...customers individually. A forward thinking company must focus on the preserving and increasing the value of that customer base. Organizations like airlines must mange their customer relationships effectively in order to remain competitive. In this case analysis, I will identify and explain key external factors that affect the passenger airline industry. This analysis will then turn towards explaining what the major airline market segments are, by applying segmentation, targeting, and positioning. Finally at the end of this analysis I will contrast two specific airlines United and Delta Airlines and describe each of the company’s target market and positioning by giving some examples of how these strategies are implemented for each company. Key External Factors Companies, like the airline industry, are forced to alter their business models, pricing, revenue, and cost structures to suit their customers’ changing needs in different economic conditions. The airline industry has experienced several modifications in terms of marketing and strategic planning in recent years due to an increase in airline competitiveness. (Gursoy, D., Chen, M-H, & Kim, H. J. 2005.) There are several key external factors that affect the airline industry, which can be broken down into four main categories. The four categories are political and legal factors, economic factors, demographic factors and finally technological and environmental factors. The first...
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...Using macro and micro environment analytical techniques provide a comparative analysis of leadership and the external environment for the following four airlines: AirTran, Delta, WestJet and Air Canada. Introduction The drive for lower operational costs and increased efficiency has forced many companies of the world to turn towards mergers and acquisitions. However, even then when companies realize that cost cuts cannot be born out of “corporate marriages”. Instead a new trend in strategic management emerged to achieve similar objectives - forming alliances. Among the industries, alliances and networking are dominant in the airlines industries with North America securing the leadership position followed by European carriers. Both the Canadian and the US airlines industries account for a market approximately $4.5 billion and $5.5 billion respectively (Factsheet from WestJet Website 2005), offering widespread opportunities for airlines to exploit and explore. Yet one observes many airlines have been filing for bankruptcy protection; others constrained for profit margins; and there are some that are enjoying greatly the benefits of these vast markets. There are a host of reasons macro and micro factors responsible for the diversified operational outcomes of airlines. In the following discussion the researcher offers an overview of the North American airline industries through a macro and micro environmental analysis of the four of the leading airlines in the US and Canada -...
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...Delta Airlines Cynthia Howard-Morgan BUS499 Professor Anderson July 29, 2012 Introduction The longest-running airline carrier, Delta Airlines began in 1924 as a crop-dusting company called Huff Deland Dusters. Delta has since become a world leader in providing efficient, on-time travel, since 1941, the company has been based in Atlanta, where Hartsfield-Jackson International Airport serves as its largest domestic hub and primary base for flights to over 57 countries. The airline also operates four other hubs in major U.S. notably Los Angeles which it has recently reestablished (Delta, 2011). Due to competition from lost-cost airlines, the negative effects of 911 on travel and skyrocketing fuel prices, the company held over $20 billion in debt as of September 2005 Delta declared bankruptcy. Delta was able to emerge from bankruptcy in 2007, achieving profitability that same year. In April, 2008, Delta announced its intention to purchase Northwest Airlines. The two companies combined created the world’s largest airline. Currently it is the only airline to service all six permanently inhabited continents in the world. The company's structure and management approach have constantly evolved in order to maintain competitive in the cutthroat airline industry (Delta, 2011). Delta vision will able them continue to be the world’s largest and the world’s greatest airline. Segments of General Environment Segments that rank the highest would be suppliers and work...
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...Affairs This portion of the paper will include key information about Delta Air Lines, Inc. (Delta): (a) history; (b) culture; (c) important leaders over the years; (d) current products and service offerings: (e) target markets; and (f) methods of product and service delivery. History This section describes the history of Delta. The company was founded in Macon, Georgia, in 1924, as the world’s first crop-dusting service, Huff-Daland Dusters. The company moved to Monroe, Louisiana, in 1925. In 1928, field manager C. E. Woolman and two partners purchased the service and renamed it Delta Air Service after the Mississippi Delta region it served. Delta was the first international mail and passenger route on the west coast of South America. Delta operated its first passenger flights over route stretching from Dallas, Texas to Jackson, Mississippi, via Shreveport and Monroe, Louisiana. Also, Delta was awarded a US Postal Service contract in 1934 to fly from Fort Worth to Charleston via Atlanta (Hoover’s, 2011). In 1941, Delta relocated to Atlanta. Woolman became the president in 1945 and he managed the company until his death in 1966 (Delta, 2011). Delta offered its first night service in 1935, using the Stinson Model A; the first Delta aircraft with two pilots. Douglas DC-2 and DC-3 service was introduced and the introduction of flight attendants, called “stewardesses,” added to flight crews. Delta contributed to the war effort by modifying 1,000 plus aircraft, over-hauling...
