Since the Jet Age, airlines have been entering and existing the airline industry. Some have been in business since the very beginning. For example, United airlines was founded almost twenty-five years before the jet age took off, and due to an incredible amount of money that the airline had by being one of the first airlines predating the Jet Age, was able to buy new jets and assert itself as one of THE giants of air travel by the late 1950’s. But the introduction of new technology paved the way for issues regarding externalities, and production of these new technologies. ("Assessing the external environment - Responding to a changing external business environment - United Airlines | United Airlines case studies and information | The Times 100", n.d., p. 1) The beginning of the Jet Age offered an intense opportunity for new firms to open or expand, producing new products from jet engines to structural parts, from radar technology, to reclining seats. According to research done by the Air Transportation Action Group, “It has been estimated the airline industry supports a grand total of 29 million jobs” (Hanlon, 2007, p. 1). This statistic proves how dependent the world is on the airline industry, for jobs and travel, as well as r...
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 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.
3. Fortunately, there are several opportunities in the airline industry of which companies will be able to take advantage. First, the airline industry is reviving and passenger levels are now returning to pre-9/11 status. Companies can offer high degrees of service and reduce costs through the use of the Internet, such as online ticket sales, flight seating charts, and plane infor...
EconEdLink. (2005). Airline mergers, software industry: Conte markets. EconEdLink, Retrieved January 14, 2005, from www.econedlink.org.
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
Top companies need to develop a strong performance anatomy which allows them to continually pursue customer-valued innovations and differentiate from the competitors. And an increasingly important component of this strong performance anatomy is the company’s IT capability which allows a business focussed on high performance to create and act on customer and business insights in real time, create new products and services and transform business models. Likewise a strong and proactive IT governance model is also important which insures that business leaders are involved in planning and aligning IT initiatives with business priorities which is well understood by Accenture. And the company’s IT governance demands are particularly heavy as well being a heavily matrixed organization with five operating groups, 17 focused industry grou...
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 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.
1. Issues 2. American Airlines’ objectives 3. The airline industry 4. Market 5. Consumer needs 6. Brand image 7. Distribution system 8. Pricing 9. Marketing related strategies 10. Assumptions and risks
This will lead to the limitations on the number of routes the international carriers fly, flight schedules, fares, etc. The past five years witnessed an increase in the cost of fuel, leading many airlines into bankruptcies, which resulted in consequences such as the $30 billion loss faced by the US airline industry as estimated by the US Airport Transport Association. One of the major political factor of globalization that affected airline industry was 9/11. In order to deter future terrorist threats, several security rules and regulations were enforced, which led to the increased cost of aviation operators to administer the fundamental training and personnel to follow these rules. Additionally, the post 9/11 period saw a decline in passenger and consumer requirements, negatively affecting the airline profits. There was a revenue drop of dollar 22 billion and three years were taken to recover them. But these revenues were dropped by 14% during the global financial crisis during the years 2008 and 2009, which was reclaimed to a large extend in the following year. The 9/11 period brought forward a huge global impact such as decline in traffic, revenues and profitability, increase in oil price and bankruptcies,
Tom, Y. (2009). The perennial crisis of the airline industry: Deregulation and innovation. (Order No. 3351230, The Claremont Graduate University). ProQuest Dissertations and Theses, , 662-n/a. Retrieved from http://search.proquest.com/docview/304861508?accountid=8364. (304861508).
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...
Airline industry is affected by no. of factors such as fuel price fluctuations, high fixed costs, strong influence of external environment and excessive use of marginal costing by carriers. Recessions in the industry tend to last longer, while recovery periods are generally shorter. Over the past nine years, it is observed that industry has made losses for five years and during the profitable years margins were on a lower end. The airlines industry is acutely sensitive to external events such as wars, economic instability, government policies and environmental regulations.
Perry, B., 2005, Organisational Management and Information Systems. [e-book] Oxford; Elsevier. Available at: Google Books . [Accessed 14 November 2013]