Going public when the airline industry are still suffering from 9.11 attack is adventurous, especially it is even harder when the competition of the airline industry is severe, given the fact that 87 new-airline failure over the past 20 years. However, JetBlue has good management team with strong capability, and it has considerable competitive advantage compared to comparable companies, hence there are more opportunities and strengths than threats and weaknesses. JetBlue’s executive management team have rich experience in the airline industry. CEO David Neeleman has extensive experience with airline start-ups and worked in various low-fare flights. COO David Barger and CFO John Owen had worked in airline companies before joining JetBlue.
Based on the book when there are competitive markets such as airlines, a company certainly needs to look at costs and revenue very closely. (Brickley, Smith, & Zimmerman, 2009, p. 180) In this case I believe that the flights from San Francisco t Washington DC should be discontinued. Even though United Airlines is a large company and profitable if they continue these flights in the long run they will lose money. The other option that they would have would be to increase the fares to cover those costs, but since the airline industry is a competitive market people are more likely to go with a lower cost airline. The first thing the airline must do is look at the firm supply.
This will help to recapture profit margins lost to inefficiency and make them better competitors in their chosen market, (Russell & Taylor, 2011). b) Economies of Scale in material purchasing: Albatross
Maureen Abajah LOG 125 Chapter 7 Case 7-2 U.S. Airways Overview: US Airways is and has been beleaguered with a myriad of issues, from financial issues to consistently below average ratings when it comes to baggage handling and customer service. They have filed bankruptcy several times and merged with other airlines and now have to work on a way to get to a competitive edge in the industry with all issues facing air carriers in general. Case Questions: 1. If you were the CEO of US Airways, what would you do to confront the competition from its low cost competition? Based on the summary table provided in the text book – the first thing that jumps out is how disproportionate the labor volume/number of employees is to the number of aircraft that the company has.
Conversely if the sales mix were changed in favor of one of the lower contribution margin aircraft then the volume of aircraft sold would need to be increased in order to make up for the reduced profit per aircraft. 3.
1. What challenges and opportunities did Boeing face in the late 1990s? Some challenges that Boeing faced in the late 1990’s were as follows: Terrorist attacks – the impact of 9/11 caused the company to lose a lot of money due to the fact that air travel declined significantly. People weren’t flying as much as flight schedules were cancelled because people were scared to fly. In addition, airplanes re-orders were being rescheduled.
II. ANALYSIS 1. INTERNAL ANALYSIS (a) VRINE Model Resource 1: Embraer’s E190 Valuable- E190 increased growth opportunities for JetBlue as the company could get access to a larger potential market via E190. It was more comfortable than typical regional jet. Cost per available seat of E190 was 34% less than a typical regional jet.
WestJet’s competitive priority relates to cost, quality and delivery. Cost – WestJet has been able to reduce its operating costs through standardization. By purchasing only one type of plane WestJet is able lower both maintenance and training costs, resulting in higher profits. These savings and profits allows WestJet to provide lower cost airfares to its customers, thereby having a competitive advantage over its competitors. Quality – WestJet’s culture emphasizes a fun and friendly atmosphere for all travellers and empowers employees with bottom-up management.
RUNNING HEAD: AMERICAN AIRLINES American Airlines and US Airway’s Merger By Aveon Sims Strayer University BUS 508 Contemporary Business Professor Jean Fonkoua August 24, 2014 Abstract American Airlines has suffered tremendous profit losses over the last few years. The losses have been so great that the company filed Chapter 11 bankruptcy. The news for the Chapter 11 bankruptcy protection was a shock to many, considering the fact that they had enough money to operate and cover their losses through the following year. The merger indeed was a great decision on behalf of American Airlines. The merger itself was questionable.
Planes are now more efficient, larger and air travel is now cheaper which increases the number of customers. There are now two types of flights; full service carriers which the food and drink is included, and the low cost carriers which are the budget airlines and you can pay for just your seat and have to pay for luggage and food which is not included. The increase in budget airlines has made it more accessible for people to be able to fly. The internet has also increases the growth of air travel as you can now book a flight from your home/mobile, which increases the chance of having an impulses holiday. Containers are can be easily transferred from one transport to a different form.