Strategic Management Assignment

The airline industry is a hyper-competitive marketplace as many airlines have gone out of business

Firstly, it’s cost base. The low priced industry is highly competitive with various brands contending for the same customer base, which has led to price battles and other actions that makes it challenging for EasyJet to keep up due to concern over cost involved in trying to cut fares further or offering any luxury. Secondly, Easy jet stays away from big airports like London Heathrow airport to cut down cost of landing. However, this makes customers who live nearby the airports uncomfortable, since time and money are wasted to travel to easy jet landing airports. Lastly, due to fluctuations in the Middle East, impact of increased oil prices, cost of production is increased and this eliminates profit margin therefore customers have to pay more.

1 This essay will assess how globalisation has impacted on the airline industry using British Airways as an example to illustrate this change had on the industry as a whole. This essay will attempt to show how the airline industry and British Airways in particular coped with thesee change and how neoliberalism thinking allowed and supported this fundamental change to happen.

You are required to undertake a detailed examination of the changing nature of the long-haul transatlantic airline market. The market you are required to investigate comprises only the international passenger market (i.e. excluding the movement of goods by

At their beginning they provided scheduled passenger airline services between Ireland and the UK. The aim was to break the monopoly on London-Ireland flights held by British Airways and Aer Lingus. They ran at loss until 1991, when O'Leary determined that the key to profitability was low prices(fairs), quick turn-around times for aircraft, no frills and no business class, also to operate a single model of aircraft.

The main problem that concerns this case is that JetBlue has the need for slower capacity growth but the exact size of the cuts from each of the airlines’ two aircrafts was far from obvious. The contents of this case analysis will show how they managed to get to this point through the use of business strategy tools. Also I will give some recommendations on how to resolve the issue at hand.

1. There are a few trends in the US airline industry. One is consolidation, wherein existing players merge in an attempt to lower their costs and generate operating synergies. The most recent major merger was the United Continental merger, which is still an ongoing affair, but has created the largest airline in the United States by market share (Martin, 2012). Another trend is towards low-cost carriers. In the US, Southwest has been a long-running success and JetBlue a strong new competitor, but in other countries this business model has proven exceptionally successful. The third major trend is the upward trend in jet fuel prices, and the increasing importance that this puts on hedging fuel prices and capacity management (Hinton, 2011).

At the onset of the airline industry in the United States, major network airlines were the sole providers of air travel. This multifaceted industry was a difficult industry to break into as a consequence of “sophisticated customer segmentation, hub-and spoke models and costly information systems for reservations, fare wars and intense competition” (Thompson 2008). Shrinkage in airline ticket prices augmented the demand for airline travel. Many markets were simply deserted or over-looked by major network airlines; this is a region a fresh “second tier of service providers” could enter into. This endeavor proved to provide a consumer savings of billions per year. Thus in June of 1971, after a tumultuous battle with other Texas-based

airline industry has never matched the profitability of even the average U.S. corporation (ATA Report, 2007). In its “”FAA Aerospace Forecast Fiscal Years 2008–2025,” the Federal Aviation Administration (FAA) reported on the industry’s 36 mainline air carriers that use large passenger jets (over 90 seats) and 84 regional carriers that use smaller piston, turboprop, and regional jet aircraft (up to 90 seats) to provide connecting passengers to the larger carriers (FAA, FAA Aerospace Forecast Fiscal Years 2008–2025, A Review of 2007), stating that “three distinct trends have occurred over the past several years that have helped shape today’s U.S. commercial air carrier industry: (1) major restructuring and shrinking by the mainline network carriers; (2) rapid growth by low-cost carriers, particularly in nontraditional long-distance transcontinental markets; and (3) exceptional growth among regional carriers.”

*Threats from new entrants : When new airlines enter the market ,how they affect easy jet

The airline industry has seen a fair amount of turmoil over its relatively brief existence, perhaps as the result of its youth or perhaps, as others have contended, due to mismanagement and failures of regulation to maintain stability in the industry. Regardless of the reason, however, it is a fact that many major airlines have demonstrated a consistent problem in generating profits and keeping their business aloft, as it were. The recent bankruptcy of American Airlines, one of the nation's oldest and largest carriers, is just the most recent event in a long trajectory of failures and instabilities that have plagued the industry almost since its inception, and in extreme way since deregulation in the late 1970s.

Significant developments have occurred in the field of air transport. A large number of countries made remarkable progress in liberalizing international air transport regulations, and became involved in full market-access arrangements. At the same time, the airline industry underwent a major shift and saw the forging alliances and mergers between companies in order to consolidate their presence in a market environment characterized by strong competition. (Icao.int, 2013)

Within the category of services, it applies to different types of customers such as family, solo travellers and business travellers, the key focus of this report is on the upper-class service for business travellers and how it influences business travellers to purchase a flight package from them instead of using their competitors Jet airways, British Airways or Emirates. We can discover the decision-making process and how it operates but it’s important to understand the marketing strategy behind the company that makes it very successful and attracts more business travellers to fly with them.

Fast Trains are now providing competition for airlines in China on key routes (Finighan, 2011).

It may be argued that the next major challenge in the business of air transportation, beyond the invention of heavier-than-air flight and jet-powered planes, is the worldwide separation of the market between two mega-corporations. Airbus and Boeing currently dominate about 90% of the air transportation market with very few major competitors on the horizon. However, Canadian-based Bombardier is creeping up in its business jet market share of 27% (Bombardier press release, 12/4/2003). The competition between Airbus