...Sage Consultants January 19, 2012 Mr Olive Yue, CEO Air Canada 135- 5980 Miller Rd Richmond, BC V7B 1K2 Dear Mr. Yue, Report on Changes and Trends in the Airline Industry I am writing this report in response to your recent request to Sage Consulting to advise Air Canada on the emerging changes and trends in the airline industry. This report will address major issues rather than trivial ones. Currently, the fierce rivalry between the different airlines means that Air Canada must continue to innovate in the ever-changing market place in order to stay relevant. Given that the airline industry is highly sensitive to changes in the wider economy, our company has performed in-depth research and analysis on the challenges and opportunities that these social changes may bring as well as the potential impact that they may have on Air Canada. Furthermore, we have also investigated the innovative practices that are currently being developed by your competitors which Air Canada should be aware of. Based on the strengths and weakness of Air Canada, we have come up with recommendation on ways that your company can best adapt to these changes. We hope that you and your senior management staff will find this detailed report to be useful and insighful. Thank you once again for choosing Sage Consulting Inc. Sincerely. Henry Fung Senior Consultant Sage Consultants Inc. 1055 Georgia Street – Suite 301 Vancouver, BC V6E 3H3 Telephone (604)-301-3001 Emerging...
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...Kava, a small country in the Pacific is a country that has seen its share of natural disasters. Our company has taken the initiative to assist in any way the country of Kava by assessing where we are as a company that has a presence in Kava. We will look in to what steps can be taken to fix the problems at United Airlines and to be as successful as we can while assisting the people of Kava and its infrastructure. As United Airlines promotes airline service into Kava we must specifically look at what the issues are and what we can do to overcome them. At United Airlines, customer service and an on time performance is our goal. This can be a daunting task due to the inclement weather that can affect our day to day operations in Kava. First, we will look into what are the times of the year that we have to prepare for inclement weather and formulate a plan that will be implemented during that period or season. Next, we must put together lists and emergency contact information available to all employees, including management. Different managers will be responsible for their areas and their employees keeping the best interest of United Airlines at hand. Schedules of when we are expected to resume airline operations and expected employees returning to work will also be discussed. As United Airlines gains its presence we must also continue to advertise from many different channels of communication and that can be done several different ways. We can start by running commercials during...
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...Lufthansa: Going global, but how to manage Complexity? Lufthansa is the leading, probably pivotal, member of the largest alliance, the Star Alliance. If globalisation means complexity, alliances are even more complex to manage than individual companies because they lack the hierarchical conflict resolution mechanisms that individual companies can employ. Important questions to Lufthansa: * Is the current strategy sufficient to maintain Lufthansa’s position as one of the few profitable airline companies, given the uncertainties and dynamics in the highly competitive but cyclical market? * Has Lufthansa done enough to reduce complexity in the right places and survive the competition, especially against the background of customer satisfaction and high value added? * Are all the employees in the corporation embraced culturally? * Is Lufthansa prepared for the sustainability challenges – in particular global warming – which create new uncertainties? Surviving the changes in the airline industry In 1992, due to the first war in Iraq, Lufthansa was close to bankruptcy just like other airlines as international air traffic has been reduced. Therefore Lufthansa has offered point-to-point connections on high traffic density routes. Also they targeted the business class passengers with new offerings such as Virgin Airlines. From the early 1990’s a minimum of 3% reduction in cost was needed every year and likely to continue. The economic and political events had a negative...
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...The main cause that makes a company have to make changes is the external environment. It usually forces organizations to make changes to its mission, culture, leadership, and operating strategies. Changes in the 12 drivers bring a series of change to the overall structure. Changing anyone of the 12 “pillars” will influence the adjoining ones. But, changing the entire structure may or may not affect the entire system. These changes are influenced by the motivation of the individuals. They will impact the change to the entire organization. They all interact with each driver on the model. The Burke-Litwin Model has these basic parts that make up an overall change for a company. Change effect one part and then affect the overall performance of the model. 1. External environment: The key external cause on the organization must be identified and clearly established. 2. Mission and Strategy: The overall “vision” should be seen through the eyes of the employee. 3. Leadership: Leadership should be understood. 4. Organizational Culture: This should understand implied rules, regulations, customs, principles, and values. 5. Structure: The function based structure should be understood, such as responsibility, authority, communication, decision, making, and control structure. 6. Systems: This includes all the policies and procedures. 7. Management Practices: How the management accepts and conforms to the overall concept of the organizations strategy. ...
