Presently, gas prices have dropped. However, the airlines continue to pass along the fees to its passengers to increase revenue. Clearly, the fees that began originally in response to fuel prices continue to be part of the revenue generating strategies of airlines. (2) Shortage of Pilots: As baby boomers retire by the thousands, the airline industry is experiencing a shortage of pilots. Before becoming captains, pilots must earn sufficient fly hours.
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.
Many eager businessmen with a few extra dollars invested in the railroad and real estate businesses, and soon this gave way to massive over speculation. Over the next few years, 89 of the country’s 364 railroads went bankrupt, over 15,000 businesses failed, and unemployment skyrocketed to 14%. Eventually, the economy managed to get itself back on its feet, and by the 1880s the country was back to normal. The government passed a number of reformative protective tariffs which were meant to ensure that nothing like the panic would ever happen again. Unfortunately, it did.
In implementing these key ideas, WestJet has been one of the most profitable airlines in North America. WestJet receives over 155,000 resumes a year from people in the airline industry and others with no airline industry qualifications at all. Surprisingly, they tend not to hire the ones with experience. WestJet is not your typical bureaucratic organization like most of the other airlines. It is assumed WestJet does not want to hire competitor employees because their work ethic is so off from what WestJet has portrayed in their work force.
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.
1.0 Introduction The airline industry has undergone enormous changes over the past decade through liberalisation and deregulation. Due to this, new airlines have been able to enter and grow within the market. Some have been a success and some have failed. The airline industry has had to face and accept the new airline business concept, called low cost or no frills airlines. The low cost airlines have developed their value chains so effective in low cost operation that they are hard to imitate, especially for traditional airlines.
However, major airline companies are actually doing the complete opposite, and are reducing domestic capacity this year, in order to increase fare prices. Looks like some cities will be offered less choice in picking their flights. Now, everyone will have to get used to sitting elbow to elbow,
Bright (Boeing) was in trouble from the start. But, in a down market he could hardly ignore a big order even from a European airline with cozy connections to Airbus. He did do well on the creativity dimension by guaranteeing GE concessions on engine maintenance. Leahy (Airbus) probably gave away too much in price and had not bothered to include a confidentiality agreement about the final price 2. Critique the overall marketing strategies of the two aircraft makers as demonstrated in this case.
General Environment Analysis The US Airlines Industry was going through a tough time during the period of 2004 - 2006. Major Airlines, such as United and Continental were trying to consolidate in order to survive. US net losses include $6.1 billion restructuring costs in 2006 [Exhibit 2, Source]. With several major airlines filing for bankruptcy, it was even more difficult for the regional airlines, which were primarily dependent on the major players for their existence. A more detailed environmental analysis is provided below: Economic Trends:  Net profit trend - Although the forecasts of the International Air Transport Association (IATA) seemed to be promising for 2007(collective profit of about $2.5 Billion), the situation till December 2006, seemed to be pretty bleak (Threat)  Seasonal Fluctuations - Another problem was the seasonal fluctuations in demand.
Puerto Rico was struggling to develop a growing economy, and because of the inexpensive airplanes fares between San Juan and New York City, by 1970 there were about 1.5 million Puerto Ricans in America. The first immigrants settled in the East Harlem, Manhattan, but they spread out rapidly into the other four New York City boroughs. In 1970, 64 percent of Puerto Ricans lived in New York. By 1980 this figure had dropped to 50 percent, and Puerto Rican enclaves had grown in other major cities-particularly Hartford, Connecticut; Philadelphia; Cleveland; Chicago; Los Angeles; and Miami. During the 1970s, Because economic conditions in the United States was getting worse, more Puerto Ricans returned to the island than came to America.