Such technological advancement placed a lot of financial burden on the operations of Jet Blue. The airline industry continues to feel the effect from the U.S economic slowdown and rise of crude oil/jet fuel prices, which have risen to record numbers with no predictable end in sight. The slow economic growth has compelled both business and individual travelers to cut back on travel expenditure thereby compelling airlines such as Jet Blue to initiate energy conservation measures, targeting specific markets and exploring the possibility of partnership with other airlines. Linked to the volatility of jet fuel prices is the increased in competition posed by new entrants to the airline industry. New entrants such as Virgin America are bracing the competition by offering lower fares to customers.
Also, with the unrealistic estimation of future growth in global demand for commercial jets, the guarantee of selling such a high number of Airbus’ units is doubtful. Finally, the actual sales figures is tantamount to determining share price and the overall effect of revenue on the shareholders. Company Objectives Lockheed is pushing to achieve more than just a break-even figure for the Airbus – they wish to exceed the break-even
Who are some of the major competitors? Southwest competes against many low-cost carriers or low-cost subsidiaries of larger carriers. Southwest's main low-cost carrier competitors are AirTran and JetBlue Airways. Its other competitors include American Airline, United and Delta. Because of its efficient cost-saving strategies, Southwest's 37-year streak of profitability is unmatched in the airline industry.
Having already filled the market with 747s, Boeing is looking to capitalize on the demand for direct flights and medium capacity requirements. Airbus on the other hand is producing the A380, an aircraft capable of carrying up to 800 people. Airbus is looking to replace the ever growing old Boeing 747s in the market with a higher capacity more fuel efficient plane. Its easy to compare the two aircrafts in terms of size and primary use. The A380 is a high capacity aircraft capable of transoceanic flights, while the 787 has relatively the same traveling distance, but a maximum passenger count of 280.
Analyse the attractiveness of the airline industry pre-9/11. There had been several structural changes in the global airline industry for the last decades. Some of the main factors are: globalisation, deregulation, technology improvements, and ongoing improvement in the jet engines in order to make it longer routes Pre 9/11, the demand for air travel increased due to the rise of world GDP, rise in world trade and investment (economic influence). In addition, the demand for travelling increased due to the growth of the number of retirees (social influence). This was a major opportunity within the airline industry since the global number of passengers increased from 450 million to 700 million between1990 and 2000 mainly due to the retiree that were travelling for leisure.
Airlines Silverjet is a good example for this, we will understand deeply how important of market segmentation with the success or failure of a company. The typical segmentation bases that used by airlines is geographic, demographic and psychographic segmentation. And most major carriers flying domestic of international routes have three basic types of segment.
Industry Analysis Two large airlines take the initiative to expand their horizons and decide to affiliate and join together. The alliance between US airways and British Airlines was widely publicized and criticized because it was the largest such venture ever attempted in an industry. British Airways, in 1939, British Overseas Airways Corporation was formed. The company became heavily loaded with debt through the 1950s and 1960s as it acquired new aircraft, experienced severe swings in capacity as passenger traffic ebbed and flowed, and began to compete internationally with the large U.S. airliners. For many years the British government continually subsidized the losses.
It depends on the industry barriers to entry. If the potential entrance is high, it may lead to increase the degree of industry competition. The industry attractiveness therefore is less due to low profitability (Tutor2u, n.d.). There are number factors of barrier to entry however the key barriers to entry can include: * Economics of scale * Production differentiation * Capital requirements * Customer switching costs * Access to industry distribution channels * Government policies (eNote, 2012) a. Economic scale: European airline industry has achieved economic scale in which it creates a barrier of entry that the new entrants have to compete on a large scale (eNote, 2012).
It is because there are weak in financial reporting, highlighted in the audit, floating interest rates and additional financing problems. Furthermore, JetBlue weakness single fleet. JetBlue has been using a single fleet. Others weaknesses are concentration on middle class and it shifting customer’s need.
Ryan Air versus The easyGroup : A comparison of business strategy 1. What are the main sources of economies of scale, scope and learning that underpin the strategy of Ryanair? The Ryanair business strategy is to be the cost leader in the airline industry. The cost structure of the airline industry is predominantly one of fixed costs. The Ryanair strategy is to keep paring away at fixed costs and increase the passenger load per aircraft to improve profitability.