In every organization there are issues that need to be adjusted and dealt with to suit the needs of its customers, and in the aviation industry, where there are many different departments and millions of people from different race, religion, nationality and ethnic groups traverse, also where huge and very advanced technological resources are used to carry out day to day tasks/activities, several issues are bound to arise.
CEO and Director General of IATA Tony Tyler (2014) outlined 3 major challenges facing the aviation industry, these include:
• Safety In 2013 there were some 36.4 million flights and 16 fatal accidents. If you were flying on a jet aircraft, your chances of being involved in a major accident were one in 2.4 million. And among
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Over the last century airlines have just broken even. Despite all of the value that they bring to the world, they have basically destroyed a vast amount of capital. It is a very competitive and very tough business. On average, airlines make less than $6 per passenger. On about $750 billion in revenue, we expect a net profit of just $18 billion. For those of you who are good at arithmetic, that it is just a 2.4% profit margin.
Diana Coza (2014) also outlined a number of challenges facing the airline industry in her article posted on Travel Technology and Solutions (tts.com). Some of these include:
• Competitiveness
Any change in the GDP is often reflected in airline usage and the fuel also costs almost 50% more in just 5 years. According to Antonio Vázquez, the chairman of IAG and Iberia, `competitiveness is one of the most important problems being faced by the airline industry in Europe. Vazquez mentions that this makes alliances vital for the growth and development of airlines – whether with high-speed rail links or with other airlines. He states Iberia’s merger with BA as an example where both airlines have managed to gain immense benefits from the merger despite the fact that they haven’t integrated
The pros of an airline implementing a policy that bigger customers need to buy a second seat is that the weight capacity regulations will be followed to. As well as the cons of an airline implementing a policy that larger customers need to buy a second seat would result in a bigger people who travelling will not uses that airlines anymore, airlines would be glowered on by family or relatives of larger customers, airline’s policies could be vigorously monitored for discriminatory actions against overweight persons. As mentioned in the book there are no federal laws prohibiting discrimination against obese individual, although there are some places such as Wisconsin, DC, and California provide legal protection. (Harvey & Allard , 2012, p. 234)
Another internal challenge for Southwest Airlines is the conflicting management style and business operation with AirTran. On top of that, the external challenges such as the increase of competitions and gas prices are some of issues f...
The Airline Industry is a fascinating market. It has been one of the few industries to reach astounding milestones. For example, over 200 airlines have gone out of business since deregulation occurred in 1978. Currently, more than 50% of the airlines in the industry are operating under Chapter 11 regulations. Since 9/11, four of the six large carriers have filed for and are currently under bankruptcy court protection. Since 9/11 the industry has lost over $30 billion dollars, and this loss continues to increase. Despite the fact that the airline industry is in a state of despair, JetBlue has become the golden example, a glimpse of what the industry could be.
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).
As airline industry is a competitive marketplace, the airline companies use new technologies to improve their efficiency and decrease the overhead costs, including ‘advanced aircraft engine technology, IT solutions, and mobile technology’ (Cederholm 2014). The technology changes including technology improvement, new innovation and disruptive technology. The disruptive technology need to meet the characteristics of ‘simplicity, convenience, accessibility and affordability’ (Christensen 1995). The technology changes would bring both opportunities and threats to airline companies. Since Labour cost and fuel costs occupy 50% of most airlines operating cost (Groot 2014). Therefore, if new technologies could be disruptive in the two aspects, there will be important changes to current airline
1- Issues The main issue of this case is the lack of profits of the airline industry, an industry that should be more than profitable due to the large amount of customers, the necessity of using airlines’ services and the high prices charged by most of these airlines. What we are going to deal with is, why is this happening? And how is American airlines dealing with this problem?. To be able to discuss how American airlines wants to regain profitability, we must identify and analyse different issues such as, the company’s background, the airline industry as a whole, the demand for air travel, the marketing strategies, the distribution systems, pricing policies etc.
Recently Qantas has partnered up with Emirates in an effort to channel Europe-bound travellers through Dubai International Airport in a mutually beneficial arrangement, an example of business-to-business geographic segmentation marketing.... ... middle of paper ... ... Indirect Taxes on International Aviation*.
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).
David Neelman realized his vision of creating an airlines company that is focused on customer service by starting JetBlue. During the startup phase or entrepreneurial stage, typically most of the companies go through the activities of marketing the service and /or product. But Neelman, perceptive of the industry needs, went about raising enough capital before starting JetBlue, as airlines industry is a capital intensive industry. His entrepreneurial style and previous experience enabled him to identify the core value of the service “To improve the passenger experience at a low cost” that he wanted JetBlue to provide. Neelman wanted to utilize technology to bring better customer experience at a low cost. Some of the technological activities that JetBlue planned include state-of-the-art revenue management system, paperless tickets etc. His in-depth experience enabled him to identify the external factors that would affect the business such as simple check-in and boarding process, hassle free ticketing procedures etc. This emphasized his knowledge of adapting to the ever changing customer needs. Neelman instilled the culture of...
In 2013, 81 aviation crashes occurred. 3 billion people flew safely that year on 36.4 million flights. Due to this the percentage of a plane crash occurring is fairly small. The Raft by S.A Bodeen is a suspenseful fiction that keeps the reader wanting to read more.
Summary William Boeing founded the Boeing airplane company in the early 20th century. After strings of acquisitions and mergers, this company grew and became the largest global aerospace industry. Followed by previous reorganizations in the 1990s, this company decided to start its branding campaign in May 2001. This campaign consisted of lots of effort and structural changes for the first time in corporate history. The media was showing the initial success of this campaign just after its beginning.
The main opportunities that the scheduled air transportation will have in the next five years are the possible decrease of TSA agents at airports, technology increasing the safety and comfort of the flights for the passengers and ...
The death ratio and crash ratio have descended over the following years.There are thousands of car fatalities each year, along with deaths. You have a one in one million chance to crash while being present on an plane.
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...
The International Air Transport Association (IATA). 2014. Airline Cost Performance. IATA Economics Briefing. [report] IATA, p. 31.