Aviation Management

15

AviationManagement

Part1

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 invest profitably by understanding its market andknowing the right side of the venture. Given that there is growingimbalances between the demand for the transport activities andavailable 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. The airlinerelies on the contributions to determine on the areas to investheavily and the areas to commit little funds. It is evident that whenthe airline invests wisely, there are high chances of increasing therevenues.

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 of flights per day and that translates to getting moreslots or bidding for more slots (Hong and Harker, 1992). In order tobid for more slots, the airline should consider having thehub-and-spoke (HS) networks as an alternative means of getting newslots and also a means of concentrating more flights in waves attheir hubs. This would imply improving the flight waves in accordanceto lower connecting time as well as considering expansion andincreasing the number of transfer passengers. To ensure that theventure is profitable, the model should consider creating a newflight schedule which is made of flights which are already operatedby the airline. Flights that are assigned the new slots in which theairline revenue has to be maximized should also be included in theschedule (Jones, Viehoff and Marks, 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 (Joneset al., 1993).This in short can be alluded to be route network expansion as aresult of introduction of new route. The main points that must benoted include two factors which are slot price at secondary marketand the changes in the realized revenue every year (Jones, Viehoffand Marks, 1993). The various issues which form the output that mustbe put into consideration including the new flight schedule, thenumber of years that are necessary to recoup the initial purchasingoutlay for the new slots and the possible number of connections thateach and every airline can realize upon introduction of the newslots.

Part2 of Case Study

Introduction

Leadershipis the process that instills motivation, direction and support of agroup of followers to accomplish a commonobjective.There are two essentials for successful leadersfirst they must be positiveabout what they want to do. Second, in scenarios of potential alliesand hostile criticstheymust explain what they want to dowiththem (Miller and Chen, 1994 p 6). Inthis case study,the essay is going to analyze the style of leadership that JuanTrippe used in the management of the pan-Americanairline, and how the style contributed to its success. It willfurther describe the advantage the airline took over the Americangovernment in the expansionof their operation. Finally,the paper will give the analysis and description of the of the routenetwork that the airline set up.

Theleadership style Juan Trippe used in managing the pan-Americanairline is a benevolentautocrat. Benevolent Autocratleadership style is the one with characteristics of dedication,decisiveness, industrious and commitment (Faux, 2010). This styleapplies to the leaders who evaluate the quality and the quantity ofthe job in advance. In line with this style, autocrats are onlyconscious on the company’s costs minimization, the projected andachieved profits and lastly, they consider if the sales targets havebeenmet.In this case,they are the main pillar of the business hence they assist indeveloping and proposing the new ideas. The new ideas help inincreasing the efficiency and effectiveness in productivity whichguarantees better results (Faux, 2010 p 45).

Inthis case, Juan Trippe showed numerous initiatives.For example,the faith act from Trippein aeronautics happened to be the greatest ever to bemadeby an airline in technology. Trippeshowed development when he gained the courage to choose massivecompetitionandbest strategies for Pan Am airline to enter the domestic market in amajor way. Thishappenedto be the first time in its history When the National Airlines waspurchased.

Trippewas industrious and committed to the future of the company despitethe company struggling with a huge debt. It is evident that Trippebelievedin the gamble for the firm’s future. Because of his commitment,Trippe stepped down from the active management of Pan American.However, the future of Pan American airline still looked promising.Notable, Trippe was a risk taker he secured funds for the newequipment, through loan agreements. His risky nature wasalso seenwhen he decided to invest in larger jets thatcould 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. ManyAmerican airline chief executive officers protested the move on theground that the cost of buying and maintaining jets deterioratedtheir economy in both the short and long terms (Lynesand Dredge, 2006 p 121).

Trippe’seffort was continuous, he developed many new ideas and had been acontinuous innovator. At his competitive age, it is evidet that hehad done so much to shape the Pan Am. However, it was unfortunatethat he failed to train the new leaders who would have taken over thecompany for the future consistent growth. Research has indicated that any successful leader must have apositive attitude towards his job. Additionally, it is evident thatsuccessful leaders consult their allies before making any majordecisions (Lynesand Dredge, 2006 p 121).

