1. Describe the type of international strategy the company has chosen. Lufthansa, one of the world’s biggest airliners, has divisions handing maintenance, catering and air cargo. Since the World War II the airline industry has never earned its cost of capital over the business cycle (Hitt, 2010). Most of the airline companies have either filed for bankruptcy or are being bailed out by their government. Lufthansa had also gone through these tough times, but had resurfaced to become one of the worlds most profitable airline company. The company adapted a transnational strategy, seeking to achieve both global efficiency and local responsiveness. Lufthansa’s monopoly in Germany came to a halt with the creating of the European Union. All the EU member countries become one regional and therefore the European competition became, an increasingly a local competition. Lufthansa created its regional Hubs, to cater for its domestic market. But the availability of substitutes such as bullet trains and the Euro tunnel, made is necessary for Lufthansa to create short traveling time, customizations and quality standards in the region to achieve a competitive advantage. But outside the EU there are no substitute to air travels as such all the flag carriers are competing in the market, the international airline industry is a highly competitive environment. A new force has also emerged in the world of air travel, in the form of three Gulf airlines with jumbo ambitions. Within a decade Dubai’s Emirates, Qatar Airways and Eithad from Abu Dhabi have between them carried the capacity of two hundred million passengers (Micheal, 2010). The company had to go global and therefore adopted the international corporate-level strategy, where Lufthansa will ope... ... middle of paper ... ...xperience (Thomas, 2010). Finally Lufthansa may have a flat management structure and a kind of flexible, highly productive workforce, not the likes of rival British Airways’ strike-torn employees union. It could also recruit cabin crew and ancillary staff on low wages from the south-east Asia and Africa who will work right up to regulatory limits to cut down labor cost. Works Cited Clark, P. (2010, June 8).Europe airlines struggle for take-off as rivals gain speed. Financial Times, p.15. Hitt, M., Ireland, R. & Hoskisson, R. (2010).Strategic Management: Competitive and Globalization, Concept and Cases. Mason, Ohio: Cengage Learning Michael, D. (2010, June 9).Emirate Airline Orders More Airbus Planes, Challenging Germany’s Lufthansa. The Wall Street Journal, p.B1. Thomas, B. (2010, May 12).Briefing Aviation: Rulers of the new silk road. Financial Times, p.16
According to the International Air Transport Association, 2001 was only the second year in the history of civil aviation in which international traffic declined. Overall, it is believed that the IATA membership of airlines collectively lost more than US$12 billion during this time (Dixon, 2002).
This book by John Newhouse provides an exhilarating account of the competitive battle between the world's dominant commercial aircraft manufacturers. In the Aviation Industry, there have always been various airframe producers which where competing against each other. Throughout the years, two of them gained the majority of the market share. It encompasses two of the biggest companies in the world, going to extremes to finalize sales, and more importantly, to gain a higher percentage of the market share and outmaneuver the other. Airbus and Boeing are seen as national symbols that receive massive subsidies, benefits, contracts from the EU and the American government. This book gives a review of both Airbus and Boeing’s objections and future market outlooks in relation to the new A380 and Boeing 787 “Dreamliner”. This report outlines some of the key factors in John Newhouse’s Boeing Vs Airbus thriller.
The Economist. 2013. Flying into more flak. [online] Available at: http://www.economist.com/blogs/gulliver/2013/08/ryanair [Accessed: 26 Mar 2014].
However, poor industrial relations and crisis management imply that there is a greater need to focus on building strong relations with employees, enabling them to internalise the vision of the company. Given intense competition in the industry and continuous changes in regulations from the EU and international regulatory bodies, British Airways needs to introduce cost-effective methods of complying with regulatory standards. The firm should also avoid illegal practices that can harm its corporate image.
