Global Issues in the Airline Industry
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Added on 2020-06-05
Global Issues in the Airline Industry
Added on 2020-06-05
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Global issues in theairline industry
Table of ContentsINTRODUCTION...........................................................................................................................11. Strategies adopted by airport planners to deal with increasing dynamic airline network.......12.Challenges and opportunities faced by airline industry...........................................................43.Asses the response of airline industry towards competitive environment...............................7CONCLUSION................................................................................................................................9REFERENCES................................................................................................................................9
INTRODUCTIONMerger is a corporate strategy in which two companies are come closer for making a jointventure and seen as a single enterprise at marketplace in order to improve their financialsituations or to enhance operational strength (Grosbois, 2012). Now-a-days this policy is adoptedby 'n' number of association due to various reasons such as; to reduce their business risk,maximization in profit, financial support etc. Therefore, it has been observed that in airlineindustry numerous of mergers are taking place for overcoming challenges or threats which isfaced by them. British airways is a second largest airline company in UK and later on it mergedwith Iberia, creating “international airlines group (IAG)”. Hence, this assignment is going toidentify various challenges and threats encountered by aviation industry while operating theirbusiness. 1. Strategies adopted by airport planners to deal with increasing dynamic airline networkOverview of industry:- Aviation sector of UK is consider as a fourth largest nationalairline industry across the globe as well as third largest in European market by having almost6.4% global market share in 2016 (Belobaba, Odoni and Barnhart, 2015). In fact number ofdomestic airline companies are emerges in British aerospace industry for example; Hybrid Airvehicles, Rolls Royce (Worlds second largest innovator of defence aero engines) , Britten-Norman, Cobham, GKN, British airways etc. Basically, UK aircraft sector has made many moresignificant contributions in the chronicle stories because they are solely liable for growth andintroduction of first plane by having enclosed cabin.Thus it has been identified that its not easy to survive in this competitive world due toincrement in complex airline network; thus to deal with these kind of problems entrepreneur ofaerospace companies requires to adopt effective strategies. Thus, two major schemes which isutilized by British companies of aerospace sector are explained as follows:- Low carrier model:- In the starting of this era, aircraft companies are trying to identifydifferent concept of flying and techniques for capturing attention of customers. Therefore, inorder to adopt something new, managers of an organization go for “low cost carrier” (LCC) inwhich there is absence of foods, frills, drinks, spacious seats but charge a very minimum fare.After introduction of this tool, competition increases between full services aircraft and LCC andlater on it become a major issue in this industry as well as have a greater impact on a entire1
sector or European market. However, not every low cost carriers get succeeded in bringingbenefits, only few of leading operators are capable in earning consistent level of returns on theirinvestment due to their effective planning. Origin of LCC:- Initially, this technique is used in around 1949 at United states and afterthat “Pacific south-west airlines” became a benchmark in aerospace industry. In today's world“south-west airline operating” which was started with small “Texas airline” named when it wasestablished but later on this organization developed to become one of best aviation company inunited stated by having almost 3100 regular flights in almost 62 cities and registers nearly 80millions customers in a single year (Cowper-Smith and de Grosbois, 2011). Significant features of LCC model :- This strategy is growing in a fastest way due to itssimplex process with full of additional facilities on extra charges. Most of the successful andwell settled companies are using this technique for increasing their sales in a minimum timeperiod as well as trying to gain customer trust. Therefore, useful or different features of LCCmodel are expressed as follows:- Simple products:- According to this element, passengers may demand extra facilities bypaying charges as per their requirement for example; food is served on immediate order,planes with flexible seating without having any other services instead of basic needs.(Source :- De Groote, 2005)2Illustration 1: Story of European Low-Cost Carriersin a Changing Airworld
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