Air Canada Industry Analysis

As mentioned above Westjet WestJet offers high quality customer service, WestJet offers flights to over 30 cities in North America, including some of the cheapest airfares to destinations such as Hamilton, Calgary, Toronto, Montreal, Winnipeg, Edmonton, Calgary, Vancouver and more. WestJet has recently expanded its service into the

Air Canada is Canada 's largest full-service airline and the largest provider of scheduled passenger services in the Canadian market, the Canada-U.S. trans-border market and in the international market to and from Canada. In 2010, Air Canada improved its reputation as one of the world’s leading international air carriers. Significant progress was made on executing and delivering on its four key priorities and this, coupled with improving economic conditions, allowed Air Canada to record operating income of $407 million in 2010, a $677 million improvement from 2009. Air Canada’s financial strategy is to continue to improve both the level and sustainability of its

Suppliers generally have a moderate to high bargaining power within the industry due to the limited number of suppliers which forces aviation companies to choose from the number available and accordingly to accept their prices. In fact, fuel is the second highest cost for aviation companies. There are highly depended on supplier’s prices and the availability which indicates on a relatively high bargaining power of suppliers. In addition, there are high switching costs which are strongly in favor of the suppliers and means that the company experiences an increase in operating costs when switching to another supplier as flying another type of aircraft leads to additional costs (maintenance, training etc.).Aircrafts are vulnerable to delays due to the location of gate locations which leads to a decrease in utilization and therefore to an increase in costs.

However, despite the correct decision to privatize, the company continued to have troubles. The financials of the newly privatized airline were unreflective of the successful stock offerings. “Air Canada reported losses of C$74 million in 1990 and C$218 million in 1991, and it reported that it had nearly two million fewer passengers in 1991 than in the previous year.” These failures were blamed on the effects of the economic recession and the decrease in travel due to the war in the Persian Gulf. However, it was clear that competition with international carriers was a major cause. To elaborate, the airline industry is considered to be a cyclical industry, meaning that it is directly affected by the business cycle. As such, during times of

Air Canada has been in the business of air transport for an extended period of time. Due to the experience and the exposure of the carrier in the field, it has made a commendable progress through many strategies as well as customer proximity. One of the approaches taken by the airline involves the identification as well as an implementation of cost reduction initiatives in a bid to increase revenue from its operations (Air Canada, 2016). It is also attempting to connect with the existing carriers across the world to connect the current customers to the international world. This approach has been adopted to increase its competitive advantage over other existing airlines.

Air Canada mission is simple and straightforward which is the connect Canada with the world. Naturally focusing on improving their financial performance in order to increase productivity and its cost structure. To minimize fuel emission and other greenhouse gases based on Air Canada’s environmental concern. Their vision consists in building loyalty through quality service and innovation.

Power rests with the suppliers in the form of price and quality of supplies. Suppliers can increase the price or lower the quality of their goods and services. The power of supplier in the Indian airline industry is immense because of the three major inputs from the supplier are all affected by the external environment. These 3 factors and the power of supplier for each component is explained below.

Airlines usually buy new jets under long-term fixed price contracts. This effectively shifts the financial risk to the aircraft manufacturer as they have no certainty of the future, thus giving

This was evident with the purchase of Canadian Airlines, in 1999 (The National, 2003). With the purchase of this airline, Air Canada also inherited their estimated eight billion dollar debt (The National, 2003). Also inherited from the merger, were underappreciated employees and under trained employees who lacked morale (The National, 2003). In 2003, Air Canada filed for bankruptcy (The National, 2003), this was due to the large financial deficit, the economy and the underappreciated/paid employees. Although, this was a difficult time for the airline, this truly marked the change in how the airline is structured. In 2005, it marked the true return of Air Canada, they reached record breaking revenues and far exceeded anyone’s expectation, including their own. Currently Air Canada, is the largest Canadian Airline, which has a lot to do with their change in business strategy.

Given the high-tech nature of the airplane industry, there are relatively few suppliers capable of providing parts to Airbus and Boeing. In contrast to Boeing, who relies heavily on suppliers, Airbus has tried to manufacture the

The supplier power in airlines is dominated by the world’s two largest aircraft manufacturers are Airbus and Boeing. The competition between the two manufacturers is neck to neck but that would prove to be a boon for Emirates as the prices would not rocket through the ceiling. A study shows that Emirates holds 93 Boeing aircrafts and 83 Airbus units (Planespotters, 2009). In 2007, Emirates purchased 81 Airbus flights, to extend it services- however, they chose Airbus over Boeing as the latter failed to deliver its latest aircrafts on time and moreover, Airbus had quoted a good price (Barryl, 2007). The changing oil prices also have an adverse effect on the aviation industry. In a nutshell, the bargaining power of suppliers is high.

Aircraft industry has only small suppliers while the customers are all over the world. As above mentioned the industry requires large complex cooperate alliances in its hierarchy, only few countries having high tech industry basis are able to

The probability of power of suppliers would be low-medium risk. The bargaining powers of suppliers are low due to the limited numbers in the industry. This gives Boeing a high degree of control over the suppliers. Since Boeing started as an engineering company, they provide suppliers with unique features to decorate the crafts and supply parts. But if Boeing needed certain parts from their suppliers, their bargaining power can decrease. Boeing can also lose more bargaining power if government created new laws on making planes more eco-friendly. This would cause Boeing to purchase new parts just to follow the new rules and regulation.

The aviation industry has been different however, as to date; it has mainly been dominated by two main Western players Boeing and Airbus. Now that China has also entered the Aviation industry, it will not be fool hardy to say that the Aviation industry is bound to undergo another transformation.

For example, Boeing and Airbus supply most commercial aircraft. The concentration within the suppliers segment of the industry makes it very difficult for competitors to exercise leverage over another supplier and obtain lower prices. The power of the supplier is one key in prohibiting the ability of competitors to earn higher profits.