Why was Kiwi Airlines so successful initially?
The success of Kiwi International Airlines lies in its felicitous entry strategy. It was established by Ewan Wilson in 1994 and performed international flights between Australia and New Zealand. Originally, they provided the first-class service at the same time offering rather cheap flights. For example, they offered “gourmet meals and expanded legroom of the 36-inch pitch” (“Kiwi, the Dream that Almost Came to Life,” 2014, p. 4).
Moreover, Kiwi International Airlines started their business as a usual discount carrier with the selection of simplified flight paths that were built on the “point to point” principle, in other words, direct flights between airports instead of landings in “hubs.” Particularly, the company operated in Hamilton and Dunedin cities. The above strategy was utilized in order to maximize the use of aircraft and to minimize delays associated with transit passengers and loss of baggage between flights. After a while, Kiwi International Airlines expanded the number of suggested cities that, in its turn, led to the success of the company, too.
What went wrong – why did Kiwi Airlines go out of business so fast?
It goes without saying that Kiwi International Airlines went out of business rather fast. First of all, a good strategy came along with a bad name. After all, the kiwi bird, a symbol of New Zealand, cannot fly. A driving force of any business is the word in the minds of the customers; therefore, it is impossible to achieve success, starting with the wrong label (Smith, 2013). From my point of view, it would be better if the Kiwi International Airlines had its own catchy and pleasant label and name. Second, it was connected with the company’s financial strain. Nobody could predict that the company would involve in debts. Third, after some time, Kiwi International Airlines became a low-cost carrier that offered low ticket prices in exchange for eliminating most of the traditional passenger services.
For example, food service consisted only of coca-cola and peanuts. Consequently, it caused customers’ dissatisfaction. In this way, both economic and operational misfortune forced the situation when Kiwi International Airlines went out of the market.
So why did Kiwi Airlines fail – why did Qantas and Air New Zealand respond?
One more reason for Kiwi International Airlines’ failure is strong competition in the airline market. World practice shows that usually, companies that offer their service for a reasonable price with comfort and ready to deliver passengers to the desired destination all over the world survive in this business. It was not surprising that such serious airlines as Qantas and Air New Zealand reacted aggressively as they incurred losses due to the Kiwi International Airlines’ strategy.
For example, Air New Zealand’s “passengers were picking up flights for $US120 round trip for the 2200 km (1378 mile) international flights” (Cowling, 2015, para. 2). In addition, they provided their frequent customers with different bonuses and promotions that help them to save a decent amount of money. A distinctive feature of the airline is the quality of service for passengers. Consequently, any detail on this issue could lead to success or failure.
Qantas and Air New Zealand were major transnational carriers that completely comprehended the above issues coming to the market for a long time and having invested a lot in infrastructure, service, and the aircraft. Therefore, they have made all attempts to prevent the rise of Kiwi International Airlines. Thus, tough competition on Trans-Tasman flights led to the collapse of Kiwi Airlines in 1996.
References
Cowling, M. (2015). Will Kiwi Regional Airlines succeed? Risks are high. Wild About Travel. Web.
Kiwi, the Dream that Almost Came to Life. (2014). The Real World, 18(1), 4-5.
Smith, P. (2013). Cockpit Confidential: Everything You Need to Know About Air Travel. Naperville, Illinois: Sourcebooks.