...Business Ethics : Air France Finance and competitiveness are today the two words at the heart of preoccupations for all Air France executives. Air France is the main French airline company. Founded in 1933, it provides transportation of passengers, cargo, maintenance, and maintains aircraft around the world. It joined with the Dutch company named KLM in 2004 and became together the fifth air carrier in the world. Air France KLM has about 77.3 million passengers each year, more than 95,000 employees and 25.5 billion turnover in 2013, so it must implement a very specific organization in order to better manage its business. With the rise of low cost airline and the economic crisis raging, Air France KLM must pay close attention to the management of his company. Many stakeholders are involved in the good functionment of Air France KLM, that’s why they have an important place in the company. In recent weeks, Air France KLM has been affected by several strikes of its employees which caused Air France to lose a lot of money (until 500 million euros) and created lowers credibility to its loyal customers. How Air France KLM has to face all these threats and what solutions could be put in place to prevent these risks ? First of all, we will see the main stakeholders present in this company and the actions to take in place to manage them. Finally, we will find different preventions to avoid any strikes and minimize risk. Company’s stake holders identification...
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...Delta airline and Air France KLM established a joint venture that includes revenue sharing, cost sharing and intercontinental routes between two airlines. This joint venture was successful in early days and its sales were more than 12 billion Euros in 2011. As author said the purpose of this case is discussion in class room rather than examining its benefit and loss so this case examined the airline industry. Especially this case discussed the joint venture and Alliances that occurred in past between the different airlines. In this case Delta airlines and Air France KLM discussed about its joint venture, policies, procedures and operation. But Air France KLM and Delta airlines faced some issues and conflicts over the time. Detail of case is discussed as follows. This case was written by Pierre Dosage and Ulrich Washer of John Molson Schools of business in Concordia University. Airlines industry was tremendously change in last 24 years and especially during 1990 to 2010 many alliances in airline industry was occurred. A first airline alliance was established in 1930 between pan American Grace and Latin America. That alliance was simple and limited but with the passage of time alliances become complex and diversified and many airlines alliances occurred afterwards. Alliances occurred in different categorize according to the need and relation of airlines with each other's. First alliance category was code sharing agreements whereas airlines allowed each other's passengers on corresponding...
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...------------------------------------------------- Competing through alliances in the airline industry: The AIR FRANCE- KLM/DELTA AIR LINES JOINT VENTURE In less than twenty years, the global industry has gone through tremendous change. Several airlines had gone out of business that had been on top of the industry for years. One of the remarkable changes had been airline alliances. The case focuses on the airline industry and how airlines are forming alliances and joint ventures. It then introduces the partner firms Air France KLM , and Delta . Air France KLM had over 25 collaborative agreements with other carriers and was a founding member of Skyteam, one of the leading airline groups. Air France KLM and Delta Airlines formed revenue and cost sharing joint ventures that include all transatlantic routes of the two airlines. The alliance formed sales over 12 billion euros, and accounted for about 30% of all North Atlantic passenger business. The case also provides information on joint ventures, and how alliances are used strategically to enhance revenues and reduce cost. The case also discuss how collaboration can be structured and governed to achieve outcomes, and how strategic decisions by one alliance partner can affect the stability of the alliance. The issue of the case is if whether Air France KLM should reconsider their alliance with Delta Airlines, due to some of the independent decisions made within the alliance. Some of the external factors that affected the company...
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...Case Study What are the main drivers of success in the airline industry? Critically analyze and comment on the evolution of the airline industry? The main drivers of success in the airline industry are dependent on what the customers value and where the organization (in this case the airline company) must excel to outperform their competition. Since the airline industry is very sensitive to changes in the economy, both passenger and freight demand need steady economic growth. Therefore a main success driver is to manage the high fixed costs, which are related to these areas. Also, it is important to have control over the cost item fuel, which is crucial to an airline since it’s also considered to be a fixed cost. It is also mentioned in the case that technological innovation and flexibility were considered to be key success factors for profitability. Another important factor is the relationship between airliners and aircraft providers, since this can ensure the airliners flexibility and renewal, which is of importance to the customers in this highly competitive industry. Airliners should also be considering their occupancy rates, which should be optimized to cover the fixed costs of every flight. To do this, fidelity programs and code sharing can be used as tools for success. The evolution of the airline industry starts with national clusters, and countries and governments have played a big part for the industry. The governments would support the (often state owned)...
