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.
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. The company has to make some tough decisions in streamlining the labor force to reduce the cost of labor and make itself more competitive with its peers in an industry where competition is stiff at the least. In addition to this the idea that they will be using more regional jets e.g. Mesa Air in medium markets may help alleviate operating costs that are also currently very high. US Airways may also want to look into the option of merging/working with one of the more successful low cost carriers as a strategic partnership 2.
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?
Making travel to these areas much more expensive than what is really necessary. Quite possibly making the cost to these areas for travelers so much more expensive than most would be willing to pay. This could just be a ploy for the airline to stop this flight service from San Francisco to Washington, D.C. because they are in fact not making enough to cover the fuel and crew costs for these flights. Rather than announce the cancellation of this service themselves, they could be feeding information to the WSJ to help get the word out that they plan to stop this service in the near future. And this article is helping them to plant that seed.
American Airlines was accused of predatory pricing business practices during 1995-1997 when competing against several low cost carriers in the Dallas, Fort Worth area, forcing the other airlines out of the market. Analysis American Airlines altered their pricing structure during the years of 1995-1997 in the Dallas Fort Worth Area when several low-cost airlines attempted to establish themselves in this market. In response to the low cost carriers, American Airlines reduced fares, and in some cases increased their routes to match their competitors in this particular area. When the low cost carriers failed to survive this market, American Airlines resumed flight schedules and pricing used prior to the 1995-1997 time period. Any price reductions were quickly recouped when American Airlines resumed ‘normal operations’.
Cost, Volume, Profit Analysis Group 2 MBAA 517 Case Analysis – Activity 5.3 Embry-Riddle Aeronautical University In determining the breakeven point, both in dollars and passengers, ABC Passenger Service Airlines will be affected if there would be an occurrence of decrease or an increase of passengers from the breakeven point. When an increase of passengers should occur, profit will rise since the increase will land above the breakeven point. ABC will suffer profit losses as the number of passengers decreases, as it will land below the breakeven point. | | | Helicopter | JET | goods carrier | Cruise | total | | | | Sales | | 100 | 100 | 100 | 100 | 400 | | | less | Variable cost | | 40 | 50 | 30 | 60 | 180 | | |
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.
Week One Individual Assignment Alexandra Del Rio MKT 571 November 21, 2011 Professor Debbie Thomas Abstract Classic Airline is one of the largest airlines company’s within the industry however they are going through a difficult time because a reduction customers therefore revenues. During these times there will be several factors involved and possible directs to choose between. This document will present marketing concepts found in the Classic Airlines scenario and how they correlate to the readings. These concepts could help Classic Airlines decide the best course of action to take moving forward. Marketing Concepts Within the Classic Airlines scenario presented (Classic Airlines Scenario), one concept mentioned by Kotler
Both companies remain in fierce competition to dominate the number one spot in the industry. Airbus has held that position since 2003. However, according to the Wall Street Journal, Boeing is threatening to take its position back and reign as number one for the first time in over a decade (Ostrower, 2013). As a duopoly, this change can prove to have a significant effect on the aircraft marketplace as well as our economy in general. As a duopoly, the entrance into the aircraft market can prove to be extremely difficult, not leaving many options for substitutes.
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).