...Industry Background The terrorist attacks of September 11, 2001 brought about dramatic changes in the United States (U.S.) airline industry both in terms of short-term profitability and in standard operating procedures. In spite of the economy recovering from recession, the industry reported net profits of $5 billion in calendar year 1999 and $3 billion in 2000 (Smallen, 2002). These gains would quickly deteriorate in the months following the attacks as a frightened public cancelled trips, resulting in a 2001 net loss of over $10 billion. While the federal government intervened with a $15 billion bail-out package, one-third of which would be received in cash and the balance as guaranteed loans (Corridore, 2002), the losses continue to mount as airlines face increased security costs and lagging passenger counts. Investors are wary about the industry as financially strapped companies struggling to stay afloat by reducing the number of flights and value-added services, streamlining operating costs, laying-off thousands of employees, and restructuring debt labor force. Many companies have had to seek loans to meet operational expenses, resulting in the total debt load of the industry surging from $55 billion to $90 billion since 1999, towering nine times over equity. Several airlines have or are on the brink of filing bankruptcy protection. This paper examines the annual statements of three companies from the perspective of an investor and employs financial statement analyses...
Words: 2978 - Pages: 12
...the last decades, aviation or airline industry represented higher level of business growth rapidly. Additionally, in terms of business development airline industry is playing effective role in enhancing global trade, international business investment and activities in tourism sector. In reference to specific roles, it can also be illustrated that airline business industry is the major focus of globalisation for other business sectors. The improving airline industry offers number of opportunities and challenges to different business organisations functioning in specific industry. However, the challenges don’t arise only due to higher market competition rather because of enhancing demands of customers in order to attain better quality of service....
Words: 1699 - Pages: 7
...AN ANALYSIS OF BUDGET AIRLINE- ‘RYANAIR’ Module Name: Management and Strategy (MBA INTERNATIONAL) Module Reader: Claire Devlin Student Name: Varghese Jacob Student Number: 8202730 Date: 16/03/2007 Introduction Air line Industry can be called as one of the biggest industry in the world. In that huge industry European Airline industries part is very high. European Airline industry consists of two sectors mainly Main stream and Budget Airlines. The budget airline sector is becoming a great threat to the main stream airlines in these days. Among the Budget Sector Airlines Ryanair is the most established one. Here the essay is mainly dealing with the reviewing of the management strategy of the budget airline giant RYANAIR. Essay includes not only the management strategies but also the main problems that Ryanair have to face in their entire business period. And also includes the analyses of European Airline Industry in relation to Ryanair. ANALYSIS OF EUROPEAN AIRLINE INDUSTRY European Airline industry can be called as the world’s biggest airline industry. Europe’s main stream airlines industry includes British airways, Lufthansa, Scandinavian Airlines and BMI. Before the establishment of the budget airlines they were the kings of European airline industry. The Budget Airline or the Low frae airline includes Easyjet, Virgin Express, Aer Lingus, bimbay My TravelLite and last but not the least Ryanair. Among these...
Words: 3709 - Pages: 15
...Porter’s Five Forces Analysis for Airline Industry Threat of entry The government imposes quite lot restrictions on the entrance of the airline industry. What’s more, the high cost and high early stages investment capital for purchasing airplanes are barriers of entry. Threat of substitutes The most threatening substitutes are traveling by trains and cars. Because of the high price of taking planes, many people choose to travel by trains or cars, especially short-distance trip. But it takes a long time for people to take trains or cars, so people tend to choose air when they will experience long-distance trip or when they want to save time. Therefore, the substitutes influence the industry a lot. Threat of powerful suppliers The government also imposes quite lot restrictions on suppliers. Therefore, there are not many companies have the rights to provide products for airline industry. Airline companies have few choices about suppliers, so the suppliers’ bargaining power is very strong. Threat of powerful buyers At most time, when people decided to travel by air, they do not have many choices, and it is very difficult for the buyers to unite to buy services. When sellers gives out the service standards and price, buyers have nothing to do but accept it. So the buyers’ bargaining power is quite weak. Threat of rivalry There are only several airlines in the market. In spite of most of them provide similar services, they share some differences in air routes. So, the threat...