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...French used to get 38% of the total benefice, 20% was for the British and 4% for the Spansih The first flight of an Airbus plane was on May 12th.1979 with Air France. The plane made a return trip Toulouse-Paris. The most famous plane was A320. There were 10,994 orders for this plane and only 6,285 of them are delivered for the moment. The last plane Airbus launched is the A350 XWB. There are already 750 orders from 39 customers worldwide Airbus usually sales its planes to normal flight companies like Air Austral, Air France, Amedeo, Asiana, Emirates; but also Jetliners and private owner (Arabic prince …) and the industry. II. Boeing The first plane of Boeing was a Seaplane, the Boeing Model I, on June 15th, 1916. The New-Zeland Flying School was the first company to pilot the plane with two crews at a maximum speed of 121 km/h. 2 The most famous plane of Boeing is the B-737. The first flight was in 1968 with Lufthansa Company. Nowadays, 8237 plane were sell and this plane is used by Southwest Airlines, Ryanair, United Airlines... Their last plane is the B747-8. The newest and most modern plane. The first flight of Boeing was on 2010 and the first company who used this plane was Cargolux in 2011. Some companies and luxurious companies fly with Cathay Pacific Cargo, Lufthansa, Atlas Air or Cargolux Airlines... The clients of Boeing are so various. The first client was the US Navy. Nowadays,...
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...E-Business advantages for Airline Industries Analysis of the supply chain structure of the Airline Industry to highlight the advantages of the e–Business systems Index E-Business advantages for Airline Industries ................................................................................................ 1 Introduction and scope ............................................................................................................................... 2 The Airline Industry .................................................................................................................................. 2 External actors ........................................................................................................................................... 2 I.C.A.O................................................................................................................................................... 3 I.A.T.A. .................................................................................................................................................. 3 EUROCONTROL.................................................................................................................................. 4 The digital flight, how the e-business revolutionized the Airline Industry ...............................................4 Can we make the journey experience different? Should we do it?........................................................ 5 ...
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...two. This sector had its share of heightened challenges during the global financial crisis of 2000-2005 and 2008-09. The airline industry lost billions of dollars and some airlines struggled to remain in business. Today, the global airline industry consists of over 2000 airlines operating more than 23,000 aircraft, providing service to over 3700 airports. In 2006, the world’s airlines flew almost 28 million scheduled flight departures and carried over 2 billion passengers [1]. The growth of world air travel has averaged approximately 5% per year over the past 30 years, with substantial yearly variations due both to changing economic conditions and differences in economic growth in different regions of the world. Historically, the annual growth in air travel has been about twice the annual growth in GDP. Even with relatively conservative expectations of economic growth over the next 10-15 years, a continued 4-5% annual growth in global air travel will lead to a doubling of total air travel during this period. The economic importance of the airline industry and, in turn, its repercussions for aircraft manufacturers, makes the volatility of airline profits and their dependence on good economic conditions a serious concern for both industries. This concern has grown dramatically since airline deregulation, as stable profits and/or government assistance were the rule rather than the exception for most international airlines prior to the 1980s. As shown in Figure 1, the total net...
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...Airline Global Alliances May 11, 2015 Table of Contents Abstract 3 Introduction of Strategic Alliances in Airline Industry 4 Evaluation of Alliances in Airline Industry 4 Purposes of Alliance between Airlines 5 Disadvantage of Alliance between Airlines 6 Major Airline Alliances in the World 6 Alliances help Airlines to Achieve Comparative Advantage 7 Sky Team Alliance 8 Airline Alliances Enhance the CSR 9 Conclusion 10 References 12 Abstract Now a days the term global alliance is widely used in every business, but its presence is more significant in airline industry. The strategic alliances in airline industry are global in nature. The past deregulation impacted on strategic alliances positively, industry is freer to set routes and cooperation’s, due to oil price hike the cooperation of airline firms was unavoidable. The alliances help generating traffic between an airline and other parties that are partner. The European alliances were threatened by US alliances; in such scenarios United Airlines and British Airlines came in contract to avoid threats from US airlines. The benefits of strategies alliances are to gain foothold in any country like many airlines did in Europe, while at the same time is to establish global presence. Strategic alliance and mergers of firms acts as marketing technique in airline industry. Many of the European airlines bought stakes from the...
