TITLE OF ASSIGNMENT CRAFTING AND EXECUTING STRATEGY STUENT MOHAMMAD HOSSAIN INSTRUCTOR DR. RHONDA POLAK COURSE TITLE STRATEGIC MANAGEMENT –BUS 599 DATE: - OCTOBER 16, 2011 Discuss the trends in the U.S. airline industry and how these trends might impact a company’s strategy. Trends in the US airline industry have an impact the performance and strategies of the airlines. As a result, the Jet Blue has struggled to survive. The trends of U.S. airlines industries are discussed as follows: (1) Increased crude oil pricing: fluctuations crude oil price lead to passenger fees for revenue generation, This dramatic price increase caused airlines to struggle to offset the cost of fuel. Presently, gas prices have dropped.
Case Study US-Airline Since the deregulation of the U.S. airline industry in 1978, a substantial number of new carriers emerged; particularly those following a low cost strategy. Given those airlines’ rapid growth and market success the U.S. Department of Transportation (DOT) already identified a so called `low cost airline service revolution’ back in 1997. Almost fifteen years after the drafting of the DOT report, the low cost airline service revolution has not only continued – reflected in an increase of the domestic passenger market share from about 13 percent in 1997 to about 28 percent in 2009 – but also led to a substantial rise in the competitive interaction between network carriers and low cost carriers. Against this background of a substantial and further increasing relevance of low cost carriers, the paper aims at developing a comprehensive perspective of the evolution of the domestic U.S. airline industry in recent years. We find that network carriers (NWCs) und low-cost carrier (LCCs) each entered about 1,200 non-stop routes between 1996 and 2009.
Financial Management Analysis MBA 6160 September 30, 2011 Table of Contents Introduction………………………………………………………………………………………3 Senior Management Profiles…………………………………………………………………..3 Competition………………………………………………………………………………………5 Financial Analysis……………………………………………………………………………….7 Financial Techniques………………………………………………………………………….11 Capital Funding………………………………………………………………………………...12 Working Capital………………………………………………………………………………..14 Summary………………………………………………………………………………………..16 Recommendations…………………………………………………………………………….17 Income Statement……………………………………………………………………………..19 Balance Statement…………………………………………………………………………….20 Cash Flow Statement………………………………………………………………………….22 References……………………………………………………………………………………..25 Introduction The airline industry is currently in turmoil, as rising fuel prices coupled with poor economic conditions and fierce competition makes it difficult for an airline to operate profitably. Therefore, this financial analysis is to prove the necessity for Delta Airlines to merge its cargo operations, passenger operations and aircraft maintenance with the other Skyteam Alliance Airlines. Thus, the cargo operations will be split off, and merged with the other cargo operations from the Skyteam Cargo Alliance to form a new company named Skyteam Cargo Handling, which would only handle the cargo activities for all the Skyteam Cargo Alliance members. The same would happen with their passenger business and maintenance. Delta Airlines, Inc. was incorporated in the State of Delaware, but their corporate office and primary hub is in Atlanta, Georgia.
I. KEY ISSUE In 2007, the CEO of JetBlue Airways, David Barger, faced an immediate survival issue as the company struggled to overcome a major operational failure during a difficult time in the airline industry when fuel prices were increasing tremendously and the profitability levels were low. Barger knew he should move quickly to maintain the confidence of customers, employees, and shareholders. He considered the option of reducing either E190 or A320 deliveries in order to maintain low costs as the company was not ready to continue growth in the E190 regional market segment. II.
