...the cost of a four week trip across three countries before returning back to university. After weighing Julia’s bag on the scale, the ticket agent informs Julia that $450 is owed for extra weight. What?! Julia has no other option, she took a train to get to the airport from Fresno, so there is no option to get another bag to split the weight. Julia pays it. 20 minutes in to her trip and the budget has been cut almost in half. Paying fees stink! Especially when you are a college student. One of the worst fees that we all have had to pay at one point in time, are airline fees. Between baggage...
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...of Demand and Supply in Airline Fares Econ101 D002 Sum12 Effects of Demand and Supply in Airline Fares This is a topic that affects everyone that travels via airlines as we strive to locate good deals when it comes to airline prices and ticketing. Airline travel is largely price elastic, which implies that an increase in the cost of air travel decreases demand. People travel for various reasons, during the holidays, Easter, Christmas, New Year, etc. They also travel for other business reasons, which include company trips, meetings, company study, and even jobs. Family visit is another valid reason amongst others in which people travel from one point to the other. In order to fully maximize the potential of benefitting from air travel, ticket price must be considered as one of the major factors affecting airline travel. The Law of demand states that, for virtually all goods and services, a higher price leads to a reduction in quantity demanded, a lower price leads to an increase in quantity demanded.(Rittenberg & Tregarthen ,2012) The airline ticketing systems conforms to this law, as an increase in demand contributed to the higher price of airline tickets during peaks periods. Other factors also contribute to the high airline prices as considered from the business perspective. It would not be so surprising to find out two different passengers each paid different ticket fees to secure the same type of economy seat in an airline. Factors such as income...
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...Singapore Airlines Introduction Singapore Airlines is a standout amongst the most decently prestigious names in the worldwide airline industry. It started the air transport operations under the name of Malayan Airways in the year 1947 when Singapore was a bit of a settlement. After the end of the British Empire, Malaysia and Singapore together transformed into one country and the name of the transporter was changed to the Malaysia-Singapore Airline in 1966. Later, Singapore reported self-sufficiency and the air transport association got divided into the two substances. Likewise, Singapore Airlines began to exist in the year 1972 (SIA, 2013). Disregarding the way that it was guaranteed by council of Singapore, it was still treated as an exclusive business which also expected to pay charges. The Singapore Airlines showed amazing improvement and progression by securing new planes like Boeing-747 and going into new markets and things like familiarizing burden organizations with the city of San Francisco. Discussion Workforce Management Program Singapore Airline had the ability to offer its splendid organizations all through the 1970s on the establishment that they had a low work bring as diverged from the ethereal transports in the zone and around the globe. Notwithstanding, the affiliation began confronting issues in giving quality after the year 1978 in light of the way that the costs of fuel augmented essentially. Furthermore, the specialist's organizations started...
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...Ministry of Civil Aviation announced that Air India Limited (AI), India's national flag carrier and Indian Airlines Limited (IA), the government owned domestic airline, would merge with effect from July 15, 2007.1 The new airline formed by the merger was to be called 'Air India,' and would operate in both the domestic and international sectors. The AI-IA merger was expected to create one of the biggest airlines in the world in terms of the fleet size. According to information posted on IA's website, the increasingly intense competition faced by AI and IA from private and global airline companies, was the main reason for the merger of the two airlines. . However, the proposed merger was not without its share of critics. Initially there was opposition from the employees of the two airlines as they feared that the merger would result in job cuts. The Aviation Minister, Praful Patel, had allayed their fears and assured the employees unions of the two airlines that employment conditions, wages, seniority and career progression, would largely remain unchanged. He also said that a grievance redressal mechanism would be set up to protect employee interests. The government also indicated that there would be no layoffs. Post merger, the airlines met with many problems. The Indian Commercial Pilots Association (ICPA), which represents pilots of the erstwhile Indian Airlines,...
