1) The economics are attractive ($2 billion in sales for high sales scenario) 2) If projections are correct, the VLA segment is growing and too large to ignore. They want to be a dominant competitor in the commercial aviation industry and the VLA segment is a must involvement. 3) Create a far more superior plane then Boeing’s 747. Will offer more space for passengers, better amenities, much newer/safer, better economics for airlines, and better pilot utilization. This is a chance to surpass Boeing if they are able to be the first movers into the market.
The five forces are competitive rivalry, threat of substitute products, and threat of new entrants, bargaining power of suppliers and bargaining power of buyers. 2.1 Threat of new entrants The threat of new entrants presents the possibility of new firm entering the industry, which increases the competition while reducing the airline revenue. There are a few factors influencing the threat of new entrants such as government regulations, product differentiation, capital requirements and lastly switching costs. There was a low barrier of entry in the airline industry when Airline Deregulation Act eliminated government control over fares and routes. This allows those new entrants who enter the airline industry to slash price to capture market share which increase in competition.
U.S. Airline Industry Case Study Ronald Loebel Park University INTRODUCTION As technology rapidly develops in the 21st century, so are goods and services in the competitive market. The airline industry in the United States of America is one of those undergoing a tidal wave of changes, causing a drastic alteration in the business landscape. Some of these changes were not heard of before, such as more nonstop air travel with the USA, and even the kinds of entertainment systems provided onboard the plane. Moreover, the grueling battle between prolific companies to compete for customer attraction and in the end, loyalty, resulted to further segmentation of the airline industry.
New entrants such as Virgin America are bracing the competition by offering lower fares to customers. Such a strategy pose a great threat to the operations of Jet Blue whose major strategy and survival is the low airfares offered. Lastly, the potential for increased labor cost as a result of the possible future shortage of pilots predicted by the International Air Transport Association will impact negatively on future expansion programs of smaller airlines such as Jet Blue. Discuss Jet Blue’s strategic intent prior to 2008 Jet Blue strategic intent prior to 2008 was to use low fares and entertaining planes to
First, management will analyze the situation. Management needs to examine past events, look at the current situation, and try to "forecast future trends" (Bateman & Snell, 2009). In a situational analysis, Boeing management will also consider the competitive market. Next, management will set goals and create alternative plans that will aide in the achievement of goals. A specific goal Boeing has is to become the "world's largest civil aircraft maker once again" (Singapore Press Holdings Ltd., 2010).
Strengths of Southwest Airlines Swot Analysis • Has experienced very fast growth since its inception in 1971. • Offers credit based on the number of trips with the airline instead of the total miles traveled. • Was the first to offer senior discounts, ticketless traveling, and services for air freight delivery. • Carefully considers each applicant so that they are sure to hire the best employees which leads to excellent service for their customers. • Offers reasonably priced travel packages with low frills and excellent customer service.
If Classic Airlines wants to remain successful, a successful marketing plan in this competitive environment would be strongly encouraged. Many challenges have begun to plague Classic Airlines. One of the main challenges is that Classic’s stock share price has decreased by 10% in the past 12 months. Combine that challenge with a record low for employee morale, a decrease in the number of customers enrolled in the company’s reward program, an increasing cost of fuel, and a declining number of travelers in general because of security and safety fears, it is to be expected that managers at Classics Airlines realize the need to reduce costs by 15% in all areas over the next 18 months. Classic Airlines needs to make improvements to increase its profits, employee morale, and improve customer satisfaction
I will discuss several marketing concepts from the 9 step model which Classic Airlines can apply to their business to regain their customer loyalty, their profits, improve customer service, and provide a competitive price, restore employee morale and increase stock prices. The first marketing concept is the relationship which “has the aim of building mutually satisfying long-term relationships with key parties – customers, suppliers, distributors and other marketing partners – in order to earn and retain their business.” (Keller, 2006 p. 18). Classic Airlines need to rebuild their relationship with their customers since there has been a decline in Classic’s reward program. The relationship marketing concept is used in the when there is more professional responsibility. It is Classic’s Airline responsibility to regain their customers and improve customer service to remain profitable.
In 2004, the organization earned $10 million on $8.7 billion in sales. As an organization, Classic AIrlines is heading for trouble. Uncertainty regarding safety while flying has impacted the stock prices of the industry. As a result, They have seen a decrease of 10 percent in share prices, 19 percent decrease in the amount of Classic Rewards members, and a 21 percent decrease in the amount of flight booked for the current members. The Board of Directors would like to beef up the frequent flier program to increase the company’s return on investment (ROI).
FedEx also shifted their focus to a just-in-time mentality and was known for their precise tracking and efficient delivery. The combination of their hub and spoke delivery pattern, owning their own planes and precise delivery style was boosting FedEx towards the leader spot. Leading up to the USA/China agreement, UPS was trying hard to revamp their image to improve their reputation. They were however already the world’s leading Delivery Company. But the new opportunities presented with the agreement would be a true test for UPS and how they would handle the pressure from FedEx.