Other arguments for the expansion include jobs and the increase in economy, for example the 3rd runway will boost the economy to a predicted 22 billion. The Construction alone will create 60,000 jobs in the area and once complete there will be 800 jobs available on site. Many local people are concerned that the increased air traffic will cause too much pollution but these concerns are often over played. The development will help to compete against other European airports, which
Easy jet is the largest air line in terms of passengers volume – ‘59 million’ (Easy Jet corporate media file, p.3) in UK and internationally across 30 countries with flight scheduled services of ‘600 routes’ as well as the fourth largest short-haul carrier in Europe with a market share of ‘8%’ (Easy jet annual report, 2012, p.12). In order to promote efficient service to customers, they introduce speed boarding that gives passenger’s greater choice over their seat arrangements. Furthermore, the volumes of passenger’s turnover have increased their financial performance to ‘£317 million’ (p.9) profit before tax and after tax of ‘£255 million’ (p.19). Their annual report can be assess at http://2012annualreport.easyjet.com/downloads/PDFs/Full_Annual_Report_2012.pdf and http://corporate.easyjet.com/~/media/Files/E/Easyjet-Plc-V2/pdf/content/press-info-kit.pdf a. Table: The vocabulary of strategy in Easy jet airline (2012 annual report) Term Definition Example (including why chosen and evidence Mission Overriding purpose in line with values or expectations of stakeholders Their mission statement is to ‘leverage cost advantage, leading market position, and brand to deliver point-to-point low fares with operational
Due to rebound of travel budgets, airlines are now competing for premium customers. Business Class customers are now the main source of income to airlines, and its even difficult for passengers to find business-class seats available. As Eric Shaver, a managing director for a consulting and training firm called Kensei Partners, says, " It has been harder to get up-graded to first class these days because so many frequent fliers are crowding the air." So he had seen evidence of this trend this year. He continues, "On flight back from London last year, there were five rows of empty seats.
The New York Times claimed that, “When immigrants do take jobs, they’re hard workers” (Preston and Connelly a1). Therefore, it greatly contributes to America’s retirement system. The presence of immigrants also contributes to America’s long term population growth, necessary to stabilize the overall retirement fund. The Springer Science and Business Media’s journal states that some other countries in the world suffer from the labor shortages and a demographic crunch, in which a very small number of workers will be expected to pay the retirement and health care for elderly people (Gold 409). The ratio of retired people to workers is expected to dramatically increase in the coming decades, which would result in significant changes in the Security System of America’s retirement money.
An Analysis of Southwest Airline Strategy Using SWOT Concept Joseph, F. Okpe University of Maryland University College An Analysis of Southwest Airline Strategy Using SWOT Concept Faced with continuing economic pressure, mounting competition, and a constantly evolving hyper-competitive business environment business organizations worldwide are being forced to radically change and reinvent their strategies and/or business models or face extinction. The winning strategy is one that enables a company to outperform its competition in terms of long term competitive advantage in the market i.e., profitability, cost reduction, customer satisfaction, product and service delivery innovation, production efficiency, production differentiation, and cheap but qualitative products and services (Boone & Kurtz, p. 273, 2006). According to Thompson (p. 1, 2010) a successful strategy is one that sets a company apart from its rivals and create a competitively advantage over the long run, simply by causing an attractive numbers of buyers to have lasting reason to patronize a company’s product’s as opposed to that of its competitors. Southwest Airlines is a prime example of a company in a very competitive industry that has perfected its business strategy and model and in the process gained competitive advantage over its rivals simply by providing customers with what they perceive as superior value services compared to the offerings of rivals airlines. Superior value can mean a good product (or services) at a lower price; a superior product or service that is worth paying for; or a best-value offering that represents an attractive combination of price, features, quality, service, and other appealing attributes (Thompson, p. 87, 2010).
JetBlue started by following Southwest's approach of offering low-cost travel, but sought to distinguish itself by its amenities, such as in-flight entertainment, TV at every seat, and Sirius satellite radio. JetBlue operates one of the youngest fleets in the skies with an average age of 5.1 years between both types of aircraft. The airline mainly serves destinations in the United States, along with flights to the Caribbean, The Bahamas, Bermuda, Barbados, Colombia, Costa Rica, the Dominican Republic, Jamaica, Mexico, Peru, and Puerto Rico. As of October 2013, JetBlue serves 84 destinations in 24 states and 12 countries in the Caribbean, South America, and Latin America. JetBlue took off on February 11, 2000, with an inaugural flight between New York City’s John F. Kennedy International Airport and Fort Lauderdale, Florida.