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...A) What are the primary information needs of each manager? Andre Agassi is the Sales Manager at Love All who supervises all sales representatives. There will be a lot of information Andre will need however; the primary information Andre will need to know first and foremost is who the customer base is. With Love All being a manufacturing company of tennis related items Andre would want his employees to focus mainly on people who are either professional or recreational tennis players, or individuals that are involved the sport tennis. A very important aspect of being a sales manager is to know the cost that is involved in each product beginning from manufacturing to the end when the product is sold. In order for the organization to determine to profit on each product sold; the sales manager will need to know the salary that is paid to each representative and the commission that is received. B) Which, if any, financial accounting report(s) is each likely to use? With Love All being a manufacture of tennis rackets and tennis related products. The income statement and cost of goods manufactured schedule will be beneficial statements the Sales manager will use. Information from the income statement will be; the cost of goods manufactured, ending goods inventory and beginning finished goods inventor. These areas of the income statement will help the sales manager determine the cost of goods sold. This information is very important to the sales team. On the other hand, the cost of...
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...Case on- US Airways Cost Structure US Airways Corporation (formerly US Air) was formed with the merger of several diverse regional airlines including Allegheny Airlines, Mohawk Airlines, Lake Central Airlines, Pacific Southwest Airlines and Piedmont Airlines. The mergers that ultimately led to the establishment of US Airways did not come without difficulties. US Airways possesses a diverse fleet of aircraft, unlike the much more successful Southwest Airlines, which flies only one type of plane, the Boeing 737. US Airways’ diversity results in higher costs of maintenance and crew training and in a much more complex crew scheduling problem.Because of the traditionally week competition in its Northeast market stronghold, US Airways had the highest yield in the airline industry in 1993. The combination of high yields and very high costs per available seat mile invited competition. With the cloud of a potential bankruptcy hanging over it, US Airways looked for ways to control its costs in order to restore its financial health. Cost control is a difficult problem in any corporation. It is, however, especially difficult in a capital-intensive industry such as this. Case on- Rising Marginal Cost of 747s Boeing and Airbus provide all the wide-bodied jets the world needs. Boeing 747, 767 and 777s typically have a 60-70 percent share of the worldwide market, but Airbus accepted the majority of the new orders in 1994-1995 and doubled their output rate from 126 to 232 planes per year...
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...Contemporary Developments in Business and Management 1.0 Executive Summary This report is about the growth of a Malaysian brand low cost carrier - AirAsia Berhad on how they started this business and bring a huge change in the low cost carrier history globally. This report will discuss on how AirAsia business structure is, what is their culture and the expectation to maintain as well as get into the right track of tough time in airline services. The concept of low cost air travel was then new in Malaysia and how does they turned a loss to profit just in seven years? 2.0 Organization Overview AirAsia is the world most leading low cost carrier airline now as their name had earned a lot of recognition worldwide because consumer as their TOP priority with the tagline of "Now Everyone Can Fly", AirAsia has made flying affordable for more than 61million guest. AirAsia started their business in year 2001 with only MYR1.00 with the partnership with Tune Air Sdn Bhd and AirAsia was remodeled into a low cost carrier by January 2002 where their mission is to make air travel much more affordable for Malaysians took flight.Valued at MYR2.3 billion, AirAsia is today award winning and the largest low cost carrier in Asia. From a two aircraft operation of Boeing 737-300, AirAsia currently boasts a fleet of 78 aircraft that flies to over 60 domestic and international destinations. The airline has carried, thus far, over 61 million guests since its first day of operation. Low fares...
