Kiwi Airlines’ Initial Success
The initial success of Kiwi Airlines was connected with the fact that the company had no problems with entering the airline industry. Its entry strategy was well-designed and efficient, which saved the organization from competitors’ threats. Not to resist established carriers, the company started to work only with three routes so that it was less costly for the competitors to let Kiwi Airlines operate instead of trying to eliminate it. Moreover, each route affected the businesses so that no particular competitor faced extreme losses. In this way, the business risk for Kiwi Airlines reduced because even if some companies eliminated it, there still would be two routes.
One more source of Kiwi’s success was its services. First of all, the organization provided an opportunity to buy the tickets right before the flight with no restrictions. Except for that, the number of seats in the airplanes was reduced so that all clients seemed to be in a business class, where hot meals are offered.
One of the company’s drawbacks also turned out to be advantageous. Kiwi had no finances to promote itself, so it entered the industry quietly. As a result, a direct challenge from other organizations was avoided.
Moreover, Kiwi turned out to be gladly met by the shareholders, as it did not poach the personnel but encouraged people to get back to work in the airline sphere, promising a profitable future.
Kiwi Airlines’ Failure
Unfortunately, initially achieved success did not last for a long. The company started to grow rather quickly, and the number of its employees increased five times in only two years. It already had twelve plains instead of two and almost fifty flights per day instead of six. Of course, such changes involved the complication of the route structure, increasing the number of destinations (Greenwald and Kahn 235).
These alterations show that the company expanded, which is mainly considered to be a positive tendency but in this case, it contradicted the original strategy. Kiwi Airlines was not already a single hub with limited simple routes and a particular target audience. As a result, the company moved beyond its area of competitive advantage. It experienced losses as had no economies-of-scale and was not able to offer better service to clients.
Failure and Respond from Qantas and Air New Zealand
Kiwi failed because it seemed to turn into a large airline while remained the same on the organizational and operational levels. It was not able to perform efficiently and meet the standards put by the established carriers, and the competition responded. Qantas limited the ticket price for its regular flights and increased promotion. Air New Zealand formed a new charter airline similar to Kiwi. Still, it was better financed and used both existing infrastructure and tourist one.
When Kiwi decided to implement changes that were likely to improve its situation and increase gaining, that airline, Freedom Air, also announced alterations. It changed the schedule dropping some locations and adding new ones. It offered cheap fares and provided an opportunity to get a two-nights accommodation, car rental or tickets to entertainment events for less than $10. Even though such an offer was available only for one week, thousands of people used it, which had a negative effect on Kiwi. Then, Qantas and Air New Zealand also lowered their prices greatly, attracting the rest of the customers (Bowden 4).
Works Cited
Bowden, Stephen. “Kiwi International Airlines: Judo Strategy and Its Limits.” Journal of the Australian and New Zealand Academy of Management 9.2 (2003): 1-7. Print.
Greenwald, Bruce, and Judd Kahn. Competition Demystified: A Radically Simplified Approach to Business Strategy. London: Penguin, 2005. Print.