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...RUNNING HEAD: THE AIRLINE INDUSTRY The Airline Industry Name College Table of contents Abstract 3 Introduction: 4 Products and services: 4 Organization: 4 Major players in the airline industry: 5 Economic impact of the airline industry: 8 Employment within the industry: 9 Key trends in the airline industry: 9 - Economic forces: 9 - Technological forces: 11 - Socio-cultural forces and political-legal forces / Government Regulations 13 Logistics and supply chain factors 14 Porter’s Five Forces Analysis: 16 Strategies used by airlines: 17 Expected Entrants: 18 Conclusion and Recommendations: 18 List of Abbreviations 20 Appendix: 20 References 21 Abstract The US airline industry is one of the key sectors of the country’s economy. Employing over ten million people, it contributes up to half a trillion dollars in annual revenues (about 5% of the US GDP). In recent years, the industry has been faced with major challenges arising from its external environment. Some of these include rising fuel prices and the global economic recession. As a result, growth in the industry has significantly slowed down with the ATA estimating that by the end of 2008 the industry had lost between $9 and $24 billion. With high intensity of industry rivalry, high supplier bargaining power, low threat from new entrants, low threat of substitution, and low buyer bargaining power; the industry’s attractiveness can be described as moderate. To be successful...
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...Mission: Who are we: Low-cost airline focused on Texas and southwest part of the U.S. Target: people seeking public transportation that would otherwise use other means of transportation. What do they do: Southwest provides transport for small distance flights at a low cost with the most basic necessities for flight passengers in an enjoyable environment and good mood. Why? To provide customers with an alternative to road transports by reducing travel time and an alternative to other companies airlines by reducing costs. Vision: expand MS from 45% to 55% and expand to new markets. By the 3rd quarter in 1995 we expect to reduce the cost per available seat mile to 6.9 cents of dollars. We expect to increase our total revenues per 10% every year within the next 3 years. We shall get a return on average stockholders equity of 20% in 3 years. We shall increase the size of our fleet to 250 in 3 years and expand our traffic to the east cost. Strategic objectives: -Expand to……. -Maintain…… | Cost per Seat | Return For Shareholders | Total revenues | Fleet Size | 1995 | 7.01 | 17.5% | | 200 | 1996 | 6.95 | 18.5% | | 225 | 1997 | 6.90 | 20% | | 250 | Sector definition: Low cost airlines in the west of the US, competitors such as USair, continental, united, American airlines, Delta etc and road and rail transportation. External Analysis: PEST: Political/legal: Government laws regarding aviation safety or airport hubs, customer...
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...Analysis of Strategic Structure of Southwest Airlines Uploaded by so cerious on Jun 26, 2006 [pic] |Analysis of Strategic Structure of Southwest Airlines | | | |Twenty-nine years ago, Rollin King and Herb Kelleher got together and decided to start a different kind of airline. They began with one | |simple notion: If you get your passengers to their destinations when they want to get there, on time, at the lowest possible fares, and | |make darn sure they have a good time doing it, people will fly your airline. | | | |Within 28 years, Southwest Airlines became the fifth largest major airline in America. With the addition of service to Buffalo-Niagara | |International Airport on October 8, 2000, fly more than 57 million passengers a year to 57 great cities (58 airports) all over the | |Southwest and beyond. And she does it over 2,600 times a day. | | ...
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...Airways External Environment Analysis: * PESTEL(Macro-level environment) * Political: September 11 terrorist attack, tons of new flying rules and regulatory factors, political stability, competitive industry, * Economic: Improved purchasing power, rise in oil prices & inflation * Sociocultural: Increased entertainment level, greater customer awareness, security level of customers, bad service & lost baggage * Technological: Automated cockpit systems, introduction of animated advertisements, e-ticketing * Ecological: N/A * Legal: N/A * Five Forces * Threat of Entry: Low. Deregulation allowed easy entrance, low profit margin, hard to differentiate, high cost of capital to enter, brand image and customer loyalty important, safety and reliability important for new companies entering * Power of Suppliers: High. Only 2 suppliers, not much bargaining ability, fuel suppliers can control the price of fuel, fuel supply extremely important for JetBlue * Power of Buyers: High. Several flying options for customers, no switching cost, easy for customers to research competitors, customer incentives * Threat of Substitutes: High. A number of other airlines available, high existing barriers, bankruptcy laws allow continued operation for companies operating at a loss * Rivalry among competitors: High. Large competitors such as Delta, United Airways & American Airlines. Competition can get...
