Inthe landing slot auctions the contributions are given for everygroup. For group 1, the contribution was $769,559,375.00. In group 2,there was no contribution. In group 3, the contribution was$197,924,375.00. For group 4, the contribution was $13,775,000.00. Ingroup 5, there was no contribution. This brings the totalcontribution made in the landing slots auctions to $981,258,750.00.
Thevarious contributions that are realized in the airline aresignificant in a number of ways. First, through the contributions,the company can be able to invest properly by understanding itsmarket and knowing the right side of the venture. Given that there isgrowing imbalances between the demand for the transport activitiesand available airport capacities that can be supported to meet thevarious demands, such contributions are integral in understanding thebusiness (Le, et al., 2003). With the contributions in place, thevarious operational logistics can easily be taken into account andthe challenges that are likely to be met addressed. Usually, thecontributions and their various facets form the basis of advisory onthe area of the airline to invest more and the area to take slow.Thus through sound investment decision there are chances of revenueboost in the airlines.
Inorder to increase the revenue, we have to first assume that thenumber of seats for every flight is constant. With a fixed number ofseats in every flight, the airline company can consider increasingthe number flights per day and that translates to getting more slotsor bidding for more slots (Hong and Harker, 1992). In order to bidfor more slots, the airlines should consider also having thehub-and-spoke (HS) networks as a means or alternative of getting newslots and also a means of concentrating more flights in waves attheir hubs, that is, improving the flight waves in accordance tolower connecting time as well as considering expansion and increaseof number of transfer passengers. In ensuring that the venture isprofitable, the model could consider creating new flight schedulewhich is made of flights which are already operated by the airlineand at the same time the flights that are assigned to the new slotsin which the airline revenue has to be maximized and at the same timethe assumptions and operational constraints met (Jones, Viehoff andMarks, 1993).
Indoing so, the airline can consider having the flights assigned to newslots being chosen from a set of flights which are made of those withthe destinations that are usually not served by an airline. This inshort can be alluded to be route network expansion as a result ofintroduction of new route. The main points that must be noted includetwo factors which are slot price at secondary market and the changesin the realized revenue every year (Jones, Viehoff and Marks, 1993).The various issues which form the output that must be put intoconsideration include the new flight schedule, the number of yearsthat are necessary to recoup the initial purchasing outlay for thenew slots and the possible number of connections that each and everyairline can realize upon introduction of the new slots.
Part2 of Case Study
Leadershipis the process that instills motivation, direction and support of agroup of followers to accomplish a common objective.There are two essentials for successful leaders first they must bepositive about what they want to do. Second, in scenarios ofpotential allies and hostile critics they must explain what they wantto do with them (Miller and Chen, 1994 p 6). In this case, study theessay is going to analyze the style of leadership that Juan Trippeused in the management of the pan-American airline, and how the stylecontributed to success. It will further describe the advantageairline took over the American government in the expansion of theiroperation. Finally, the paper will give the analysis and descriptionof the of the route network that airline set up.
Theleadership style Juan Trippe used in managing the pan-Americanairline is a benevolent autocrat. Benevolent Autocrat leadershipstyle is the one with characteristics of dedication, decisive,industrious and commitment. This style applies to the leaders whoevaluate the quality and the quantity of the job in advance. In linewith this, autocrats are only conscious on the company’s costsminimization, the projected and achieved profits and lastly, theyconsider if the sales target have been met. In this case, they arethe main pillar of the business hence they assist in developing andproposing the new ideas. The new ideas help in increasing theefficiency and effectiveness in productivity which guarantees betterresults (Faux, 2010 p 45).
Inthis case, Juan Trippe showed so many initiatives. For example, thefaith act from trippe in aeronautics happened to be the greatest everto be made by an airline in technology. Trippe shown development whenhe gained the courage to choose massive competition and beststrategies for pan Am airline to enter the domestic market in a majorway. This happened to be the first time in its history When theNational Airlines was the purchased.
Hewas industrious and committed in the sense that, though the companybegan to struggle with its immense debt, Trippe, on the other hand,believed that still the gamble for the firm’s future was stillsensible. Because of his commitment, Trippe stepped down from theactive management of Pan Am time but still the future of Pan Americanairline still looked more promising. Notable, Trippe was risk takerhe secured funds for the new equipment, through loan agreements. Hisrisk nature was also seen when he decided to invest in larger jetsthat could accommodate more passengers and fly at accelerated speeds.
Trippewas bold his bold tactics had their effect on foreign aircraftcarriers. Additionally, he dogged his gambles when he ordered threeadvanced ideal Comets for Pan American. Many American airline chiefexecutive officers protested the move on the ground that the cost ofbuying and maintaining jets deteriorated their economy in the longrun and short-term (Lynesand Dredge, 2006 p 121).
Trippe’seffort was continuous,he developed many new ideas and had been acontinuous innovator, at his competitive age he had done so much toshape the Pan Am: but the unfortunate thing is that he failed totrain the new leaders who would have taken over the company for thefuture consistent growth. In line with this, there are twoessentials for successful leaders first they must be positive aboutwhat they want to do. Second, in scenarios of potential allies andhostile critics they must explain what they want to do with them(Lynesand Dredge, 2006 p 121).
