...It is commonly known that the airline industry uses a different mechanisms to price discriminate (PD) consumers with varying elasticities of demand in terms of travel.[1] In this case study, I will investigate PD based on the day of the week a ticket is purchased. In theory, this method of price discrimination is very feasible as airfares can be easily changed on a day to day basis. For example, consumers who travel on any given day of the week but purchase on the weekend may have different PED than those consumers who purchase their tickets during the week. By comparing different days of the week and ticket prices, we can study whether the airline industry has identified this method as a valuable segmenting device. I will start this case study by defining the theory of PD then continue by assessing data regarding ticket prices and day of week of which purchased then conclude if there is enough evidence of PD. Price discrimination is the practice of charging consumers different prices for the same good or service, whereby the relevant price in each case depends on the buyers characteristics. The most common form of PD would include grouping consumers based on certain attributes and charging these groups a different price. In pure price discrimination, the price of a good or service will be set at the maximum of which each consumer is willing to pay. The goal of PD is to gain an extra slice of untapped revenue source from consumers who are willing to pay a higher price...
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...implement plans. • Planning - is the process of setting objectives and determining how to accomplish them. • Controlling - is the process of measuring performance and taking action to ensure desired result. • Leading - is the process of arousing enthusiasm and directing efforts towards organisational goals. In case study one; we can see that Robert L. Crandall was successful as he sat through various managerial levels at different organisation. One of his keys to success was through his ability in the area of management where he shown the four basic managerial functions. He was well known for his time at the American Airlines. Under his leadership, American Airlines was transformed from a small domestic carrier to one of the world's leading airlines with the largest jet fleet worldwide. American led the airline industry in the 1990's in revenues and operating income, and its parent company, AMR Corporation, was one of the top Fortune 500 companies. Organising In this case study one, organising was the managerial functions Crandall perform the most as it was one of his strongest points. His greatest contribution to the success of American Airlines was his vision in propelling the SABRE (semiautomatic business research environment) Group from an internal division of the company to one of the world's largest, privately owned computer networks. During his leadership, he introduces the Super Saver Fares. These were greatly reduced fares available only for reservations...
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...SPEEDING TICKETS: A CASE STUDY OF INTERNET DISTRIBUTION AND THE TRAVEL INDUSTRY --- SHOAB MOMIN (13210690764) Case Question: 1) Who are the winners at different stages of the changing travel industry? Ans: Based on the timelines, the case can be divided into following stages. Stage: Emergence of Global Distribution Systems (GDS): By 1950s, American Airline’s growth outpaced its ability to manage its inventory of seats using manual methods. IBM and American Airline developed SABER for this purpose. This system eventually became control center for American Airlines. Witnessing the success of Sabre system, IBM developed a scaled down version called PARS, targeting medium sized airlines and by 1972, 9 out of 10 major airlines operating in US were operating on IBM PARS system. Winner: IBM is the winner of this stage as it profited the most by starting a technology race for Distribution system and capturing major market Stage: GDS companies Dominance The airlines that owned GDS enjoyed oligopoly with only 4 GDS operators providing flight schedule searching and booking capability for almost all travel agents in United States.They deployed various methods to bias the results of searches performed on their systems e.g Display bias, Architectural bias as well as booking fees charging higher booking fees from more threatening competitors. Winner: Airlines Owning the GDS systems. Due to lack of government regulations, GDS owning airlines enjoyed dominance by deploying various...
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...Merger Robert J. Carbaugh, Central Washington University Koushik Ghosh, Central Washington University Recommended Citation: Carbaugh, Robert J. and Ghosh, Koushik (2010) "United-Continental Merger," Journal of Industrial Organization Education: Vol. 5: Iss. 1, Article 1. DOI: 10.2202/1935-5041.1034 Unauthenticated | 62.189.189.132 Download Date | 6/6/13 12:08 PM United-Continental Merger Robert J. Carbaugh and Koushik Ghosh Abstract This case study discusses the nature and likely effects of the proposed merger between United and Continental. It is intended as a lecture for instructors teaching undergraduate courses in Industrial Organization or Antitrust Economics KEYWORDS: United, Continental, Merger, Antitrust Unauthenticated | 62.189.189.132 Download Date | 6/6/13 12:08 PM Carbaugh and Ghosh: United-Continental Merger United-Continental Merger On May 2, 2010, the Boards of Directors at United Airlines and Continental Airlines approved a stock-swap deal that will combine them into the world’s largest airline. The combined carrier will have 21 percent of domestic flying capacity, taking the lead from Delta Air Lines, which will lose what had been its leading 20 percent share of the domestic market. The deal still needs final approval from the U.S. Department of Justice and shareholders before being allowed to go forward. The firms hope to complete the transaction in the fourth quarter of 2010. According to the management of United and Continental, the proposed...
