Highly competitive industry 2. Unsuccessful implantation of growth strategy 3. The hiring of competent staff who maintain the culture of JetBlue JetBlue’s strategy of maintain customer excellence and providing needed low cost service is a definite way to stay up above the competition, customers want a low cost airline that gives them what they need in terms of pricing as well as destination. JetBlue, will be in a position of failure if a growth strategy is not in place to increase capital and foresee methods in which to cover debt and make a profit “ Achieving our growth strategy is critical in order for our business to achieve economies of scale and to sustain or increase our profitability” (JetBlue,2004) Gating is an important issue that must be looked at, due to the fact it could limit their sales “We will also need to obtain additional gates at some of our existing destinations. Any condition that would deny, limit or delay our access to airports we seek to serve in the future will constrain our ability to grow” (JetBlue, 2004).
There are several options available for customers to choose in this industry because the standard product and service are in this industry, so customers are more care about the price. And also the Internet makes customers research cheaper flight much easier than before and switching cost is low. The threat from substitute is high. Numerous options for customers can instead airlines, such as trains, buses, boats, and personal vehicles. Customers usually desire a cheaper way to travel if there are many options for them.
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.
As a duopoly, the entrance into the aircraft market can prove to be extremely difficult, not leaving many options for substitutes. Those that may even fathom the idea of entering the aircraft market are faced with considerably high set up costs. Cost may include, but are not limited to training, labor, personnel, and supplies, in addition to the cost of research and development and legal costs of new products. On the other hand, customers considering switching suppliers have very minimal buyer power and may also be faced with considerable costs. Such circumstances clearly clarify the high concentration in the aircraft industry.
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.
In addition, airplanes re-orders were being rescheduled. Rising fuel prices consolidation - Cost pressure – resulted as there was a decline in the industry as a whole. Increasing competitive intensity – Airbus, Boeings competitor, offered the same airplanes at cheaper costs. 2. What is the e-Enabled Advantage?
Additionally, due to the limited competition as well as its ability to keep prices low, easyJet was able to successfully offer stable prices to its customers while ensuring sustainable levels of profitability. Sellers While the goal of easyJet was to offer cheaper air travelling options, it charged higher fares for routes that were frequently travelled. For example, the yield management system which was set up had higher fares if the particular flight was highly demanded, but at the same time still managed to remain competitive in comparison to conventional carriers. Substitutes In terms of alternatives to easyJet, the company faced competition from companies that offered a similar service of cheaper air travel. Each of them had their own strategy in place to keep their prices low and survive in the budge airline industry.
Resolved: The USFG Should Create A Policy That Substantially Reduces Security Measures In All United States Airports What comes to mind in terms of airport security? Is it the process of physically screening every passenger so that the plane can complete a safe journey? Is it a sham produced by the United States Federal Government (USFG) to make travelers feel better? The answer is probably a little bit of both. Immediately after the 9/11 terrorists attacks, there was an overwhelming need to review and change the security procedures that were in place at that time.
Recent debates and news concerning air travel has created a deep-seated fear of this mode of transport, and more and more people are being made aware of the consequences of having firm airport security. Busy and popular airports and international airlines try to come up with the best measures to make sure that air travel is safe and reliable as well as quick and convenient, but people still have solid reservations and opinions about this modern day concern. There was a time when security checks at airports were merely a formality. Metal detecting equipment and body searches were minimal and people didn’t need to worry about their right to privacy, and more specifically, being asked to take their clothes of during their travels. Airports were not security-free but at the same time they did not feel like entrances to maximum security prisons.
And the costs of complying and some additional costs such as audit fees can be very high, especially for small firms. Furthermore, if the IPO fails JetBlue will lose money. This makes the IPO process time consuming and expensive. Finally, the future benefits of being listed are not guaranteed. After weighting the costs and benefits of going public, in my opinion, private placement would be a better idea for JetBlue to raise funds particularly following the terrorist attacks of September 2001, because private placement is less expensive, less time consuming and do not need for registration, and at the same time, JetBlue can also raise funds quickly through private placement.