Theairline took the advantage of American government to expand infollowing ways. Firstly, although many management teams feared andprotested the costs of purchasing and maintaining the jet. The fearwas due to the losses in future- the airline took that advantage andbought the airline with largest passenger capacity which saved theeconomy than propeller driven aircraft. While the manufacturers ofAmerica refused to accept and fulfill airline deeds. Even somefactory managers were not interested in making the Jets. Aircraft hada deal to accomplish that is a plan for the jet craft. The airlinecompanies did research on the jet engines. They decided to go for thepowerful version that powered the air force crafts. These enginesalso powered larger planes during the war (Lynesand Dredge, 2006 p 121).
TheAmerican government failed to support single chosen instrument. TheAmerican state did not support the airline interests first. However,other foreigners fed their traffic into the airline. For this reason,the many airlines in America were at odds they did not care thecompleting airline flag on the foreign flag. This made trippe designa plan that could consolidate three airlines into a new line calledCommunity Company. Conversely, the community plan faced manychallenges especially when it became a bill in Senate. Many senatorsopposed the bill that made it to fail.
Thecompetition for international passengers increased number ofairlines. However, the American government failed to support the moveby international air transport association (I.A.T.A) to increaseairline and regulate the fares. Other countries in Europe saw theneed but America objected the proposal from triple. This issue led tostagnation of overall travel from the US, which led to the expansionof airline to cater for higher demand.
WorldWar caused Europe to need a lot of cooperation in socio-economic fromAmerica. However, America appeared to be obstructing the low fare forthe common man. The airline went ahead to introduce new low-cost farein public traveling, Pan Am presence was expanded to buy airlineoverseas from America. This made American Airways change topan-American world ways(Lynes and Dredge, 2006 p 121).
Indescribing the route network that airline set up. The route inconsideration includes the number airline from America serving theCalifornia to Hawaii route increased, and the number serving theOrient increased from two to four, the route also led to SouthPacific. Another route is York and London the fare were set at$572.88
Globaloperations made more routes in US and Europe during World War II.With, more of the routes were within war zones. There was a trip toSan Francisco and Hong Kong for public relations. Additionally, TheMartin Aircraft carried passengers in the longest route over theNorth Atlantic. The route was 2,000 miles between Newfoundland andIreland. Furthermore, there is a route in Macao, south of Shanghaiin mainland China. Lastly, the route that was American-run China, itwas created to save on cost at low fares.
Part3 of Case Study
SWOTanalysis of new airline in the market
SWOTin full Stands for Strength, Weakens, Opportunities and Threats. Themain focus of the SWOT analysis is to examine the micro and macroenvironment. After clear examination, the analysis provides thedecision to be made in strategic planning. Therefore, SWOT analysisprepares the companies on how to effectively do away with threats.Use the available strategies to pursue achievable opportunities.Maximize on their strength and eliminate any weakness detected. Forexample before the establishment of the airline business, the companyneeds to identify some of the competitive advantages it has over theother similar companies. It also needs to compare the internalweaknesses of the competitors. The viability of the project andexternal entities that may negatively affect the airline businessalso needs to be analyzed(Kajanus, Leskinen, Kurttila, and Kangas, 2012, p 5). This section,therefore, is going to discuss the SWOT analysis of airlinebusiness, and benefits of investing in this business.
Theanalysis was carried out to check if the new airline could functionwell in the market. Several factors such as the economy, level ofemployment and transport cost were put into consideration (Kajanus,et al., 2012 p 6).The investigation was done on the price of purchasing an aircraft andthe minimum fare that could be incurred in the process oftransporting passengers and cargo. Other analysis includes thecompetitive strategies such as online booking, the training servicesneeded to its employees, the office front help to customers andsponsor of major sports to promote its brand. The need to determineemployees training, performance program of the new airline was noted. There was an analysis of the customers’ relationship to airlineowners this was done to confirm if the relationship can build aworldwide partnership. Moreover, experts analyzed, the number of jetsa new airline company needs and to which parts are required to fly.
Variousinvestigations were also done by a team selected by management toexamine the number of airlines to be put in place, and if the numberof airlines can meet the demand of people. Additionally, the analysiswas also done with the wastes produced. If possible could the fewerwastes maximize the companies’ outputs and minimize the inputs.Furthermore, the chief executive officer in his proposal recommendedthe team involved in the analysis to research the market anddetermines the strategies that a new airline company need in order tohave competitive edge over the existing one, likewise if the same canbe reduced.
Finally,the analysis was carried out to check if the requirement of newtechnology such as latest computer model, the amount of suchtechnology and initial capital. The test was also done on fuel, laborcosts and other expenses. In line with this, the need to determinethe number of airports and all charges was put into consideration.