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...Introduction Virgin Atlantic is a British airline company that is majority-owned by Sir Richard Branson’s Virgin group 51%. The remaining 49% is owned by Singapore Airlines. The airline was established in 1984 and is the second largest long-haul airline in the UK and the third largest European carrier over the North Atlantic. Their route network also includes destinations in US, Caribbean, Far East, India and Africa. Virgin Atlantic is valued at a minimum of 1.225 billion euro. Their fleet is consist of more than 26 Boeing 747s and Airbuses. Virgin Atlantic is known for challenging the industry, championing the customer, improving the service and repeatedly won the best airline awards. They are pioneers in the airline industry it’s a “long list of firsts include being the first airline to have individual TVs in all classes, to provide child safety seats, to offer a super economy service, to have no smoking flights, to have drive-thru check-in, to have an arrivals lounge, to allow mobile connectivity and SMS texting on board, the first to have at-seat podcasting and, most recently, the first to fly one of its planes using biofuels” (innovationleaders.org PROFILE: VIRGIN ATLANTIC 2007). Micro environment analysis Customer behavior analysis Who are Virgin Atlantic´s customers? Virgin Atlantic attracts customers who appreciate and value customer care in terms of a combination of service elements and attributes. Virgin Atlantic operates a two class system: Upper Class and...
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...INTRODUCTION Virgin Atlantic Airline (VAA) is a business organization that embodied “British Success Story”. The company was founded in 1984 by Richard Branson upon his vision to build an airline to challenge the status quo of dominance of the industry by British Airways. The company was established as the “offshoot” of virgin group which as at then was a key player in the pop and rock music. Since it was founded, it has enjoyed great success and rose to become Britain second largest carrier with more than 9000 employees and estimated to have carried more than 53 million passengers since it first operation in 1984(BBC Business, 2013). The ownership of the company share between virgin group who owns 51% and Delta airline owned 49%, an arrangement that was concluded in 1999 to form a more formidable global partnership; it has its corporate head office in Crawley, England. Gatwick remain the main base of VAA and operates a mixed fleet Airbus and Boeing wide-body jet between UK, North America, Caribbean, Africa and Middle East, it also operates from London Heathrow and Manchester which serves as its secondary base. Virgin Atlantic Airline has a mission to grow profitable airline where people love to fly and where people love to work. TASK ONE 1A: Purpose and objectives of (VAA) with Fire service. Organizations are into operation for various reasons; this could be for the purpose of making profit or for service rendering purpose. The legal structure which business chooses...
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...Business Plan Part 5: Risk Assessment and Strategies for Growth Business Plan Part 5: Risk Assessment and Strategies for Growth Jasmeih Green BUS521002VA016-1126-001 Entrepreneurship & Innovation MANNERS, AMANDA 9/8/2012 Jasmeih Green BUS521002VA016-1126-001 Entrepreneurship & Innovation MANNERS, AMANDA 9/8/2012 Assess risk for your business. 1. Identify and evaluate the main sources of risk for your business. 2. Explain your plan for dealing with risk by developing a contingency plan. It is stated that risk assessment is third step in a basic risk management process. Risk assessments measure two components: severeness of expected loss and the probability that loss will occur. The aim is to determine the quantitative and qualitative values of risk associated with a potentially hazardous circumstance. Risk assessment is different for individual businesses, there is a general checklist to consider when assessing and managing risks. It should be able to identify potential endangerment to your assets when using the risk assessment. The primary assets that are subject to risk, as well as the secondary assets that might be affected can be determined. My company will have to be able to identify the threat community by deciding whether the threat is internal or external, human ware of malware. In this case we have to be specific in determining the threat. Sometimes you have referred to a broad-spectrum analysis. There is several risk assessment that...
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...INTRODUCTION Business environment is very important and plays significant roles for sustainability of airline business. In the global and modern world, business environment also become more complicated and more challenging to the airlines. It is important for airline manager to know because it will help the airline to plan and prepare for any changes that threatens the survival of airline business. The 21st century comes with so many changes, new technologies invented, circular of income of a country increase with better economy situation, air travel demand increasing very high which are given the airlines benefit to do business. Apparently, the 21st century not only bring benefit, but also bringing new risks for airline business such as fuel price volatility, natural catastrophic that had never been experienced before and others. The risks if not be taken with cares and smart strategies will threaten the sustainability of airlines. This writing try to identify issues arising and new risks that affecting airline business. Identifying significant issues and risks is very crucial for airline management to make planning, scheduling, price setting for flight tickets, demand forecasting, traffic movement, and the most important is managing capacity. Therefore, knowing impact of issues and new risks in airline business is very crucial. Survival of airline business is important for the global economy, airlines play important role as major contribution for Growth Domestic...
