It is one of the highest taxed holiday destinations in whole of Europe (BHA, 2012). Thus with the rise in tax, business like the local shops, the restaurants and the travel agencies are said to be affected. Economic Factors During the past few years the tourism sector have faced hard times due to challenging economic times and have largely impacted the global travel market but however there are signs of recovery within the consumers. The travel and the leisure sector were impacted mainly due to the consumer’s disposable income, unemployment rate, fluctuation in the rate of currency and the oil price. All these drives have hugely impacted the travel and leisure industry.
According to Dempsey’s research (2008), U.S. airline industry had made a huge lost on profit, by the end of 1991. It was recovered in late 1990s, but once again, the industry suffer a bigger loss in early 2000s (Dempsey 2008). This second drop of profit is probably due to the September 11 terrorist attack. The impact of the September 11 was a loss in revenue of U.S. airline of $19.6 billion in 2001-2002 (IATA). From 2011 to 2005, a total loss was $57.7 billion (IATA).
Another factor is inflation. Inflation changes from year to year and affects more and more the customer. If in 2000 with 100£ you bought 100kg of sugar, now in 2011 you can buy only 50kg of sugar. The economic growth can affect your company in a bad manner or in a good manner. For example, now we deal with a crisis period and large companies like Sainsbury suffer a lot.
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.
I. Market Ratios: First of all, looking at the market ratios, we can see an unstable performance of the company between June 2008 and March 2010. The stock price is about half of the industry’s average stock prices. Both of them fell dramatically in December 2008 and March 2009, but they went up and have had an upward trend until now. Below is the price chart of Garmin from June 2008 to March 2010: (Source: Msn Moneycentral) The company pays an annual dividend of 0.750, which is much higher than the industry’s average.
Ladies and gentlemen, The habit of smoking can cost a smoker thousands of ringgit a year. A pack-a-day-smoker, who pays RM 10 per pack can expect to cost more than RM 3,500 per year. Just imagine how much money can you save. It appears that the price of cigarettes will continue to rise in coming years as will the financial burden to keep up with this bad habit. Many surveys, studies and scientific research has proved that smoking is injurious to health.
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. Fuel prices and labor costs increased during the year 2000 which led to a rise in the airline cost. Air travel increased to 160 per cent from 1978 to 2000. Despite this increase, US airline RPKs (the average revenue per passenger kilometer) went down by 2.5 per cent per annum. The business model for Full Service Carriers (FSCs) main focus was to provide product quality and service to lots of cities.
Contribution margin = $190 - $ 70 = $120 per passenger 90 X .60 = 54 filled seats Break-even point in passengers = $ 3,150,000/$120 = 26,250 passengers 26,250/54 = 486 train cars d) (Refer to original data.) Fuel cost is a significant variable cost to any railway. If crude oil increases by $ 20 per barrel, it is estimated that variable cost per passenger will rise to $ 90. What will be the new break-even point in passengers and in number of passenger train cars? New contribution margin = $70 Break-even point in passengers = fixed costs/contribution margin Passengers = 45,000 Train cars = 715 e) Springfield Express has experienced an increase in variable cost per passenger to $ 85 and an increase in total fixed cost to $ 3,600,000.
Also the headquartered in Dublin, employs about 4,200 people, operates with a fleet size of 120 Boeing 737-800, carries approximately 35 Mio passengers a year and had a turnover of 1,692.5 Mio in 2006 with a net profitability of about 10% (Mayor, 2007). Furthermore revenue has risen from €231 million in 1998 to €2,714 million in 2008 and net profits have increased from €48 million to €480 million, over the same period despite the worldwide recession and the high oil prices. (4.1) External Environment Analysis Purpose of an external environment analysis is to identify or develop a finite list of opportunities that could benefit a firm and threats that could be avoided. Firms should be able to respond either offensively or defensively to the factors by formulating strategies that take advantage of external opportunities or that minimize the impact of potential threats. The external analysis can be divided into macro environment and industry analyses.
The whole airline industry were running in to negative profits and many major airline corporations were operating under the bankruptcy protection except Southwest airlines and JetBlue airlines which was through its efficient management strategies and its emphasis on low fares . This was due to the terrorist attack on September 11, 2001. The customers feared to use air transportation and thus the domestic yields dropped almost 20% and stayed low until 2005. JetBlue saw its worst nightmares in the year of 2007 after more than 1100 JetBlue flights were cancelled in February which was then followed by sharp rises in fuel costs thus raising the operational costs .David Barger who was the president and COO of JetBlue was promoted as a CEO in 2007. The board was concerned about the situation and David Barger who was the President and COO of JetBlue during that time was appointed the new CEO of the company at its corporate headquarters in Forest Hills, New York.