Airline and travel industry profitability has been strapped by a series of events starting with a recession in business travel after the dotcom bust, followed by 9/11, the SARS epidemic, the Iraq wars, rising aviation turbine fuel prices, and the challenge from low-cost carriers. (Narayan Pandit, 2005) The fallout from rising fuel prices has been so extreme that any efficiency gains that airlines attempted to make could not make up for structural problems where labor costs remained high and low cost competition had continued to drive down yields or average fares at leading hub airports. In the last decade, US airlines alone had a yearly average of net losses of $9.1 billion (Coombs, 2011).
This report is based on Ryanair Holdings PLC which was established in 1985. “Ryanair obtains permission from the regulatory authorities to challenge the British Airways and Aer Lingus' high fare duopoly on the Dublin-London route. Services are launched with two (46-seater) turbo prop BAE748 aircraft” (Ryanair, ND). Ryanair Holdings PLC is an Ireland based airline which is the largest low fare airline with 32 bases & over 800 low fare routes across 26 countries, connecting 146 destinations. Ryanair fleets are made up of 196 Boeing 737-800 crafts with a seating capacity of 189 seats. Its aims are to deliver a further 102 aircrafts over the next 3 years. Ryanair currently employs more than 6,000 people and expects to carry over 67 million passengers this year. This report is giving me the chance to highlight Ryanair’s strengths, weakness, opportunities and threats which they face now and in the near future.
...ember 25). Boeing hails ME investments. Times of Oman [Muscat], p. 1. Retrieved from http://search.proquest.com.ezproxy.libproxy.db.erau.edu/docview/1073420766?accountid=27203
Airbus A380: How the Airlines Compare." Busineesstraveller.com. Panacea Publishing, 31 Aug. 2013. Web. 1 Dec. 2013.
In 1978, deregulation removed government control over fares and domestic routes. A slew of new entrants entered the market, but within 10 years, all but one airline (America West), had failed and ceased to exist. With long-term growth estimates of 4 percent for air travel, it's attractive for new firms to service the demand. It was as simple as having enough capital to lease a plane and passengers willing to pay for a seat on the plane. In recent news, the story about an 18-yr British...
Revkin, Jan W. and Laurent Therivel. “Delta Air Lines (A): The Low-Cost Carrier Threat”. Harvard Business School. Jan 25, 2005.
Latrou, K. and Oretti, M. (2007), The Airline Choices for the Future: From Alliances to Mergers, Ashgate Publishing
To buttress the implication of the model, Porter explained why the airline industry is the least profitable amongst industries owing to the high threat of the competitive forces. The airline industry players compete heavily on price. Most custom...
Qantas & Emirates both have been in the top leading global aviation company for past decades, both providing world class services and long haul flights which penetrate the market shares of aviation. Qantas & Emirates come into a strategic alliance which offers the most comprehensive global network coverage and connecting more than 65 cities in Europe, Middle East and North America bringing a total of 800 flights per week which allows consumers to easily book and fly convenience and frequency (Qantas Airlines. 2014). With the strategic alliance both Airlines aim to enhance and strengthen their global branding, positioning, and maintaining their market dominance within host country and globalising.
Easy Jet has gone international to an extent. ”Push” factors within its existing market are primarily the saturation of the Europe market and its strong competition. The statistics show that people travelling by air has increased tremendously over a year (Holloway, 2000). Asia and North African appears to be attractive new markets for EasyJet to expand and exert its influence. EasyJet entered the European airline industry despite the stiff competition. The competitive factors and attractiveness of the European market can be examined further by use of Yip’s driver of internationalization. YIP’s framework suggests that the internationalization of organization is influenced by drivers of globalization which are: market, government, cost and competitive consideration.
Porter stated; “for an airline to succeed in the marketplace, it must have a sustainable competitive advantage” (Porter M. E., 2008). The airline industry is the highest competitive industry, and I believe a sustainable completive advantage is essential to succeed in the future of the aviation industry. The competitive advantages that an airline embrace, needs to be based on the airlines strategy and differentiation to competitors. Emirates displays how it has a strategy and how the airline gets ahead of its competitors through how unique it is.