Theairlinetook the advantage of American government to expand in the followingways. Firstly,although many management teams feared and protested the costs ofpurchasing and maintaining the large jets, it is clear that the fearwas due to the losses in future. The airline took that advantage andbought the airline with the largest passenger capacity which savedthe economy than propeller driven aircrafts.American manufacturers were opposed to the idea and they even refusedto make the jets. Airline companies did sufficient research anddecided to settle for jets which used the engines that are used topower the air force one jets. It is evident that these engines havebeen used in jets which participate in war. (Lynesand Dredge, 2006 p 121).

TheAmerican government failed to support single chosen instrument. TheAmerican government did not support the airline interests at first.However,other foreigners fed their traffic into the airline and this made thevarious airlines in the United States to be at odds. ThismadeTrippedesigna plan that could consolidate three airlines into a newairline called Community Company (Hong&amp Harker, 1992).Conversely, the community plan faced many challenges especially whenit became a bill in Senate.Many senators opposed the bill thatmade it to fail.

Thecompetition forinternational passengers increased with the increased number ofairlines.However, theAmerican government failed to support the move by international airtransport association (I.A.T.A) to increase airlines and regulate thefares. Other countries in Europe saw the need but America objectedthe proposal from Trippe.This issue led to stagnation of the overall travels from the US,which led to the expansionof airline to cater for the high demand.

TheWorld Warleft Europe in dire need of social-economic cooperation from theUnited States. However, America appeared to be obstructing the lowfare for the commonman. The airline went ahead to introduce new low-costfare in public traveling.Pan Am’s presence was expanded to buy airline overseas fromAmerica. ThismadeAmerican Airwayschangeto pan-Americanworld ways(Lynes and Dredge, 2006 p 121).

Indescribing the route network that airline set up, the followingchanges should be considered the number of airlines from Americaserving the California to Hawaii route increased,andthenumber serving the Orient increased from two to four, the route alsoled to South Pacific. Another route is York and London where the fareweresetat $572.88

Globaloperations made more routes in US and Europe during World War II withmore of the routes being within war zones. There was a trip toSan Francisco and Hong Kong for public relations. Additionally, TheMartin Aircraftcarried passengers in the longest route over the North Atlantic. Theroute was 2,000 miles between Newfoundland and Ireland. Furthermore,there is a route in Macao, south of Shanghai inmainland China. The route from America to China was a low cost routethat was developed to save on the fare.

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 macroenvironmental factors that affect the operations of a firm. Afterclear examination,the SWOT analysis providesthe decision to bemadein strategic planning. Therefore, SWOT analysis prepares thecompanies on how to effectively do away with threats. Use theavailable strategies to pursue achievable opportunities. Maximize ontheir strength and eliminate any weakness detected. For example,before the establishment of the airlinebusiness, the company needs to identify some of the competitiveadvantagesit has over the other similar companies. It also needs to compare theinternal weaknesses ofthe competitors. The viability of the project and external entitiesthat may negatively affect the airline business also needs to beanalyzed(Kajanus et al., 2012). Thissection, therefore, isgoing to discuss the SWOT analysis of airline business, and thebenefits of investing in this business.

Strength

Thestrengths of any firm in SWOT analysis constitutes the advantagesthat the firm has over its competitors. It involves an analysis ofwhat the airline does better than the rest of the competitors.Accessibility to cheap resources is another strength that firm canacquire over its competitors. The analysis was carried out to checkif the new airline could function well in the market. Several factorssuch as the economy, level of employment and transport cost were putinto consideration (Kajanus,et al., 2012 p 6).Theinvestigationwasdoneon the price of purchasing an aircraft and the minimum fare thatcould be charged in the process of transporting passengers and cargo.Other analysis includesthe competitive strategies such as online booking, the trainingservices needed to its employees, the office front help to customersand sponsorship of major sports to promote its brand. The need todetermine employees’ training, performance program of the newairline was noted (Ahmed et al., 2006). There was an analysisof the customers’ relationship to airline owners this was done toconfirm if the relationship can build a worldwidepartnership. Moreover, experts analyzed the number of jets a newairline company needsand to which parts are required to fly.

Variousinvestigations werealso doneby a team selected bymanagementto examine the number of airlines to be put in place, and if thenumber of airlinescan meet the demand of the potential clients. Additionally, theanalysiswas also done withthe wastes produced. If possible, could the fewwastes maximize the companies’ outputs and minimize the inputs?Furthermore,the chief executive officer in his proposal recommended the teaminvolved in the analysis to research the market and determine thestrategies that a new airline company need in order to have acompetitive edge over the existing airlines.