Words: 257 - Pages: 2
...Oligopoly Behavior in the Airline Industry. Case Analysis This case illustrates the pricing behavior of firms that are oligopoly whose market is characterized by the relative few participating firms offering differentiated or standardized products or services. Such firms in an oligopoly have market power derived from barriers of entry that wards off potential participants. As seen in the case, it is clear that because there are a small number of US Airlines firms competing with each other, their behavior is mutually interdependent – thus, the strategies and decisions by one airline management affect managements of the other airlines whose subsequent decisions then affect the first airline. In the airline industry, such oligopolistic interdependence gives rise to a strategic behavior akin to chess moves- where, for example, what is best for American Airlines depends on what Northwest Airlines does, and what is best for Northwest Airlines depends on what American Airline does. The small number of firms competing with each other in the airline industry means that one airline’s changes in price immediately affects the demand for its competitors. The case suggests that behavior of firms in an oligopoly can be one of cooperation when they all sync their strategies to the obvious disadvantage of the consumer who has few alternatives e.g. inability to substitute other forms of travel for air travel usually because of time and distance constraints. As shown by data in the case, oligopolistic...
Words: 632 - Pages: 3
...Southwest Airlines Prepared for: Mr. Balasubramanian Shankar Due date: Monday, 5th October 2015 Submitted by: Jiyeon | CT00000000 | TABLE OF CONTENTS 1. INTRODUCTION 2 2. COMPANY BACKGROUND 3 3. PESTEL ANALYSIS 4 3.1 Political 4 3.2 Economic 4 3.3 Social 5 3.4 Technological 5 3.5 Environment 5 3.6 Legal 6 4. PORTER’S FIVE FORCES ANALYSIS 7 4.1 Threat of New Entry 7 4.2 Threat of Substitution 7 4.3 Buyer Power 7 4.4 Supplier Power 8 4.5 Competitive Rivalry 9 5. STRATEGIC RECOMMENDATIONS 10 5.1 Managing Technology Advancements 10 5.2 Maintain Cost Advantage 10 5.3 Geographical Expansion 10 5.4 Product Diversification 11 6. CONCLUSION 12 7. REFERENCES 14 1. INTRODUCTION The focus company in this report is Southwest Airlines (SA), a major low cost carrier in the United States (US). The aim of this report is to examine the current market environment and competitive power of Southwest Airlines. In order to have a substantial overview of its environment, two analyses, the PESTEL analysis and Porter’s Five Forces analysis, will be used to evaluate SA. With the findings, strategic recommendations will be made for the problems that the airline is facing or may encounter in the near future. 2. COMPANY BACKGROUND Southwest Airlines is a budget airline established in 1967 by Rollin King and Herb Kelleher and had its first flight in 1971. Headquartered in Dallas, Texas, SA is an important airline in the...
Words: 3086 - Pages: 13
...position of Singapore Airlines Module No : EG3080 Module Title : Business Application in Engineering Submitted by : Chia Kok Kwang Alvin (K1068496) Table of Contents Page 1. Abstract 3 2. Introduction 4 3. Background 5 4. Singapore Airline’s Macro Environment (PESTEL Analysis) 6 5.1 Political Factors 6 5.2 Economic Factors 7 5.3 Socio-cultural Factors 7 5.4 Technological Factors 8 5.5 Environmental Factors 8 5.6 Legal Factors 9 5. Competitive forces and firm strategy (Porter’s 5 Forces Analysis) 10 6.7 Threat of new entrants 10 6.8 Threat of substitutes 10 6.9 Power of buyer 11 6.10 Power of supplier 11 6.11 Competitive rivalry 12 6. Strategic Capabilities (SWOT Analysis) 13 7. Strategic Choices (Porter’s Strategies) 14 8.12.1 Cost leadership 14 8.12.2 Focus 14 8.12.3 Differentiation 14 8.12 Strategic choice of Singapore Airlines 15 8. Challenges ahead of Singapore Airlines 16 9. Conclusion 17 10. References 18 & 19 1. Abstract Singapore Airlines leaves a deeply positive impression in many people’s heart as a leading airline that is dedicated to bring the highest level of products and services. We will look into how Singapore Airlines achieve its excellent...
Words: 3194 - Pages: 13
...JetBlue Airways Corporation is: how to maintain low-costs structure and continue enlarging its market share in the competitive airline industry with increasing fuel costs. II. Strategic Considerations A. Industry Analysis 1. History a). American aviation pioneers attempted to start airlines using airships in the mid-19th industry. b). Aktiengesellschaft was world’s first airline which was founded in November 16, 1909 with the government assistance, and operated airships manufactured by Zeppelin Corporation. c). Tony Jannus conducted the United States’ first scheduled commercial flight on January 1914. d). In 1918, the United States Postal Service won the financial support from Congress to begin air mail service. e). In 1925, Stout Aircraft Company began to construct Ford Trimotor with 12-passenger capacity which became the first successful American airliner. f). At the same time, Pan American World Airways created an air network that linked America to the world. g). At the end of twenty century, a new style of cost airline appeared, offering a no-frills product at a lower price. The representative low-cost carriers are Southwest Airlines, JetBlue and AirTran Airways. h). The September 11th terrorist attacks resulted the airline industry bailout which lost $30 billion with 100,000 employees laid off. k). Today, JetBlue, Southwest and Air Tran have become...
