Case Analysis - YunnanLuckyAir

PRESENTATION ON
ECOMMERCE AT
YUNAN LUCKY AIR
BY- MAKRAND VISPUTE

POOJA BHOYE
V R SUDARSANAM
PREM PRATIK
YASH MEHTALIA
INTRODUCTION
COMPANY OVERVIEW
• Lucky Air is a Chinese Low Cost Carrier based in Kunming, Yunnan. Founded in 2004, It is owned by Hainan airline’s group. The
carrier operates domestic service with narrow body equipment from its main base at Kunming Changshui International Airport.
• Lucky air was started with initial capital of U.S$ 2.2 million.
Within 4 years the operating revenue was U.S$ 104.3 million
• Lucky Air operates mostly in the Yunnan region, and the region is considered as one of China’s “most popular domestic tourist
destinations” Lucky Air based its routes on the tourist destinations within Yunnan region, such as Dalie and Xishuanbanna in order
to capture the growing tourist market.
• Lucky Air got a huge lead in year 2007 as the no. of internet users were increasing rapidly. This led a boom in IT industry and e-
commerce industry. Taking this as an opportunity lucky air adopted the latest technology and had a great success in very short
time.
PROBLEMS/CHALLENGES FACED BY YUNNAN
LUCKY AIR
Yunnan Lucky Airline’s main

concern was low-cost carrier
strategy, but by considering
monopoly & its parent company
support they successfully
established themselves as one
of the major player in Airline
industry in China.
PROBLEMS IDENTIFIED
• Airline industry in China was heavily regulated.

• Intensified competition
• Operating cost :
- Fuel
- Landing fees
- Aircraft leasing
- Taxes
• Commission to travel agents (2%-5%) and
reassurance wasn't available.
• Others such as less transaction security,
emerging online travel websites, absence of
customer reviews, etc.
SWOT ANALYSIS
STRENGTH
 Rapid growth of technological industry gives the company a competitive advantage.

 Successful existing infrastructure and low cost of operations enables success.
 one of the most profitable airlines that achieved profitability three years it was founded.
 Lucky Air has IT operations which leads to efficient operational matters that result in low cost
hence having low fare with great values.
SWOT ANALYSIS
WEAKNESS
 Will yield limited initial results due to the slow technological boom.
 Government restrictions.
 Low access to internet.
 More participation in another countries.
 Communication for customers only in some states
SWOT ANALYSIS
OPPORTUNITIES
 Chinese technological boom will guarantee growth of online market.

 Online Payment presence makes it easier for fast and efficient booking.
 Entering a new market and developing a new way to see this business.
 Increasing the market share by doing new promotion.
SWOT ANALYSIS
THREATS
 External users will expand into this market.

 Cyber threats to company and users will increase.
 China Government Regulations.
 Limited inflight services to customers.
PESTLE ANALYSIS
POLITICAL FACTORS ECONOMIC FACTORS

 Political stability and importance of Major  Type of economic system in countries of
Airlines sector in the country's economy. operation – what type of economic system
 Level of corruption - especially levels of there is and how stable it is.
regulation in Services sector.  Government intervention in the free market
 Legal framework for contract enforcement and related Services
 Intellectual property protection • Infrastructure quality in Major Airlines industry
 Trade regulations & tariffs related to Services
• Oil pricing are expected to remain around $50 a
• Taxation - tax rates and incentives barrel, adding operational margin.
PESTLE ANALYSIS
SOCIAL FACTORS TECHNOLOGICAL FACTORS

 Demographics and skill level of the  Recent technological developments by
population LUCKY Airlines Company Limited competitors
 Class structure, hierarchy, and power  Technology's impact on product offering
structure in the society.  Impact on cost structure in Major Airlines
 Culture (gender roles, social conventions etc.) industry
 Entrepreneurial spirit and broader nature of  Impact on value chain structure in Services
the society. Some societies encourage sector
entrepreneurship while some do not.  Rate of technological diffusion
PESTLE ANALYSIS
LEGAL FACTORS ENVIRONMENTAL FACTORS

 Anti-trust law in Major Airlines industry and  Weather
overall, in the country.  Climate change
 Discrimination law  Laws regulating environment pollution
 Copyright, patents / Intellectual property  Air and water pollution regulations in Major
law Airlines industry
 Consumer protection and e-commerce
 Employment law
 Health and safety law
ANALYSIS OF AUTHOR’S WORK ON LUCKY AIR
1. Brief knowledge about lucky air’s success over years.

2. Information on their airline service.
3. Operational expenses
4. Backing by parent company and its advantages.
RECOMMENDATIONS
Establishing call center service facility for senior age group.

Tickets from govt. offices.
Working on customizing the website to contain reviews and to why customers choose yunan lucky air.
Focusing more on conversion rates by constantly studying the customer data and change their strategies
accordingly.
Focus more on corporate travelers .
Price sensitive decisions keeping students in mind to convert them into long time loyal customers.
Exciting offers and discounts to loyalty group.
More investment in increasing flights and more frequency of flights and create new destination routes.
Collaboration with ctrip and elong to provide tour packages.
Become a online travel leader by creating a network of partnerships.
Invest more on technology and proper training to staff for ecommerce.
Evaluating what the competitor offers and then acting accordingly to attract customers of competition.
focusing on the *middleclass/average* customers as they are the largest target segment, lucky air should
also focus on making upgradation a choice so that the higher class can also consider lucky air for their
travel. This way they will be focusing on two class customers based on their preference to spend.
focus on to cut some of the operational costs is by updating the online booking Lucky Air would save the
costs of printing the tickets, where they could be sent via email rather than paper by cutting down the use
of paper
another cost reduction is the company could be creating call centers to handle booking and customer
service questions, by doing so the company would avoid paying travel agent commissions “which is 2%
of its total costs.”
CONCLUSION
• In tough competition Yunnan Lucky Air managed to survive by its existential resources.
• Transformations on software operations created an advantage with great value.
• Use of e-commerce/company website and direct purchase of flight tickets contributed to their
profit and improved customer relationship.
• Lucky Air will gain competitive advantage through consistent customer base , e-commerce and
expanding their company globally.
•THANK YOU

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What are the main problems faced by Yunnan Lucky Air?

What are the opportunities identified for Yunnan Lucky Air in the SWOT analysis?

PRESENTATION ON

BY- MAKRAND VISPUTE

Yunnan Lucky Airline’s main

• Airline industry in China was heavily regulated.

 Rapid growth of technological industry gives the company a competitive advantage.

 Chinese technological boom will guarantee growth of online market.

 External users will expand into this market.

POLITICAL FACTORS ECONOMIC FACTORS

SOCIAL FACTORS TECHNOLOGICAL FACTORS

LEGAL FACTORS ENVIRONMENTAL FACTORS

1. Brief knowledge about lucky air’s success over years.

Establishing call center service facility for senior age group.

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