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...The Airline Industry In this brief report I will be analyzing the airline industry up to date and I will also look at various aspects including Porters five Forces diagram, key customers and products of the airline industry. The reason for analyzing this brief report is to give the reader with a wider knowledge of the topic. The porter five forces model can be used to assess the competitiveness of the Airline industry. It can also review the competitive within the industry, it also checks for the threat from outside. Key points of Porters five forces model: • Supplier Power: The power of suppliers to drive up the prices of your inputs. Supplier power is reasonably high in airline industries because of the specialist nature of the goods required • Buyer Power: The power of your customers to drive down your prices. The bargaining power of buyers in the airline industry is quite low due to the high cost of switching planes. • Competitive Rivalry: The strength of competition in the industry. Highly competitive industries generally earn low returns because the cost of competition is high. • The Threat of Substitution: The extent to which different products and services can be used in place of your own. Substitutes to the airline industry only carry a small level of risk to existing companies within the sector. • The Threat of New Entry: The force of new entrants is relatively low in the industry. The ease with which new competitors can enter the market if they...
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...American Airlines | | Since 2003 American Airlines has struggled to survive economically, with the rise of other low cost airlines such as Jet Blue, Southwest. In 2011 the board of directors finally came to the conclusion that after almost 10 years of bleeding money that filing for Bankruptcy was the only option. During the reorganization and bankruptcy American’s priories were not put in the right place. They unveiled a new paint scheme for their aircraft instead of focusing on getting the merger with US-Airways completed. Moving forward with the merger Americans weakness is their top level management priorities, aging fleet and non-committed employees. If you company is losing money then you need to go back to the basics do those right first then, and only then can you think about changing thing around or trying new and exciting new paint schemes or booking systems. The management needs to take care of the fleet and employees first before even thinking about customers. Without happy employees or safe aircraft you cannot run an airline productively. Also over the last six months sequestration is causing a lot of backups in the ATC system. America’s main hub in Chicago has felt quite a lot of this with capacity and efficiency down due to lack of ATC staffing. Americans strengths exist in the largeness of its fleet and especially after a merge with USAir “ Rick Seaney, CEO of FareCompare, fears that airlines are becoming ‘too big to fail’ such as the auto industry and...
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...Capstone: Strategic Management May 13th, 2008 Robert Gibson – Scott McDaniels – Jonah Nelson – David Stark Table of Contents: Strategic Profile 3 * Company Introduction Situational Analysis 4-15 * External * PEST Analysis * Porter’s 5 Forces * Bargaining Power of Suppliers * Bargaining Power of Buyers * Threat of New Entrants * Threat of Substitutes * Competitive Rivalry between Existing Players * Competitor Landscape * Alaska Airlines * Southwest Airlines * United Airlines * Air Canada * Key Success Factors * Internal 16-23 * Resources * Tangible * Intangible * Value Chain Analysis * Primary Activities * Secondary Activities * Capabilities * VRIN Testing * Core Competencies SWOT Analysis 24-25 * Strengths * Weaknesses * Opportunities * Threats Strategy Formulation 26-28 * Strategic Alternatives * Alternative Evaluation * Alternative Choice Strategic Alternative Implementation 29-31 * Action Items * Action Plan References 32 Strategic Profile: Company Introduction Alaska Air Group is made up of two principle subsidiaries Alaska Airlines and...
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...Effects of Quality Management on Domestic and Global Competition Yudyth Vera MGT/449 January 23, 2012 Dr. George DeMetropolis Effects of Quality Management on Domestic and Global Competition Quality management is an essential factor in any commercial industry, regardless of the targeted customer segment. The effects of proper management and the measurement tools used are evident in successful airlines servicing both U.S. and international passengers. For U.S. domestic carrier, Southwest Airlines their focus on quality has provided three consecutive years of profitability. While international German airline, Lufthansa has attained longevity of ~90 years because of their ability to adapt to political and economical challenges. This paper will address various topics concerning the effects of quality management on domestic and global competition. First it will provide a definition of an airline and highlight company information for service providers Southwest Airline and Lufthansa. Second, it will provide a description of the processes similar between Southwest Airlines and Lufthansa and explain the processes from beginning to end. In addition, an explanation of the process and how it produces a competitive service in the domestic and global markets will be presented. Last, this paper will explain how quality management affects the position of the companies in the domestic and global market. Airline Industry and Overview of Southwest Airlines and Lufthansa ...