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...Memorandum TO: FROM: DATE: September, 27 2013 RE: One-Page Memo on JetBlue Case Study The purpose of this memorandum is to discuss the JetBlue case study, and review my answers to the specified questions. I will elaborate as to which price I believe JetBlue should choose for their initial public offering (IPO), and why JetBlue should choose that price. The first step in determining JetBlue’s IPO price is analyzing specific ratios of publicly traded competitors in JetBlue’s industry. I analyzed the Price-to-Earnings multiples, Cash Flow multiples, Total Assets multiples, and the Revenue multiples of the direct competitors of JetBlue. JetBlue’s direct competitors include; AirTran, Alaska Air, American West, MidWest, and Southwest. JetBlue’s relative stock prices are as follows: |JetBlue's Stock Prices Implied By Different Multiples | |Airline |P/E Multiple |CF Multiple |TA Multiple |Revenue Multiple | |AirTran |$36.41 |$23.71 |$45.20 |$9.24 | |Alaska Air |$47.23 |$27.64 |$30.69 |$8.92 | |American West |$29.04 |$30.82 |$26.24 |$8.39 | |MidWest |-$15.60 |-$11.42 |$39...
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...FInTHE ROLE OF OIL FUTURES IN RISK MANAGEMENT From: To: Senior Management - Airlines Company November 2011 0 University of Westminster - Westminster Business School International Risk Management COURSEWORK THE ROLE OF OIL FUTURES IN RISK MANAGEMENT Student: Student ID: Course: Word count: MSc. Finance and Accounting 2557/2617 1 EXECUTIVE SUMMARY In the world today, oil is being used as the main source of energy for a lot of core industries. Due to its non-renewable characteristics and the global rising demand, oil has increased in its value, which results in many oil price crises recently. For all those industries using large amount of oil in operation, the risk of rising oil price is an extensive problem. The most efficient method to hedge against this risk is by using oil futures contracts. Because of its effectiveness, oil futures contracts are playing a key role in risk management for a number of industries including transportation and manufacturing. This report provides principal knowledge about oil futures and its role in hedging the risk of oil price volatility. A case study of US airline industry with most updated data obtained from Bloomberg system is also discussed, which suggests the effectiveness of oil futures in risk management for most airlines companies. However, in some case, the inflexible use of oil futures may create a burden in financial costs while not producing effectiveness in risk hedging. 2 TABLE OF CONTENTS LIST OF...
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...CASE STUDY: Delta Airlines Inc. by Benjamin Godman Delta Air Lines is a major American airline and one of the world’s largest air carriers by traffic serving over 330 destinations in over 60 countries on six continents. Originally starting out operating crop dusters and delivery mail in Louisiana, Delta now utilizes over 700 aircraft and subsequent support activities like maintenance and operations. Delta airlines services over 165 million customers worldwide every year by averaging over 5000 flights daily. Delta Air Lines is now the oldest airline operating in the United States and is the result of multitude of airline mergers over the past 80 years that included Pan American World Airways and Western Airlines just to name a few. Its most recent merger with Northwest Airlines in 2010 was its largest in its history and in 2013 finished with $5.7 billion in unrestricted liquidity, generated $4.5 billion in cash from operating activities, reduced debt by $1.4 billion and funded capital expenditures of $2.6 billion and returned $350 million to shareholders. Delta’s 2013 pre-tax profits were up 147% in comparison with 2012. In recent years, Delta was a founding member of the Sky Team Alliance, created Delta One which is an Elite business cabin, introduced flatbed seats for international travel, Delta Comfort+ for increased comfort in the main cabin seating and other amenities to ensure its competitiveness with other airlines such as American Airlines Group Inc., Southwest...
