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
…show more content…
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)
The airline industry has long attempted to segment the air travel market in order to effectively target its constituents. The classic airline model consists of First Class, Business Class and Economy, and the demographics that make up the classes have both similarities and differences to the other classes. For instance there may be similarities between business class travellers on a particular flight, but they will not all be travelling for the same reason. An almost-universal characteristic of air travel is that customers do not fly for the sake of flying; the destination is the important element and the travel is a by-product, a means-to-an-end that involves the necessity of an aircraft that gets the customer from point A to point B. Because the reasons can differ greatly in the motivations for a customer wanting to fly, it can be difficult to divide the market into discrete segments, that is, there is always going to be overlap in the preferences and characteristics of any given segment. With that in mind, the commonalities that are shared between the clientele that make up the respective classes can easily withstand analysis.
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.
After World War II there was an excess of aircraft and trained pilots in the United States, which significantly increase in private and commercial flights. An increase in the use of private aircraft and large passenger planes meant an increase in the possibly of aircraft safety incidents. Even though safety measures had been put in place to tend to large number of aircraft in the skies, in late 1950’s there were two unfortunate accidents that finally led to legislation that would be a major change to the world of aviation that affects us even today. The introduction of the Federal Aviation Act of 1958 spurred several changes in aviation that eventually led to the creation of the Federal Aviation Administration.
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
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.
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).
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 more availability of flights for the consumers to choose from limited airlines.... ... middle of paper ... ... Dixit, A. (2000).
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 International Air Transport Association (IATA). 2014. Airline Cost Performance. IATA Economics Briefing. [report] IATA, p. 31.
1997-98 to 2002-03: During this period, Indian aviation lacked focus, leadership and strategic direction, which kept the industry grounded. The sector was both, over-regulated and under-managed. No new entrants were permitted ...
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.
Air travel is a huge and tremendously flourishing industry. Globalization can be defined as the integration of national and local economics, culture and societies through a web of communication, transportation and trade. The current era considers globalization as the dominant driver of almost all business due to the influence or the international market. The emerging prosperity of the global aviation industry plays a substantial role in economic growth, tourism, global investment and world trade, which are the impacts of globalization. This essay portrays the negative and positive effects of this globalization on the airline industry.
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.