The airline industry is made up of different groups of buyers therefore it is important to segment your customers
properly, before accessing their bargaining power. Airline industry divides buyers into different segments and each
segment has different bargaining power according to their level of need. We have discussed six of these segments here:
The business traveller segment: The business-class segment is the most important segment of airline industry. In this
segment, traveller doesn’t pay his own fare but it is paid by employer for which he/she is travelling for. This segment
requires high quality service. They cannot predict the timing of their travel in advance and they have to travel more
frequent. Therefore price is inelastic for this segment which means buyers have less bargaining power.1
The leisure travel segment: The leisure-travel segment consist of those customers who have to pay their own fares and
they travel through economy class. They travel at vacations with their family or alone to tourist places. This segment is
elastic to price, which gives them high bargaining power. Any increase in fare may result in the negative demand for
airline services.2
The personal travel segment: This segment has one aspect similar to leisure-travel segment in which customer pays
their own fare from their own pockets. On the contrary customers have tighter timing and route constraints which
requires service like business travellers segment. E.g. emergency travels brought up by some family matters. Bargaining
power is considered to be low in this segment as quality of required services is high.3
The religious travel segment (Hajj, Umrah, Christmas): The religious-travel segment consist of those customers who
travel for purpose of religious obligations. They travels in huge numbers and at specific dates. They can travel through
economy and business class and mostly they pay more than usual because of busy flights schedule for those specific
dates. Since they have no other substitute to travel on those dates, they are vulnerable to higher prices which means
their bargaining power is low.4
The guest worker travel segment: The Guest-workers segment consist of those customers who are away from their
homes and working in foreign countries. Their employer pays for their travels but unlike business class they travel

(Kassem M. S., 1989)
(Kassem M. S., 1989) (Alessandro Borgogna, 2016)
(Kassem M. S., 1989)
(Kassem M. S., 1989)
through economy section of flight. They travel annually or at time of emergency. Since this segment does not require
high services they have moderate bargaining power. 5
Cargo segment: The air-cargo industry consist of customers who are sending their shipments from point A to point B via
airlines. The air-cargo industry accounts for only 1% of whole cargo industry, but the values it transports, is worth 35%
of whole industry. They are valuable customers for airline industry and for growth prospect this is key segment. Goods
they are transporting is valuable commodities and requires unique services e.g. Capacity considerations (volume,
weight, hazmat, and dimensional), highly controlled transport, direct routing and reliability. Since it requires premium
service to transport such good, airlines are charging high price and the customers have less bargaining power.6

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