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...Business Strategy Southwest Airlines uses a low cost, short haul/high frequency/fast-turnover strategy focused on underutilized airports in the proximity of major metropolitan cities to compete in the consumer air transportation industry. The differentiator and key to the company´s success with this strategy is the unrelenting focus on human capital and employee culture in delivering exceptional customer service. Southwest is unique in that it does not offer a very minimalist and simple air transportation service (1 type of plane, no meals, etc.) to its customers, with no frills, choosing to delight the customer instead by leveraging the results of the culture it cultivates amongst employees. Alignment Roles: Southwest Airlines has a relatively flat organization structure with minimum barriers between the various parts of the organization. Both pilots and flight attendance work in tandem to support the company key competitive edge of minimum down/ground time or 15 minute turnaround. The rest of the Southwest organization is considered to be the customer of the “people department” (HR), whose role is defined as enabling the rest of the organization to deliver maximum performance while preserving the company culture. Rewards: Southwest employs a simple tenure-based rewards structure for most employees. However, for pilots and flight attendants, the company has implemented a pay structure that rewards productivity and fast turnaround, two factors which are key to the...
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...Southwest Airlines prides itself in being a company with “heart”. We know this because it is something its employees as well as customers have said about Southwest Airlines. Southwest Airlines began flying in 1971 and they keep going strong. Southwest seems to understand that doing what other airlines are doing simply because it can benefit their profit margin. Standing out from the crowd is what has allowed Southwest Airlines to be known as a company with heart. I have to say that I have flown Southwest Airlines as well as several other airlines. Knowing that the price I see is the final price since I don’t have to pay for my bags is a relief. In a time where people are trying to save money to afford a family vacation, every little bit helps and makes it that much easier to relax during that vacation. Although it may make Southwest Airlines more money to charge for bags, they will also lose their advantage over the other airlines. Southwest Airlines likes creating a fun work environment. This is something I have seen other companies try to do for their employees. I work for Verizon Wireless and there are several activities they do to make it fun to show up for work. Although this may not ensure everyone will thrive in this type of work environment, when dealing in customer service, every little bit helps. Before going this route, I dreaded waking up in the morning to go to work and deal with people who would be screaming at me on the phone. I’m not saying they don’t scream...
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...Strategy Formulation : “Kingfisher Airline” “Strategies adopted by Kingfisher airlines & causes of its Failure” Submitted by : Japkirat Singh Oberai Submitted to : Dr. Supriti Mishra Contents 1) [ ABSTRACT ] 2) [ INTRODUCTION ] 3) [ HISTORY ] 4) [ STARTING OF THE CRISES ] 5) [ DEBT RESTRUCTURING ] 6) [ CRISIS TILL CONTINUE ] 7) [ FUEL DUES ] a. HPCL: In Jul 2011, Hindustan Petroleum 8) [ AIRCRAFT LEASE RENTAL DUES ] 9) [ AAI REPORTS ] 10) [ THE CRISIS CONTINUE ] 11) [ FROZEN BANK ACCOUNTS ] 12) [ IATA SUSPENSION ] 13) [ SWOT ANALYSIS ] b. [ KINGFISHER’S STRENGTHS ] c. [ KINGFISHER’S WEAKNESSES ] d. [ KINGFISHER’S OPPORTUNITIES ] e. [ KINGFISHER’S THREATS ] 14) [ PEST ANALYSIS ] f. [ Political Factors ] g. [ Social Factors ] h. [ Technological Factors ] i. [ Economical Factors ] 15) [ STRATEGIC PARTNERS ] 16) [ Strategy’s of Kingfisher Airlines ] j. [ Functional strategies ] k. KFA’s Promotional Strategies & Marketing Strategies l. [ Financial strategies: ] m. [ Expansion strategy ] n. [ Human Resource Strategies ] 17) [ UNCERTAINTY AHEAD ] Kingfisher Airlines – has a paradoxical situation faced by the airline industry in India which experienced exponential growth in passenger volumes; but with the exception of IndiGo Airlines, all the airlines failed to make profits. However...
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...Southwest Airlines - Effective employee relations program/ Career development Southwest Airlines Southwest is a major player in the airline industry, which employs nearly 35,000 individuals. According to an article, (Hollis, 2003), Southwest Airlines has taken a different approach to building interactively relationships with the company, with employees, and with its customers to ensure the success of the business. As a result, Southwest has sustained an enhanced growth and profitability when most airlines struggle to avoid bankruptcy. Fritz Petree, Senior Manager Career Development Services, states, “Southwest philosophy is to hire for attitude and train for skill” (Hollis, 2003, p. 2). Southwest has successfully launched Virtual University at Southwest Airlines’ the University of People provides professional and personal development for the entire workforce. They offer leadership classes, software training, and career development workshops. Southwest has made the company’s vision and goals clear to all employees. Southwest established a Career Development Services group, which enhances employees’ personal development and professional growth. Riordan should take note of the accomplishment on behalf of the programs established by Southwest Airline. These programs will provide a positive and proven guideline in employee potential. This will give additional securities to the enhancement of HR and provide a traceable means of career development on behalf of Riordan employees by...