Words: 2121 - Pages: 9
...What affect has and what is the future of airline industry To begin with the purpose of the particular essay will intend to give an explanation about the Porter's five forces. However the discourse will focus on the sixth force and what affect has. The first part of the discussion will be analysed and supported by arguments about the meaning of Porter's five forces. Nevertheless examples for the five forces will mentioned in order to support and take thesis in the particular analysis. However examples about the sixth force will be mentioned in order to give the reader a satisfactory explanation and to make clear the effect that have in airline industry. Afterwards the essay will analyse the future of the airline industry. Finally a conclusion gives the reader a summarizing about the aspects discussed on the analysis. The Airline Industry has changed the people’s life. In addition it has drop the travel time and decrease the distances making possible to visit lands that cannot be imagined in the past. Michael Porter had created a model showing the influence on industry by five forces. This model help the managers to understand better the strategic forces that appear on industry and how they affect profitability. Five forces analyzing five key areas namely competitive rivalry, the threat of substitutes, the threat of entry, the power of buyers and the power of suppliers. Furthermore Porter referred to these forces as the micro-environment, to contrast it with the more general...
Words: 2673 - Pages: 11
...Content 1.0 Introduction……………………………………………………………………02 2.0 Background……………………………………………………………………03 3.0 SINGAPORE AIRLINES Mission, Vision and Values……………………………………………04 3.1 Mission…………………………………………………………………………04 3.2 Vision…………………………………………………………………………...04 3.3 Values…………………………………………………………………………..04 Table 1: Values………………………………………………………………………..04 4.0 Core Competencies………………………………………………………….05 5.0 SWOT Analysis……………………………………………………………….06 Table 2: SINGAPORE AIRLINES SWOT Analysis ………………………………………………………06 5.1 Weakness……………………………………………………………………...06 5.2 Threats…………………………………………………………………………06 6.0 PESTLE Analysis…………………………………………………………….07 Table 3: SINGAPORE AIRLINES PESTLE Analysis …………………………………….......................07 7.0 Recommendation…………………………………………………………….08 8.0 Conclusion…………………………………………………………………….09 9.0 References…………………………………………………………………….10 1.0 Introduction Aviation industry is one of the largest, growing and most competitive industries in the world. Its main duty is to provide air transportation services for its customers. Manufacturing aircrafts, handling airlines and ground support are part of the industry. Global market businesses such as medicine, tourism, transport are connected to the airline industry. Every year, more than half of the world’s tourist travel by air as it is fast, safe and a comfortable way to travel long and short distances. In 2013, the Airports Council International (ACI) annual published report stated that 6.3 billion passengers...
Words: 2069 - Pages: 9
...Richardson Effects on Quality Management The airline industry has grown over the past years and has become the major form of transportation. The airline industry has taken over the global market in ones opinion. The air travel industry remains to be the largest and growing industry in the world. The airline industry facilitates economic growth, world trade, international investments, and tourism, which is the central source of globalization, which is taking place in many industries (The Airline Industry, 2011). This paper will describe and explain the strategic planning process from beginning to end, the competitiveness in the domestic and global market, and the effects of quality management. Strategic Planning Process and SWOT Analysis In any organization, there has to be a strategic planning process. A strategic plan is the process whereby an organization develops a vision, mission, guiding principles, broad objectives, and specific strategies for achieving the broad objectives (Goetsch and Davis, 2010). Before an organization begins the planning process, they must first conduct a SWOT analysis. The SWOT analysis answers questions that deal with the organization strengths, weaknesses, opportunities, and threats (Goetsch and Davis, 2010). The strategic planning process as indicated in figure 3-1 in the textbook Quality Management for Organizational Excellence is as follows: • Step 1: SWOT Analysis (Environment Assessment) • Step 2: Develop...
