Contents A description of the organisation and the market in which it operates 3 A description of the IT governance used 3 A summary of the case study 4 A critical analysis of the impact of the IT governance on the organisation 5 References 8 A description of the organisation and the market in which it operates 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). A description of the IT governance used IT governance in the airline industry is specifically tied to sales and value chain management. By the late 1990s, international travel software traditionally used by travel agencies, such as SABRE, was opened up via application programming interface (API) to web developers (Nicolaou & Schick, 2011). As a result, consumers saw the advent of internet-based travel agencies, and many airlines and other travel companies began to sell directly to passengers (Buhalisa & Licata, 2002). Recently, IT governance has been a mainly factor for fulfill business need from investing in IT area. In addition, Sarbanes-Oxley Act (SOX) mentioned IT governance issues for enhancing internal contro... ... middle of paper ... ...dustry. IseB, 5, 65–91. Iskandar, M., & Salleh, N. A. M. (2010). IT Governance in Airline Industry: A Multiple Case Study. International Journal of Digital Society, 1(4), 308-314. Jharkharia, S. (2012). Supply chain issues in mergers and acquisitions: A case from Indian aviation industry. International Journal of Aviation Management,1(4), 293-303. Markus, M. L., & Bui, Q. N. (2012). Going concerns: the governance of interorganizational coordination hubs. Journal of Management Information Systems, 28(4), 163-198. Nicolaou, A. I., & Schick, A. G. (2011). Institutional Forces In Accounting Information Systems Choice. Review of Business Information Systems (RBIS), 1(1), 37-50. Sharma, D., Stone, M., & Ekinci, Y. (2009). IT governance and project management: A qualitative study. Journal of Database Marketing & Customer Strategy Management, 16(1), 29-50.
WestJet is the second-largest carrier in Canada, which mainly focuses on economic airlines. In decades past, WestJet expanded its destination network form all western Canadian cities to international scope. During this development period, IT played a important role. For example, electronic ticket is used in the airline reservation system. However, some IT-related issues also hinders the company’s development.
The airline industry not only transports passengers across the country and world but it also moves cargo from location to location. The largest segment for the airlines is general commercial passengers and business travelers. In 2004, there were 15 major airlines with 12 of those being mainly passenger carriers, the remaining three being cargo carriers. In addition to the large airlines (Delta, United, American, Southwest, Northwest), there are numerous low-cost regional carriers that have tapped into the larger carriers’ customer base. These smaller companies generally fly from smaller airports and serve a smaller amount of destination cities. Calling them a no-frills air carrier would not be far from the truth. Their goal is to move customers f...
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 September 11th, 2001, the airline industry experienced a significant drop in travel. The reasons for the airline industry downfalls also included a weak U.S and global economy, a tremendous increase in fuel costs, fears of terrorist's attacks, and a decrease in both business and vacation travel.
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
It can be seen as an issue network structure where each administration group chief has full summon over specific applications and stages, and in the meantime has IT obligation regarding a particular business division. Other structural components of IT administration contain the presence of IT councils. Three particular panels were distinguished: the ITLT, the BPSG, and the operational IT panel. Moreover, parts and obligations are unmistakably characterized utilizing unambiguous sets of responsibilities. With the CIO dwelling in the top managerial staff, IT administration issues are all the more frequently on the board's
Spirit Airlines Inc., which is primarily a smaller airline company than its competition, it is still provides the same good(s), (flights) as the other airlines. Since 2007, the company has been able to reduce its “overall ticket prices by 40 percent” (Brooks, Cox, & White, 2012, p. 45). It can be difficult to comprehend how a smaller airline company such as Spirit Airlines, Inc. could be capable
When it comes to quality, Delta raked number four within the fifteen biggest carriers in the USA. The annual report conducted last year, evaluated the airlines “based on several performance markers including the percentage of on-time flights and mishandled bags” (Jones, 2014).This report, brought Delta to the fourth place among the other rivals, “Delta Airlines, which held steady in the number four spot for the second year in a row was particularly noteworthy” (Jones, 2014). Though this achievement, Delta showed they can actually meet customers need providing high service quality, remaining also economically competitive in the industry, since they not only offer high priced flights, but also “Basic Economy fares, that they introduced more than two years ago to compete against Spirit and other ultra-low-cost carriers” (Schaal, 2014). Efficiency
...ilitates improved revenue, and, also enhances administrative operations of airlines. Therefore, one justification of information technology is its has ensured that information is regularly disseminated in order to conform with openness and better enlightenment and use of information management respectively. The proliferation of the internet, as a main stream communication media and as an infrastructure for airline operators activities and businesses transactions has generated a wide range of strategic implications for aviation industry in general as well as the transport and tourism industries in particular, (Li-Hua and Khalil, 2006). In addition, the examination of computerized reservation would create awareness on the need for technology which has enabled the availability of information, cashless transaction, minimal contact with potential passengers, and so on.
Southwest Airlines has come from an underdog to being one of the best airlines in the industry. This reputation translates from its strategic management of resources. The Co-founder and former CEO, Herb Kelleher, established a unique corporate culture that leads to high customer satisfaction, employees’ morale, and one of the most profitable airlines in the industry (Jackson et al., 2012). The corporate culture concentrates on empowerment the workforce. It shows through Southwest Airlines core values that “happy employees lead to happy customers, which create happy shareholders” (Jackson et al., 2012). Since its first grand opening in 1971, Southwest Airlines has shown steady growth, and now carries more passengers than any other low-cost carrier in the world (Wharton, 2010). To expand the business operations, Southwest Airlines took over AirTran in 2010 as a strategy to gain more market share for the Southeast region and international flights. However, the acquisition of AirTran brought upcoming challenges both internally and externally for Southwest Airlines. In this case analysis, the objectives are focusing on the change process post the merger with AirTran, and evaluating alternatives to address the impacts of the merger.
The International Air Transport Association (IATA). 2014. Airline Cost Performance. IATA Economics Briefing. [report] IATA, p. 31.
The airline industry has over the past few months gradually been going into recession. This has been due to a number of factors, all affecting the industry in a negative manner at the same time. This has resulted in low profits and poor performance. The decline in the industry sharply increased after the terrorist attacks on the United States, increasing the urgency to clearly identify the causes of the problems faced and to find any solutions available to overcome them.
Perry, B., 2005, Organisational Management and Information Systems. [e-book] Oxford; Elsevier. Available at: Google Books . [Accessed 14 November 2013]