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...Dubai International airport, which has the capacity to handle 70 million passengers per year. Emirates was launched in 1985 with two leased aircraft from a rudimentary airport. It’s phenomenal growth is reflected in the 160-plus aircraft in its rapidly expanding fleet – a mix of the latest wide-body Airbus and Boeing aircraft - as well as Dubai’s state-of-the-art Emirates Terminal 3, which is used solely for the airline's flights. Its fleet is one of the youngest in the skies, with an average age of under 80 months, and this figure will fall further as it takes delivery of the 200-plus aircraft it has on order, worth almost $84 billion at list price. Emirates is the Airbus A380 super-jumbo’s largest airline customer, with 20-plus in the air and over 60 still to be delivered. In 2010-2011, Emirates - which has over 12,000 cabin crew of more than 125 nationalities who speak over 50 different languages - carried 31.4 million passengers, an increase of four million on the previous year....
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...FOM Fachhochschule für Oekonomie & Management Frankfurt University of Applied Sciences Master of Business Administration First Semester Module: Economics Assignment Two: Economics of Alliance Airlines Prof. Dr. Andreas Löhr Author: Boris Olarte Arque Student id: 252547 Frankfurt am Main, 16th July 2010 Table of Contents List of Abbreviations III List of Figures IV 1 Introduction 1 2 Capital Investment 2 2.1. The Airline Market 4 2.2 High Cash Flow 9 3 Liberalization 10 4 Conclusion 11 List of references 14 Internet Sources 14 Further Literature 14 Appendix 15 List of Abbreviations ASM: Available Seat Mile OAG: Official Airline Guide IATA International Air Transportation Association ICAO International Civil Aviation Organization List of Figures Figure 1: Demand Curve….………....…..................................................................3 Figure 2: Supply Curve……………………….………….........................................4 Figure 3: One World airline members ……………………......................................5 Figure 4: SkyTeam airline members ……………………........................................6 Figure 5: Star Alliance Statistics…………………………………………….……..7 Figure 6: Market Share of the Alliances…................................................................8 1 Introduction The airline industry is classified in the third economic sector the same as services because that is what is about. Airlines perform...
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...sustainability as 5 different things; Holistic planning, one should have a right to be involved in any planning; Ecological processes preserved, one should have the right to have a healthy life; Inter generational equality, what one does today should not affect tomorrow; Fairness and opportunity, one should be entitle to a job anywhere and finally, Ecological Productivity should be preserved, one should not do anything to reduce the variety of natural life. Sustainable Aviation (2011) defines sustainable aviation as a long term approach to dealing with the 5 concepts mentioned in the Brundtland Report and ensuring a more sustainable industry, SA evaluates various sustainability problems the industry faces such as social issues, noise nuisance, air quality, natural resources, etc and it works with UK airlines to try and develop some of the key sustainability issues within the industry. Daley, B. (2010:165) states there are different concepts which elaborate on what sustainability is in the tourism industry and looks different methods which can be carried out for companies to be more sustainable e.g. UN Conference on Ecological sustainable development started in 1972 and was where the concept of sustainable tourism began. Since then, Daley, B. (2010:65) explains...
