value to the service in the eyes of the consumer. But marketing also has to respect service characteristics. Along with the previously mentioned features, like intangibility and perishability, the heterogeneity of services plays a role, which can be addressed by communications, often with the Internet (Sterne, 2000) as a supportive tool.

Euromonitor International (2010b) presents very good information on consumer lifestyles in the UK. As the research of this dissertation will be carried out among a UK-based student body, this study will provide a valuable background to understanding the participants. The authors identify a clear trend towards Internet affinity among UK consumers, with 70% of the households having an internet-enabled PC. The outlook given is that this number will rise in the future, as the UK government aims to make fast broadband Internet available to all UK households by 2012. This development is also supported by a decrease in IT hardware prices. As a result, e-commerce revenues almost doubled during the research between 2005 and 2009. Furthermore, 50% of the UK consumers book their holidays online, which displays the strong Internet affinity of the business.

Concerning air transport (Euromonitor International, 2010b), 37% of all flights in the UK in 2010 were short haul, whereas 18% were long haul and 8% domestic. This shows that airlines like RA and EJ compete in the largest segment: the short haul flights. These figures did not change significantly compared to 2006 and 2008, which indicates that the demand on the air transportation market in the UK is not very volatile, apart from impacts of the economic downturn, particularly in early 2009.

The research of Mason and Alamdari (2007) links the future trends of LCCs and CB. By using the Delphi method, they assessed the viewpoints of 26 air transportation experts to derive their findings. The consensus opinion of the experts was that network carrier consolidation would reduce the main market to three key players, competing with two to three large LCCs. The authors further imply that business class will disappear on short haul flights, as business travellers will seek better value for money. With a regard to leisure travelling, the trend would move away from one or two major holidays; instead, leisure travellers might prefer multiple short-duration holidays during the year, due to the decrease in fares.

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