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Frank Lorenzo is revered as a great businessman. His leadership of Texas International and successive acquirement of a number of other airlines led him to become one of the most notorious executives of the ’70’s and ’80’s. He helped to guide these airlines into and through the airline deregulation period. In these ways, he is rightfully considered as a successful executive who could guide his companies through rapidly changing times. Where this falls apart however, is in his handling of Eastern Airlines. He took an airline that at its heyday, was one of the largest in the world, and managed to drive it into the ground leaving a trail of devastation behind it. His iron-fisted practices caused Eastern nothing but problems, and they were eventually …show more content…
His seeming disregard for salary levels and union influence caused distaste throughout the airline. His attempted salary cuts were so drastic, that many people would have been left high and dry with regard to their personal financial situations had they stuck around. These salary cuts led to vicious strikes that left many employees either without jobs, or with much lower paying positions within the company that had little job security. According to an article from the Orlando Sentinel, “Lorenzo is described by people who know him best as a ‘numbers man’ rather than a ‘people person.’” (Powers, 1986). This attitude along with the aforementioned union and salary issues, clearly show that at the time, Lorenzo was not an empathetic person, and while he had good business sense, he did a poor job at keeping Eastern’s employees …show more content…
Texas Air Corp. contained many airlines under its umbrella, including Eastern. As the airline spiraled around the drain, Lorenzo would attempt to lift it out of bankruptcy by dividing assets. Some of the aircraft Lorenzo took from Eastern were removed and placed into service with other Texas Air subsidiaries, including Continental and New York Air. Lorenzo basically pulled Eastern’s northeast shuttle service out from under itself and replaced it with New York Air. He would also move large amounts of cash to Texas Air Corp. in the form of various loans and fees, as well as to Continental to help bring that airline back from bankruptcy (that he caused in the first place) (Rasmussen, 1996). Lorenzo’s main business strategy was to create holding companies and then snatch up subsidiaries to create a spiderweb of businesses that he could intertwine. This intertwining of airlines worked both positively and negatively. On the good side, he and a few of his subsidiary companies made a lot of money and stayed afloat, even after deregulation and bankruptcy. Negatively, these benefits came at a cost. Part of Eastern’s downfall was caused by Lorenzo moving assets from Eastern to other airlines that were managed under his same holding
Superheroes and villains are not commonly associated with airlines, but in the article “A Tale of Two Airlines” by Christopher Elliot, it is put into a different perspective. The two airlines in question are Spirit and Southwest. Although both have some similarities, they both have considerably different views on how to treat customers. Southwest practices treating customers with respect, while fares may be a little higher. Spirit’s beliefs are to treat customers “like cargo” with lower fares. With their friendly attendants and better overall customer interaction, this appoints Southwest as the hero, making Spirit our villain. Elliot makes his point by exclaiming the “heroes” should be rewarded with a higher multitude of passengers and the “villains” should not be granted this satisfaction.
whether or not that city had enough gates for the new carrier, and whether the
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.
Spirit Airlines has long been considered an unorthodox airline. They, of course, address all four P’s in their marketing strategy; however, they focus a large amount of their effort on price and promotion. They focus on cutting price through “unbundling”. They focus on promotion through taking advantage of social issues and breaking news. Many advertisements and deals promoted by Spirit have given the public a definite shock-factor. Spirit has made two objectives very clear: they are furious at getting the customer the lowest fare possible by any means necessary, and they will similarly use any means necessary to get those potential customers to notice those fares. Such a blatant marketing strategy works. Even going up against some big competition, Spirit finds ways to be competitive and successful in flagrant fashion.
In today's competitive marketplace, all firms are seeking ways to improve their overall performance. One such method of improvement, recently adopted by many firms, is benchmarking. Benchmarking is a technique used to evaluate internal business processes. "In this analysis, managers determine the firm's critical processes and outputs, baseline those processes, then compare the performance of each process against a standard outside the industry" (Bounds, Yorks, Adams, & Ranney 1994). To effectively improve a business process to world-class quality, managers must find a firm that is recognized as a global leader, not just the industry standard. Successful benchmarking requires tailor-made solutions, not just blind copying of another organization. Measurement and interpretation of data collected is the key to creating business process solutions.
In a high competitive world market and with the increasing rational buyers a company can only win by creating and delivering the best customer value than the others competitors do. To succeed, a company needs to use the concepts of value chain.