Severalanalysis was done. They include, first, the high cost of operationand implementation of new technology. secondly, experts analysed ifprices of its tickets will be high compared to other airline, and ifnew airline is planning to be a member of the airline bodies such asUAE. At some point, the need to know if the technology was affordablewas raised. Furthermore, through examination was done on theestablishment of the young airline(Houben, Lenie and Vanhoof, 1999, p 128).The analysis included lack of the confidence to invest fully, and thefears the manager may be facing to avoid taking risks. Poor employeemorale, the employee motivation was a key factor it established whatthe cause’s low performances were and why most CEO resignedfrequently. Other weaknesses analysis, include loss of customersthrough negligence and stiff competition from other companies.Finally, experts analyzed plane crashes and bankruptcy.
Themarket expansion analysis was carried out to determine if the newairline would pick up well in the existing segmented markets. Theexperts analyzed if a lot of investment will be made by developingthe old airport. A population census was done in the country andcategorized into classes(Sevkli, et al., 2012, p 16).
Thenumber of who travellers who could access the internet was analyzed.Moreover, the market research on the travelers and tourists forecastthe need for their annual growth. The experts examined number ofdistribution channels, market segmentation and productdifferentiation, tact’s that could help the new airline survive inthe market. Middle-class people were interviewed about their airlinepreferences and if they can afford the coming one (Houben,Lenie, and Vanhoof, 1999 p 130).The satellite demand and its effects in future were done to avoid abacklog.
Threatsof new entrants, the analysis, were carried out on services andproducts the company could offer. The challenges such as capitalrequirement the budget and the amount to buy aircraft and barriers ofnew companies were done. Also, the need to determine the brand tocompete with existing entrants was analyzed with main emphasis put onfamous one. The threat of other substitutes that defer in theinternational airline, the analysis was done in comparison of airtransport with other transport (Ahmed, Zairi and Almarri, 2006 p 160)
Inaddition, the research was carried out to determine the variety ofairline companies that offer best services to customers and theavailability of expansion in the market. Furthermore, the rules andregulation were considered and their effect on the company and how todefend its budgets. The corrective measures of the airline to counteraircraft crash were analyzed. This was done majorly to determine ifthe new airline were air worth before they started operating fully.The experts investigated the level of breaches such as unproceduralmanufacturing process. Finally, the laws regarding airline industrywere also carried out and its operation(Houben, Lenie, and Vanhoof, 1999 p 127).
Viabilityof airline business
Itis therefore, good to invest in this business because, according toSWOT analysis strength and opportunities outweigh the weaknesses andthreats as discussed below. The airline industry has a large market.It is a business that operates internationally. The business usesSWOT analysis provided favorable micro and macro environment toinvest in the airline business. After clear examination, theanalysis provided the major decisions that are needed strategicplanning. Therefore, SWOT analysis prepared the companies on how toeffectively do away with threats. In the airline industry, it wasdiscovered that the new airline could function well in the market.Several factors such as the economy, level of employment andtransport cost were the major ones contributions.
Theinvestigation done on the price of purchasing an aircraft confirmedthat aircrafts varied in the prices, some were cheap compared toothers. The report also confirmed that less fare could be incurred inthe process of transporting passengers and cargo. Contrary to thisthe airline business had some few weaknesses, first, the high cost ofoperation and implementation of new technology. Also, prices of itstickets were high compared to other airline, and new business was notplanning to be a member of the airline bodies such as UAE. At somepoint, the technology was affordable was but hard to maintain. Themarket expansion analysis confirmed new airline would pick up well inthe existing segmented markets. The expert’s recommended that a lotof investment will be made by developing the old airport. Apopulation census done in the country people categorized into classesproved that many people were middle class could use aircraft at leasttwice a week.
Inthreats, new entrants were great challenge however, they were few. It was confirmed that competition was on services and products thecompany offered. The other challenges such as capital requirement,the budget and the amount to buy aircraft and barriers of newcompanies proved to slow down the airline operation. Also, lack ofbranding denied the possibility of entrant airline to compete withexisting ones. The existing ones especially the famous ones gavestiff competition to entrants because they had done marketing well.Finally, the threat of other substitutes that defer in theinternational airline
Theairline industry has a large market. It is a business that operatesinternationally. It was discovered that the new airline couldfunction well in the market. In line with this, the price ofpurchasing an aircraft varied in the prices, some were cheap comparedto others. Contrary to this the airline business had some fewweaknesses, such as the high cost of operation and implementation ofnew technology. Finally, high capital requirement, the budget and theamount to buy aircraft and barriers of new companies proved to slowdown the airline operation.
Theleadership style Juan Trippe used in managing the pan-Americanairline is a benevolent autocrat. Benevolent Autocrat leadershipstyle is the one with characteristics of dedication, decisive,industrious and commitment. This style applies to the leaders whoevaluate the quality and the quantity of the job in advance. They areonly conscious on the company’s costs minimization, the projectedand achieved profits and lastly, they consider if the sales targethave been met. The airline took the advantage of American governmentto expand in a number of ways. Even though many management teamsfeared and protested the costs of purchasing and maintaining the jetdue to the losses in future.
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