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...Southwest Airlines Case Study After the acquisition of AirTran, Southwest Airlines (SWA), a company with years of profitability in airline industry is now facing challenges in both external and internal environment. The strength of success in marketing strategy and organizational management and the threats from uncertainty environment exist at the same time. This paper is a brief analysis of the company’s strategy and estimated future performance. External Environment Airlines in United States present a wide variety of services based on their strategies to satisfy different needs of the leisure travelers group and business travelers group. There are three main groups of airlines, which are national airlines, regional airlines and commuter or feeder carriers. Based on the territories they serve, airlines differ in routes. The two major types are point-to-point and hub-and-spoke. Both strategies have their own inherent costs and organizational implications. An airline can provide plenty of services: while most airlines have two classes of service, there are also airlines providing services in different selected classes. After the complete removal of government controls, airlines industry is going on a shakeout under the severe competition which is expected to last a long period. The industry is so difficult that its suppliers have high bargaining power; business requires large expenditures; and the price wars are extreme intensive. To survive and compete in this environment...
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...Magic Carpet Airlines Diane Lutzow MGT 445 July 28th, 2010 Sabrina Thomas Magic Carpet Airlines Everyone would like to work for a company that’s fair, pays competitively and looks out for their employees. Magic Carpet Airlines is not a company who are practicing those three aspects. They are trying to pay their flight attendants minimal, but still requiring long hours. The flight attendants and the League of Flight Attendants are fighting back and saying they work hard and are worth more. “Magic Carpet Air (MCA) began operations in 1961, serving 2 cities, and grew to serve 18 cities by 1987. River City Airlines (RCA) began in 1969 with service to 4 cities and grew to serve 12 cities by 1987. In January 1987, Magic Carpet Air purchased River City Airlines and merged the two operations. The joining of these two regional airlines created a small “national” airline (defined as a carrier with sales between $100 million and $1 billion) with sales of $140,265,000 in 1987. Even so, the firm competed primarily in only one region of the country, and managers constantly compared it to other large regional airlines” (Lewicki, Saunders, & Barry, 2006) . In 1988 Magic Carpet Airlines decided to enter an agreement and merge with RCA. Neither companies prior to 1989 were unionized this quickly changed and with 82 percent of the votes, LFA became their union. Magic Carpet Air and RCA flight attendants were not part of a union before or after the merger. Therefore...
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...same snacks. Why is it people sitting next to each other on the same flight can pay such different amounts for their tickets? Airline pricing seems to be a great mystery. The airline industry refers to their pricing game as “yield management” or “revenue management.” Meaning prices on the same plane can fluctuate widely based on available seats at the time of purchase. Even though this seems to defy logic (and textbook theory), there might just be a method, an algorithm, to the madness. In a perfectly competitive market, companies would have no power to discriminate by price. Price discrimination means that one is charging different prices to different consumers, whereby price cannot be explained by the differences in cost. In this type of environment, the price of airline seats would be a posted price and would stay the same until the flight would take off. This paper will try to rationalize the price discrimination that is ongoing in the airline industry, as well as seek to prove the optimality of certain routes via several online pricing sources. To price discriminate successfully, a company must have enough market power to be able to charge over marginal cost, and product resale is nearly non-existent. Although the resale of airline tickets is possible, it involves high search costs and does not eliminate restrictions such as blackout days or time-of-day-constraints. However, the airline industry is not predictable, and usually a large number of early purchases by...
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...Airline Distribution Air Transport Management Seminar Universidade Lusofona Lisbon 7th - 11th January 2008 Dr Keith Mason Director Business Travel Research Centre www.businesstravelresearch.com Dept of Air Transport K.Mason@cranfield.ac.uk Distribution - Factors affecting distribution strategy • Airlines drive to reduce costs • Distribution has been around 20% of operating costs • Airlines wishing to have more direct contact with their clients • Technology has provided the possibility of a direct channel between the airline and its customers • Disintermediation - as airlines doubt the ability of agents to influence customers’ choice • GDSs fees • Large corporates are more professional in the way they purchase travel products Star Alliance Carriers collective spend over USD $11bn on distribution Description Total Mainline reservations, sales, advertising and promotional cost, by category 2004 est. 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Sources: Form 41 4Q03, Star Alliance Cost Q3 03 8% 2% 2% 7% 18% Advertising & Promotions 20% Media Personnel Loyalty Programs Other CRS / GDS Fees Other Reservations & Sales 60% Credit Card Fees 18% Salesforce /Reservations Benefits Management & staff 5% 6% 3% 8% 19% 1% Cargo Comm. 1% Other Pax Comm. 19% Passenger commissions Cargo commissions The distribution value chain • Airlines spend $5bn per annum on GDS fees • Cost as % of ticket prices • GDS 8 - 11% • Travel...
