7A - TESTING THE HYPOTHESIS, PART 1

Opportunity: Due to the expensive tickets to most of the cities in South America, I see an opportunity in opening a new airline with competitive prices in which it can create more competition to current airlines who fly from American cities to Latin American cities.

The Who: Latin American people who live in the United States and want to go back home wither for work or holidays, and for American people to travel on competitive airfares to South American cities.

The What: Prices are too expensive to travel at the moment, due to the manipulation of the prices of large airline alliances.

The Why: Price manipulation is making it hard for people to travel for lower prices.

Testing; The Who: Ask people that are interested in flying to Latin American cities for cheaper prices, have more flexibility in terms of the schedule of flights. Access to new routes which possibly before were not offered. So companies with Latin American presence is key as well and vice versa (South American companies with North American presence) they have several employees travel in an out from cities, this could be crucial.

Testing; The What: High prices are encountered by most of the people that travel to Latin American cities or Latin American travelers to North America. Due to a large amount of Hispanics in the United States and Canada, this can be a market we could potentially exploit on.

Testing; The Why: Big alliances in the airline industry manipulate the routes and prices. for example, they will only travel to and from one city forcing travelers from other big cities to do a layover in a city in their country creating more revenue as it becomes more expensive.

Interviews:

#1: Male Latino Student

I think the implementation of new airline is quite complicated. But mainly I see it complicated because the revenue made by major airlines worldwide are very small. I think that for a new airline to break through the market it either has to be a top high-end airline or a budget low cost one. I think if you shoot for a new airline in the middle it will tank. A high-end airline can target mainly travelers that are looking for comfort over costs. While shooting for a budget airline it can target young backpackers, people with modest incomes and large families that make it more affordable for everyone to travel. If I had a large raised capital I would push through it, but finding those investors would not be an easy task.

#2: Male Young Professional Working for the Latin American market in the US.

I would love to see this happen. I have to travel a lot due to my job as it has a focus in Latin America. I travel to Colombia, Chile, Argentina, and Peru with a high frequency. Even though I travel from Miami, I encounter the problem of having to do layovers because of the lack of non-stop connections, I also have found an ambiguity in many airlines in the sense that now they are charging more and more for options to lower costs. So now they have lost an identity are they higher end airlines? or are they low cost? Traveling for work is not pleasant and I believe a higher end airline would penetrate very well the market for companies who would like to travel in style and comfort.

#3: Hispanic Female Professional

I will be honest, I see that the prices to go to Europe and certain Asian countries are a lot cheaper than traveling to South American countries. I am not sure the implementation of a new airline would fix this issue. I believe that there are sufficient routes, and whoever who can afford the ticket should travel. Maybe you can download apps like Hopper, that tell you the best time to visit a country and monitor when prices go down to go at an affordable rate. Also, you can get help financing the trip with your travel agent if that is the case.

#4: Chilean Young Professional Residing in Chile

I do see that prices to travel to North America are overvalued, I believe this is because I believe most of the people see the United States as an attractive destination to travel to. Prices to visit Europe and the United States are very similar, even when the time of travel to Europe is about 30 to 40% longer than American destinations. I believe that the implementation of a low-cost airline could possibly lower costs of travel adding competition, but I do see a barrier that this airline would have to significantly spend on marketing and advertising to make themselves known in the airline industry. A lot of people here are superstitious and the airline reputation is very important. 

#5: Retired Female and Avid Traveler

I believe that the airfares to South American cities are extremely expensive, I travel more often to India and Germany because the airfares are a lot cheaper. I dont see the reason for airfares to be so expensive, for example, I pay $700 RT than to travel to Chile or Argentina $1000+. The travel times are twice as much and that involves more fuel costs so I don't see the explanation of this inflated prices. I believe there is a lack of competition in this industry. I believe that the implementation of a higher end airline is in need because now there are many airlines switching to lower costs and at the end, the costs add so much more than it does not really make sense to go with the relatively cheaper option.

Reflection:

After the interviews, there isn't much that I did not know before, because I am very aware of airline prices to travel around the world. I love traveling and in my spare time, I look for cheap tickets to travel places that I might or not have been previously. Nevertheless, I was surprised to see that the responses of people wanting a low-cost or high-end airline are varied. I was not aware that this response was so varied, I would have to create a larger poll to see the spread of answers to get an accurate measurement of what is it that people truly want.