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...20 September 2011 Topic Proposal The topic that I am using from the Affluenza book is Stuff Wars at the Airport on page 35. The angle that I am approaching this topic is from an airport employee stance. I worked at an international airport in several different capacities and think it provides a unique perspective. My guiding questions will be the basic such as: * What is the topic? * Why has this topic been chosen? * What is the focus of the topic? * How is the perspective and understanding conveyed to the reader? The concerns for this topic are the type of information that can be found other than personal experiences but believe that resources can be found in several areas on the internet, online databases, and library. Deciding on how specific is another concern, but believe that staying within the confines of the stuff wars specifically at the airport will keep the topic within the boundaries of the project. It is difficult to determine the time frame it will take to research the topic. It will take approximately two weeks to come up with an appropriate thesis and outline for the project. It could take two weeks to focus the topic on specific questions to ask but as soon as that is complete, it is easy to make a list of factual and interpretive questions for the reader to understand the research. After all has been completed, the research has a good foundation and is ready to start. To complete the essay will take one week to compile, rewrite, and finish...
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...Economic Analysis on Budget Airline—Taking Ryanair as an example . 1. Introduction Ryanair Ltd. is a pioneered Irish low-cost airline, located in Dublin, Ireland. In 2013, Ryanair was both the largest European airline by scheduled passengers carried, and the busiest international airline by passenger numbers, according to its annual report in 2013. From its official website, data shows that Ryanair operates more than 1,600 daily flights from 72 bases, connecting 184 destinations in 30 countries and operating a fleet of more than 300 new Boeing 737-800 aircraft. The latest news about Ryanair could be found on its corporate website (http://corporate.ryanair.com), saying that “Ryanair has recently announced firm orders for a further 280 new Boeing 737 aircraft, as well as options for 100 more Boeing 737 MAX 200s, which will enable Ryanair to lower fares and grow traffic from 90m this year to over 150m p.a. in 2024. Ryanair currently has a team of more than 9,500 highly skilled aviation professionals, and has an industry leading 30-year safety record”. It is a very typical case for economic analysis. The tragic news about the wreckage of Airasia QZ8501 hit the world on 28th Dec 2014, which put the budget airline in the front of the storm again since it is not the first news about airline crash in 2014. Budget airline is elastic in terms of the speed to repose to the demand change and it makes efforts to sell out its all seat using differentiated...
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...Air Asia Berhad (Air Asia) is one of the leading low cost airlines in South East Asia which has expanded rapidly since 2001. AirAsia aims to establish itself as a leading low cost carrier in market by valuing its customers through cost advantages created by operational effectiveness and efficiency. The key of profitability for airlines is unit cost competitiveness because airlines know that it is difficult to increase their revenues in the current situation. The cost gap is the source of sustainable competitive advantage for Air Asia (low cost carriers). There are seven factors that determine firms unit costs compared to its competitors. They are also knows as cost drivers (Grant, 2014): Economics of scale: AirAsia does not use various types of aircraft, they use only limited types of aircraft in its fleet. They offer a single class which allows more seats per plane. As mentioned in the case, the Boeing 737 can be equipped 12 more seats per plane in the single class model compared to a traditional two class model. Although the company has replaced Boeing 737 with airbus 320, the new aircraft can also offers more seats with single class model. It creates the liquidity by moving pilots and cabin crews around to other same type’s aircraft and reducing training costs. Therefore, it generates economics of scale indirectly. Lean product: AirAsia’s products are basic, they do not provide hot meals, frequent flyer programmers, decent legroom, and a full complement of air-hostesses...
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...Children do not know how to play Annotation by Jane Prince, associate professor in psychology at the University of Glamorgan, Wales. The economical problems for the toy vendors are the consequence of a disturbing childhood development. There is less need for toys, because most of the children do not know how to play anymore. Instead of the traditional toy world, that has earlier been filled with toy soldiers, ball games, cars and dolls, children now surround themselves with electronic games and impression in pictures and sound from television. Children, even toddlers, have lost the ability to invent a play world for themselves. Several factors have grown to within the last 20 years. Firstly, there is the way children now get affected in the kindergarten or preschool classes: they get evaluated all the time, even on the playground. Secondly, there has also come more pressure from the parents. They are starting to buy educational toys. They forget, that kids can learn through play with toys, which apparently are without any educational purpose. Many parents think, that kids have to be capable users of computers from an early moment in their lives. They have to navigate between the icons on the screen and develop coordination between eye and hand. But ball games have always done the last thing, and while there are advantages with coming to grips with computers, there are many advantages for kids by playing with toys. Furthermore, television decides what toys kids...
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