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...CASE: Connecting within Oneworld Following 2010 approval by U.S. and Japanese authorities for antitrust immunity, American Airlines (AA) and Japan Airlines (JAL) began sharing routes in 2011 that connect mainland North America with East Asia through a nonequity joint venture. Flights between Honolulu and Japan are not included in the agreement. This joint venture is similar to one forged among AA, British Airways, and Iberia for trans-Atlantic travel that began operating in 2010. In both cases, the agreements allow representatives from each airline to jointly manage capacity, sell and promote space on flights operated by each other, divide revenues, and schedule connecting flights. The major thrusts for these ventures are to cut operating costs by better controlling capacity, avoid disruptive price competition among them, and schedule so that there are more and better departure times and connections for passengers. The proposals are merely extensions to a historical series of alliances linking international airlines. In fact, the airline industry is unique in that its need to form collaborative arrangements has been important almost from the start of international air travel because of regulatory, cost, and competitive factors. In recent years, this need has accelerated because of airlines’ difficult profit performance. In effect, the airlines have been squeezed. First, costs have been rising, particularly because of oil prices and the requirement for greater...
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...9B15C008 Robert Way wrote this case under the supervision of Professor Gerard Seijts and Professor Jean-Louis Schaan solely to provide material for class discussion. The authors do not intend to illustrate either effective or ineffective handling of a managerial situation. The authors may have disguised certain names and other identifying information to protect confidentiality. This publication may not be transmitted, photocopied, digitized or otherwise reproduced in any form or by any means without the permission of the copyright holder. Reproduction of this material is not covered under authorization by any reproduction rights organization. To order copies or request permission to reproduce materials, contact Ivey Publishing, Ivey Business School, Western University, London, Ontario, Canada, N6G 0N1; (t) 519.661.3208; (e) cases@ivey.ca; www.iveycases.com. Copyright © 2015, Richard Ivey School of Business Foundation Version: 2015-05-22 In early 2014, Ferio Pugliese looked back on his turbulent first nine months as president of WestJet Airlines Ltd.’s (WestJet) new regional air service Encore. Officially launched in Western Canada in June 2013, this venture represented the company’s most significant organizational change in its 18 years of dramatic growth and was billed as WestJet’s “second coming” — hence, the chosen name Encore. The process of expanding the airline’s fleet to include smaller, short-haul aircraft servicing smaller destinations throughout...
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...the expectation of stakeholders by putting away such measures as revenues, profit and legal obligations. Community development, welfare, human rights and ethical conduct are key factors which come under the CSR umbrella’ (Laurie J. Mullins). I would like to discuss the CSR issues in Aviation Industry that’s why I have chosen Air France-KLM and Ryanair. 1.2 Air France-KLM Overview: Air France and KLM merged together in 2004 to form Air France-KLM Group while both airlines operate individually to retain their brands and identity (Air France-KLM CSR Report 2010). Air France was elected best airline of the year 2010 in Business Travel Awards (The Financial). Air France-KLM is the only airline which is selected in Dow Jones Sustainability Index in 2008.This group is the biggest in the whole world according to their profit growth which is €24.7 billion in 2008-2009 and €21.0 billion in 2009-2010.The passenger business, with €16.28 billion of revenues, makes the Group the global leader in both long and medium-haul passenger transportation and contributes some 80% of total revenues and second largest in terms of passenger carrier which is 71.4 million (Air France-KLM Financial Report 2010).Despite of its very difficult financial...
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...Case 4 MAGIC CARPET AIRLINES: CLIMATE OF THE AIRLINE INDUSTRY Appendix A Prior to the Deregulation Act of 1978, the airline industry was federally regulated in regards to the routes airlines flew and the fares they charged. Typically, when carriers negotiated labor contracts they gave a specific percentage increase in wages and then petitioned the government for a similar percentage increase in their fares. With full deregulation, airlines were free to fly any routes, pay any wages, and to charge any fares they wished. Deregulation resulted in the formation of many new airlines. These new carriers were usually non-union and had substantially lower labor costs; thus, they charged lower fares. Competition for passengers forced the older carriers to lower their fares and to reduce service to smaller cities with unprofitable routes. To cope with deregulation, companies made other changes. Airlines realigned their route systems. They developed "hub and spoke" systems whereby passengers were funneled into a hub city by a small regional carrier utilizing small aircraft (as represented by a spoke on a wheel). Travelers connecting at a hub city from a small airline then transferred to the major. To encourage these transfers, major airlines began contracting with smaller regional airlines to provide this spoke system for their hub cities. This arrangement gave new opportunities to regional carriers. However, to obtain such arrangements, regional airlines had to also...
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