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...Contents South West Airlines 4 Goals and Objectives 5 Their Mission and Vision Statement 5 Strengths 6 Weaknesses 6 Opportunities 8 Threats 8 Analyzing company’s external environment 9 Analyzing the nature and strength of competitive forces 11 Competitive pressure stemming from bargaining power of buyer: 16 Determining whether the collective strength of the five competitive forces is conductive to good profitability: 17 Competitive pressure from seller of substitute products 18 Sign that competition from substitute is strong 19 Competitive pressure stunning from supplier bargaining power 20 PESTEL ANALYSIS 24 SCENARIO PLANNING 56 SCENARIO NO.1 58 SCENARIO NO.2 59 SCENARIO NO.3 59 SCENARIO NO.4 60 SCENARIO NO.5 60 SCENARIO NO.6 60 SCENARIO NO.7 61 SCENARIO NO.8 61 Competitors Objectives 62 Competitor's Current Strategy 63 Competitor's Resources and Capabilities 64 Competitor’s Assumptions 66 Regional Factors 67 Value chain activities: 68 Key competitive advantages: 72 Solutions: 82 Weights of Key success factors in five airlines: 86 COMPETITIVE ADVANTAGE 92 FIVE GENERIC COMPETITIVE STRATEGIES: 92 LOW COST PROVIDER STRATEGIES: 92 DIFFERENTIATION STRATEGIES: 95 BEST-COST PROVEDER STRATEGIES: 96 FOCUS (MARKET NICHE) STRATEGY: 96 STRATEGIC ALLIANCE AND PARTNERSHIP: 97 MERGER AND ACQUISITION STRATEGIES. 98 VERTICAL INTEGRATION. 98 OUTSOURSING. 98 OFFENSIVE...
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...THE AIRLINE INDUSTRY is in deep crisis. Losing over 100,000 jobs since September 11, 2001, and suffering major wage and benefit cuts, workers are in shock and looking for new leadership. The recent U.S. invasion and occupation of Iraq, the outbreak of the SARS epidemic and the economic downturn exacerbate the impact of the crisis on labor. Airline workers are in the forefront of discussions about their own industry and more general questions as political and social consciousness changes under the impact of the restructuring crisis. These experiences are valuable for all workers. While 9/11 and subsequent events greatly worsened the crisis, the dire state of this industry pre-dated the 9/11 attacks. The major carriers were losing millions of dollars and facing possible bankruptcy filings because of broken business models that were no longer profitable. In the capitalist system that generally means businesses fold. Bankruptcy as a Weapon Government aid still flows to the airlines, as it did after 9/11. But Wall Street and Washington are pushing the restructuring process. Meanwhile some important facts indicate the depth of the crisis and the challenge facing rank-and-file workers and their unions. Last summer US Airways, the seventh largest carrier, filed for bankruptcy and began slashing jobs, wages and benefits. It emerged from bankruptcy in the spring as a smaller carrier with lower labor costs than most of its competitors, but US Airways is still not out of turbulent...
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...External Environment analysis Summary There have been turbulent times for the Australian airline industry. It has been confronted with the marked decline in international tourism in the aftermath of the September 2001 terrorist attacks in the US and, more recently traffic loss attributable to war in Iraq and severe acute respiratory syndrome (SARS) outbreaks in part of Asia and Canada. And off course, the global financial crises in 2008. While the domestic airline industry is largely deregulated, Australia’s international airline industry remains quite deregulated at the commonwealth level, as it is subject to the detailed capacity controls of airline service agreements (ASAs) that underpin the industry. These agreements control the amount of airline seat capacity which may be deployed on scheduled services over individual country to country routes; they are general of treaty status and are enforceable in international law. In another move to free up the international side of the industry, the Commonwealth adopted a policy of allowing more than one Australian owned international airline to operate scheduled services to and from Australia. However the September 2001 failure of the Ansett Airlines group brought an end to Ansett International's short-lived operations. Although Qantas is once again the only Australian flag carrier, Virgin Blue has signalled its interest in operating in some international markets in Australia's immediate region, such as the trans-Tasman market...
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