Words: 490 - Pages: 2
...[pic] Bachelor of Arts in International Hospitality Management QMU BH 3213 Strategic Management [pic] China Xiamen Airline Student: Que jia lei Student number:07007923 Lecture: Mr. David Goh Submission date:04-01-2008 Contents Executive summary………………………………………………………..3 1. Introduction……………………………………………………………….4 1.1Xiamen airline company background……………………………………….4 1.2The objective of this project…………………………………………………..4 2. Xiamen airline Vision, Mission and Goals…………………………5 ▪ Vision……………………………………………………………………………5 ▪ Mission…………………………………………………………………………5 ▪ Goals…………………………………………………………………………….5 3. Strategy analysis of Xiamen airline environment…………………6 3.1 PEST analysis……………………………………………………………………….6 3.2 Internal environment………………………………………………………………9 4. SWOT analysis…………………………………………………………….12 5. Porter’s five forces analysis……………………………………………13 5.1 Competitive Rivalry……………………………………………………………….14 5.2Threat of Entry……………………………………………………………………...14 5.3Buyers bargaining power…………………………………………………………15 5.4Suppliers bargaining power……………………………………………………...15 5.5Threat of substitute………………………………………………………………..16 6. Report on the organization products, market and current strategy (Grand Strategy Matrix)……………………………………………………...17 7. Overall recommendation for future...
Words: 3757 - Pages: 16
...Hong Kong Budget Airline Industry Analysis By Jaeyeong Ahn 1155032046 Xie Jianting 1155001899 Shi Weiran 1155002072 Tan Jiayi 1009609441 Gao Jingya 1155001997 TABLE OF CONTENTS 1. Introduction 2. Budget Airline Industry 2.1 Definition & Pricing Model 2.2 Common Practices to Lower Overall Costs 2.3 Development of Budget Airline in America, Europe and Asia 3. Hong Kong Market Analysis 3.1 Competitive Landscape 3.2 Major Budget Airlines in Hong Kong 3.3 Market Analysis 3.4 Target Customer Analysis 4. SWOT Analysis of Budget Airlines 4.1 Strengths 4.2 Weaknesses 4. 3 Opportunities 4.4 Threats 5. Analysis of Success Factors in Budget Airline Industry 5.1 AirAsia’s Success in Asia 5.2 Oasis’s Failure in Hong Kong 6. Conclusion 1. Introduction In September 2013, Hong Kong Express Airways announced its plan to transform itself into a budget airline. Meanwhile, Jetstar, an Australian budget airline, has applied for an operating license in Hong Kong under the belief that there are abundant opportunities for growth in the budget airline industry. However, Hong Kong-based airlines Cathay Pacific and Dragonair strongly insist that the market is saturated, and that new entrants into the market will harm the airline industry as a whole. The purpose of this report is to analyze the prospect of budget airline industry in Hong Kong and to determine if...
Words: 4127 - Pages: 17
...m31: Home AssignmentCover Sheet Quality ManualVersion 5 2014-15 | Student(s) Name and ID: | Course Code and Title:Integrated Project Quality management. BUS4956 | Date: | Section:CLW | Submission Deadline:week 16 Late submission results in losing grades. For every working day delay the maximum grade decreases by 5%, up to a maximum of 35% after a week. Also note, not following the formatting guidelines an additional 10% may be lost. | Name of the Course Team Leader /Academic Coordinator (Moderator):Dr.BeenaSalimSaji This Assessment and the related Marking Scheme have been pre-moderated and approved by the Course Team Leader/Academic Coordinator of the Business Department according to the following criteria * The learning outcomes are covered as indicated in the assessment strategy. * The questions are clearly constructed and at an appropriate academic level. * The possible marks for each question are clearly stated. * The amount of time for the exam is properly allocated. * The level of English language is clear and suitable for the course. * The marking scheme is clear and detailed | Academic Format Reports/Essays submitted must follow the APA (American Psychological Association)thehttp://owl.english.purdue.edu/owl/resource/560/01/.Formatting and language contribute exactly ten percentage points to the overall grade. | Warning to Students! Students must submit their own works as assignments, and they cannot copy anybody’s ideas into their...
Words: 10151 - Pages: 41
...The Airline Industry: A Strategic Overview of Southwest Airlines Terra Thompson Ohio Dominican University Running head: SOUTHWEST AIRLINES 1 The Airline Industry: A Strategic Overview of Southwest Airlines Terra Thompson Ohio Dominican University SOUTHWEST AIRLINES The Airline Industry: A Strategic Overview of Southwest Airlines Table of Contents 2 The History of Southwest Airlines ................................................................................................. 3 Target Market and Business Model ................................................................................................ 3 Current Product............................................................................................................................... 4 Southwest’s Culture ........................................................................................................................ 5 Mission Statement .......................................................................................................................... 5 Mission and Corporate Culture....................................................................................................... 6 Employees and the Mission ............................................................................................................ 7 The Importance of the Mission Statement and Corporate Vision................................................... 7 Strategic Analysis .................
Words: 6158 - Pages: 25