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...___________________________________________________________________________________________ English - Or. English DIRECTORATE FOR FINANCIAL AND ENTERPRISE AFFAIRS COMPETITION COMMITTEE DAF/COMP(2014)14 Unclassified AIRLINE COMPETITION -- Background Paper by the Secretariat -18-19 June 2014 This document was prepared by the OECD Secretariat to serve as a background note for Item IX at the 121st meeting of OECD Competition Committee on 18-19 June 2014. The opinions expressed and arguments employed herein do not necessarily reflect the official views of the Organisation or of the governments of its member countries. More documents related to this discussion can be found at http://www.oecd.org/daf/competition/airlinecompetition.htm. English - Or. English JT03358883 Complete document available on OLIS in its original format This document and any map included herein are without prejudice to the status of or sovereignty over any territory, to the delimitation of international frontiers and boundaries and to the name of any territory, city or area. DAF/COMP(2014)14 TABLE OF CONTENTS Introduction ................................................................................................................................................. 3 1. Features of the airline industry ............................................................................................................. 4 1.1. Liberalisation of the air transportation industry .......................................
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...Business Case Study: American Airlines 1. Perform a five-forces analysis of the US airline industry focusing on entry barriers and pricing rivalry Threat of new entrants: Though it might appear to be hard to get into, entry into the airline industry depends on whether there are substantial costs to access banks and credit. If borrowing rates are cheap, then there is more of a likelihood that new competitors will enter and the more saturated it will become for all competitors. However, an airline with a strong name brand like US Airways, combined with the offer of incentives, can lure customers away from new entrants, even in prices are higher. Power of Suppliers: In the airline supply industry, there is a duopoly between Boeing and Airbus. Because of this, there is not much cutthroat competition between the two. Moreover, suppliers will not likely vertically integrate in order to start offering flight service in addition to building planes. Power of Buyers: The bargaining power of buyers in the airline industry is very low. There are high costs for the buyer if he wishes to switch airplanes. Secondly, the service between airlines is practically identical. The seats won’t be any more comfortable nor will the food be any better. Threat of Substitutes: For those who need to travel internationally for business or leisure, the threat of substitution is low. For regional travel however, one might opt out to take a train or simply drive. For those that need to conduct business...
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...Journal of Business Studies Quarterly 2009, Vol. 1, No. 1, pp. 16-25 ISSN 2152- 1034 A Case Study on Classic Airlines: Practical Marketing Solutions Milaly Tokhi, San Jose State University Abstract In today’s competitive arena, organizations must use all possible means to maximize growth and profitability by focusing on strategic marketing. Classic Airlines has an opportunity to alter the landscape of the airlines industry. In order to succeed, Classic Airlines must be able to correctly forecast market potential and future demand, by establishing long-term marketing objectives. Key words: Marketing, business, organizations, cross-functional teams, environmental scanning. Classic Airlines Classic Airlines is facing an organizational issue. External and internal marketing programs have not been able to satisfy the needs and wants of the stakeholders. Target customers are looking at the services offered by other airlines to satisfy their wants and needs. This has resulted in poor sales and reduced profits for the company. The marketing plan of a firm “helps the firm connect with its customers” (Kerin et al., 2006). Therefore, Classic Airlines wants to develop an effective plan of action that will not only help attract and retain customers, but also boost sales and profits. The Situation Issue and Opportunity Identification Classic Airlines is a 25 year old company that commands a fleet of more than 375 jets that serve 240 cities with more than 2300 daily flights. The...
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...research into worker’s behaviour was later criticised by Daniel Bell and other sociologists. What lessons can Singapore businesses learn from Mayo and his later detractors? George Elton Mayo (1880-1949) was an Australian psychologist, sociologist and organizational theorist. He led a team together with Whitehead and Roethlisberger, set to study the relationship between productivity and physical working conditions. His research results have led to the establishing of new theories like the human relation (Hawthorne) and motivation theory. The Hawthorne study, a new approach that is being introduced by the sociologist, has been called the human relation approach of management. This approach was generated, because the positive aspect of the variables of the scientific management, and the focuses on mechanical and psychological variables, could not bring about a positive response in work behavior and efficiency at work. The key contributions are contained into two points; organizational situation to be viewed in social, economic and technical terms; and the social process of group behavior which can be studied in clinical method analogous. These studies have a historical importance to the behavioral approach of the analysis of management problems. The practical experiments allowed Elton Mayo to deduce the importance of groups in affecting the behavior of individuals at work. Physical conditions or financial incentives had little motivational value, thus concluding that working performance...