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...Running head: FINANCE Multinational Finance Assignment [Name] [Institutional Affiliation] Multinational Finance Assignment Introduction This paper is based on the foreign exchange theories and the strategies used to minimize the risk of foreign exchange. The scenario is about the two multinational airlines. One is United States Airline and the other is Lufthansa (German) airlines. Both of them are exposed to foreign exchange risks as their transactions is in different currencies. In the scenario, U.S airlines has order from France the Airbus so, they have to pay France in Euro currency. However, United States airlines report their financials in Dollars. So, any slight change in Euro will impact the profits of United States Airlines. On the other hand, we have the case of Lufthansa Airlines which is purchasing a Boeing from USA and their reporting currency is Euro. So, both of the airlines are exposed to risks in the scenarios. This paper will address the foreign exchange theories involved in the case and strategies that will help these two airlines minimize their risk of currency fluctuations. The paper will also show calculations and the instruments used to minimize foreign exchange risks and calculating profits. Analysis of Foreign Exchange market theories in the scenario Foreign exchange market is the one which involves foreign currencies like euro, pounds or yen and it the one that is traded from local currency for e.g. the dollar. The network of...
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...XIAMEN AIRLINES: PAY FOR PERFORMANCE Company Overview: Xiamen Airlines was established in July, 1984 jointly by CAAC and the Fujian Provincial government. By December 2013, its shareholders were china Southern Airlines Co. Ltd., Xiamen C&D corp. Ltd. And Jizhong energy Resources Co. Ltd with 51%, 34% and 15% of shares respectively. They are the only Chinese Airlines featuring all Boeing fleet, operating 102 fleet with 16,650 seats on 218 domestic routes and 26 International and regional routes. They are known for its excellent customer service and extraordinary safety performance. In 2014, Xiamen Airlines employees 11,000+ employees including 1000+ pilots. Airlines Industry in China: Strengths | Weakness | * Highest population in the world * Permitting the private sector to enter into the industry * Increase in Passenger traffic * Steady increase in the need for transportation within the country * Regulation for pilots to avoid them from switching the companies | * Huge investment * Very less players in the market | Opportunities | Threats | * Industry is growing 10 times faster than USA * The revenue passenger kilometer increased by 12% | * Hugh speed rail system development * Pilot shortage | Challenges faced by Xiamen Airlines: * High attrition rate of the pilots and switching to other airlines * Unequal pay system i.e. more pay for the foreign pilots and relatively lesser pay for the domestic pilots * Lack...
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...30 June 2009 - http://news.bbc.co.uk/2/hi/business/8127705.stm British Airways seeks pay freeze British Airways wants staff to accept a two-year pay freeze, according to documents seen by the BBC. The company had already announced it was looking for 3,000 redundancies among crew and administrative staff. Talks between unions and management to agree on cost savings were adjourned earlier and should resume on Wednesday. BA is struggling as the economic downturn continues to hurt its business. It recently asked staff to work for nothing to save money. BA is also pushing for significant changes in working conditions. Reconvene The Unite and GMB unions said the talks with BA on its financial situation would reconvene at 1000 BST on Wednesday. They said they were seeking "a mutually acceptable way forward which protects the long- term interests of our members, loyal BA customers, investors and the company". British Airways has said 800 workers volunteered to work for nothing for up to a month, following the airline's request to cut costs. Another 4,000 employees are taking unpaid leave, 1,400 people have volunteered to work part-time and a further 740 overseas workers had also agreed to the cost-cutting measures. The airline had put the proposal to 40,000 staff. BA chief Willie Walsh has already agreed to work unpaid in July, forgoing his month's salary of £61,000. ------------------------------------------------- Unions said asking staff to work for nothing...
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