By exposing readers to a world where workers are underpaid and mistreated, corruption is heavy, and factories control a whole neighborhood, Sinclair shocks readers and explains that the Packington factories “[were] really not a number of firms at all, but one great firm, the Beef Trust” (Sinclair 112). Similar to how the airlines shared information to upcharge passenger tickets and control the airport, Sinclair writes that “every week the managers of [The Beef Trust] got together and compared notes” (Sinclair 112). Stating that these meetings were not to help the workers or consumers, because they judged the effectiveness of workers there and “fixed the price they would pay for beef…..and all the dressed meat in the country” (Sinclair 112). Sinclair also tells readers that the mergers and cooperation not only hurts workers and consumers but also smaller companies. For example, the airlines that grow and try to “bully foreign carriers” (Thomaselli) can be compared to the man who tried to “gather this filth in scows, to make lard out of it” (Sinclair 97) in Bubbly Creek but was stopped when “the packers took the cue, and got an injunction to stop him, and afterwards gathered it themselves” (Sinclair 97). Even though large airlines and smaller airlines both try to cheat to have a winning hand, the monopolies end up on top and can have a more widespread hold on the nation’s travelers and have “80 percent of the nation’s air traffic to be concentrated among four airlines”
Northwest Airlines is one of the pioneers in the airline transportation industry and is ranked at the fourth largest air carrier in the United States today. The success of the carrier depends on the quality and reliability of the service at a reasonable price. Close competitors force Northwest to innovate their services by increasing efficiency. This essay will try to examine different perspectives in the services needed to successfully complete the company’s objectives. The analysis will explain historical and financial perspectives that may give a better understanding of the current market trend of the organization.
Few things escaped the shadow cast by World War II, and the aviation industry was no exception. For 60 wearisome months, United put aside its quest for growth and
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).
Other airlines approached the economic crisis by limiting their service or letting go of employees, whereas Southwest tackled the problem by offering workers secured positions for lower wages. Though the circumstances were not ideal, overall employees responded positively to the option of keeping their jobs. They also promote internal marketing strategies within the workplace. Southwest has a clear vision which employees strive to be a part of. In fact, part of their vision is in the best interest of their employees, as a common mantra within the company is, “customers come second… and still get great service.” They offer a casual work environment. This approach not only benefits the employees comfort, but also coincides with the company’s easy-going brand image it wishes to portray. Employees are at ease in at their job and overall enjoy what they do. Southwest also makes a point to attract the desirable candidates for their positions. They emphasize teamwork. Employees are encouraged to help each other out to strive toward a common goal. Employees are often rewarded for their achievements as well. As seen in exhibit 1, these strategies to keep employee satisfaction high, are factors that keep loyal employees within the company.5 Southwest makes every attempt to keep employees content as they believe happy employees lead to happy customers. Southwest has
It has stayed relevant to the market through its propelled philosophy of relationships to generate profits in the business. Since its establishment in Monroe, Louisiana the once tiny airline has stretched to greater heights serving in 6 continents. It has also established a distinguishable name among its competitors with a reputation of leading customer services. However, even as an established venture, the company needs to maximize its profits in order to stay in business and expand in to new territories beyond its conquered boundaries. A strategic analysis was carried out by our team to establish the company’s current situation. A SWOT analysis was performed to come up with three referenced, strategic alternatives. This alternatives are meant to act as a strategic guidance to the company in order to enhance growth. The strategic recommendation provided will improve and enable the business to cope with the competitors while the implementation of the strategy section will outline the way to go about achieving these alternatives in the business setting. Lastly, we put up a discussion on the evaluation procedures and necessary controls for the
The perennial crisis in the airline industry: Deregulation and innovation. Order No. 3351230, Claremont Graduate University). ProQuest Dissertations and Theses,, 662-n/a. Retrieved from http://search.proquest.com/docview/304861508?accountid=8364.
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 to focus on the change process post the merger with AirTran, and to evaluate alternatives to address the impacts of the merger. II.
As Boeing’s CEO, Frank Shrontz promised to increase earnings and return on equity. Boeing had a history of making money when its competitors did not, but Mr. Shrontz wanted higher returns. The airline industry was characterized by large cash outflows for R&D and manufacturing and long payback periods over long life cycles for each new airframe design. Companies had to have deep pockets to keep the operation going while waiting for a return on their investments. If Mr. Shrontz could increase the return on equity for Boeing, it would increase the likelihood of Boeing’s continued success well into the future.