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...Case 2 - Baggage Complaints: Descriptive Statistics and Time Series Plots Baggage Complaints: Descriptive Statistics and Time Series Plots Background Anyone who travels by air knows that occasional problems are inevitable. Flights can be delayed or cancelled due to weather conditions, mechanical problems, or labor strikes, and baggage can be lost, delayed, damaged, or pilfered. Given that many airlines are now charging for bags, issues with baggage are particularly annoying. Baggage problems can have a serious impact on customer loyalty, and can be costly to the airlines (airlines often have to deliver bags). Air carriers report flight delays, cancellations, overbookings, late arrivals, baggage complaints, and other operating statistics to the U.S. government, which compiles the data and reports it to the public. The Task Do some airlines do a better job of handling baggage? Compare the baggage complaints for three airlines: American Eagle, Hawaiian, and United. Which airline has the best record? The worst? Are complaints getting better or worse over time? Are there other factors, such as destinations, seasonal effects or the volume of travelers that affect baggage performance? The Data Baggage Complaints.jmp The data set contains monthly observations from 2004 to 2010 for United Airlines, American Eagle, and Hawaiian Airlines. The variables in the data set include: Baggage Scheduled Cancelled Enplaned The total number of passenger complaints for theft of...
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...Introduction This paper explains the strategic marketing planning process illustrating the discussion with examples from the low cost airline, Easyjet. The paper proceeds in five parts. In the next section of the paper, the concept of market segmentation is described and discussed. Next, the concept is located in the overall positioning, segmentation, targeting (PST) organisational strategy. Porters’ Generic Strategy is then outlined, as a supplementary paradigm to market segmentation. The concept of the marketing mix is discussed and applied to the case study company. A brief conclusion closes the paper. Before examining the marketing process, however, it is necessary to provide an overview of the case study company. Easyjet is an airline company that has been operating in the United Kingdom since 1995 (Easyjet, 2014). Like many other low-cost carriers, the company initially modeled itself on the business model of a successful American carrier, Southwestern Airlines (Yip, 2004). That airline had experienced unprecedented success by cultivating and exploiting a low cost operating model – Easyjet sought to implement this model in the European context, launching a flight between London and Amsterdam that was half the cost of the fare at the time offered by national carrier British Airways (Sull, 1999). In the years that followed, Easyjet rapidly expanded its route network to include hubs in some of the major British cities: Glasgow, Manchester and Liverpool, and routes to...
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...Southwest Airlines, Case Analysis Your name BUSN412 Business Policy August 7th, 2011 CASE ANALYSIS Southwest Airlines. COMPANY NAME: Southwest Airlines. INDUSTRY: Air Travel. COMPANY WEBSITE: (www.southwest.com) COMPANY BACKGROUND: Southwest Airlines Co. incorporated in 1967, is a passenger airline that provides scheduled air transportation in the United States. As of December 31, 2010, the company had 548 Boeing 737 aircraft serving 69 cities in 35 states (Southwest Airlines Company profile, 2011). Key officers include: Herbert D. Kelleher – Founder and Chairman Emeritus. Colleen C. Barrett – President Emeritus. Gary C. Kelly – Chairman, President & Chief Executive Officer. The Company functions primarily on point-to-point service rather than focusing on hub and spoke service. About 78% of the passengers of the airline travel on non-stop flights and the Company predominantly serve short-haul routes with flights operating highly frequent. (Southwest Airlines Company profile, 2011) SWOT ANALYSIS: Strengths: By far the biggest strength of Southwest Airlines is the ability of the company to offer reliable low-cost prices; they are also able to maintain lower operating cost which enhances its profitability. They were the first to introduce online booking, ticket less traveling, and no reserved seating, thus making it easier to turn around flights. The teamwork and efficiency within the company’s employees is widely recognized as one of the reasons...
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...Running head: SW Airlines Case Study Case Study Southwest Airlines Cardinal Stritch University Advanced Marketing Management CMB 508 September 3, 2013 Scott A. Braucht, MBA Professor In the 1940s travel via airplane was a privilege. Men wore a suit and tie and women wore dresses with a hat and gloves. Parents would endure a 27 hour flight from the middle of the country to Hawaii to see their soldier son at Pearle Harbor. Air travel was a luxury. Customers expected the best in treatment. Chef prepared meals were served on white china with glassware and silverware. A lot has changed since that time. There are a number of discount airlines today. They come and go, but Southwest Airlines has managed to stay in the business since 1971. Their success is due in part to the successful identification of their market and the needs of their customers. Southwest Airlines primary marketing strategy included bright red heart logos and catchy phrases for its peanuts (meals) and their drinks. As it grew, Southwest Airlines became known as the airline with cheap fares, on-time service and, most recently, not charging for luggage when other airlines started to do so. Passengers flying on Southwest Airlines are entertained by the pilots and flight attendants who tell jokes, describe funny facts of the areas as they fly over, and even burst into song. The flights are shorter than other airlines and the planes are turned around on the ground faster than the industry average...
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