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 testwasalso doneon fuel, labor costs and other expenses. In line with this, the needto determine the number of airports and all charges wasputinto consideration.

Weakness

Theweaknesses of the airline would include aspects such the areas wherethe firm can have some improvements. This should also include theareas where the firm should have improvements in order to avoid anylosses. Several analysiswere done with regard to finding out what weaknesses the company mayhave in the market. They include, first, the high cost of operationand implementation of new technology (Ahmed et al., 2006). Secondly,experts analysedif prices of its tickets will be high compared to other airline, andif the new airline is planning to be a member of the airline bodiessuch as UAE. At some point,the need to know if the technology was affordable was raised.Furthermore, in-depth examination was done on the establishmentof the youngairline(Houben, Lenie and Vanhoof, 1999, p 128).The analysis included lackof the confidence to invest fully,and the fears the manager may be facing to avoid taking risks. Pooremployee morale and employee motivation were key factors that werelooked into. Additionally, the causes of low performances werediscussed and why most CEOs resigned frequently. Other weaknessesanalysis included the loss of customers through negligence and stiffcompetition from other companies. Finally, experts analyzed theweakness posed by rare plane crashesand bankruptcy.

Opportunity

InSWOT analysis, opportunity comprises of the available chances andopportunities that the firm can take as an advantage over thecompetitors. The market expansion analysis was carried out todetermine 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. Apopulationcensus was done in the country and categorized 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 travelersand tourists forecast the need fortheir annual growth. The experts examined the number of distributionchannels, market segmentation and product differentiation (Ahmed etal., 2006). This examination was vital as it would help the airlinemake decisions that would ensure its survival in the market.Middle-classpeople wereinterviewedabout their airline preferences and their chances of opting for thenew airline (Houben,Lenie, and Vanhoof, 1999 p 130).

Threat

Ananalysis of the threats of new entrants into the market was carriedout. This analysis only targeted the services and products thecompany could offer. The challenges such as capital requirement, theamount of buying aircrafts and the barriers of new companies wereassessed. Also, the need to determine the brandto compete with the existing airlines was analyzed with the mainemphasis being put on the famous ones. Thethreatof other substitute products and services was done especially withother air transport companies (Ahmed et al., 2006 p 160)

Inaddition,the research was carried out to determine the variety of airlinecompanies that offer the best services to customers and theavailability of expansion in the market. Furthermore, the rules andregulations were considered and theireffect on the company. The corrective measures of the airlineto counter aircraft crashwere analyzed (Ahmed et al., 2006). Thiswasdone majorly to determine if the new airline was air worth before itstarted operating fully. The experts investigated the level ofbreaches such as unproceduralmanufacturing processes. Finally, the laws regarding airline industrywerealso carried out and its operation(Houben, Lenie, and Vanhoof, 1999 p 127).

Viabilityof airline business

Accordingto the SWOT analysis that has been discussed above, it is abundantlyclear that the strengths and the opportunities outweigh theweaknesses and the threats. This is an indication that the businessin question is indeed viable and the airline should go ahead andstart the business (Ahmed et al., 2006). The airline industry has alargemarket. It is a business that operates internationally. The businessSWOT analysis provided that there are favorable micro and macroenvironment to invest in the airline business. After clearexamination,the analysis providedthe major decisions that are needed in strategic planning. Therefore,the SWOT analysis prepared the company on how to effectively do awaywith threats. In the airlineindustry,it was discovered thatthe new airline could function well in the market (Ahmed et al.,2006).

Theinvestigationdoneon the price of purchasing an aircraft confirmed that aircraftsvaried in the prices some were cheap while other were expensive. Thereport also confirmed that less fare could be charged in the processof transporting passengers and cargo. However, it is useful to notethat the airline business had some few weaknesses. To start with, thehigh cost of operation and implementation of new technology is amajor weakness (Lynes&amp Dredge, 2006).Whereas technology may be easier and cheap to implement, it isevident that the same may be expensive to maintain. Additionally,the price of its tickets were high compared to those of otherairlines. Consequently, the new business was not planning to be amember of the airline bodies such as UAE. The market expansionanalysis confirmed that the new airline would pick up well in theexisting segmented markets. The experts recommended that a lot ofinvestment will be made by developing the old airport. Apopulationcensus done in the country categorized people into classes whichshowed that numerous people were in the middle class. These providedassurance to the company that these class of people would be usingthe aircrafts at least twice every week.

Withregard to threats, it was clear that new entrants were greatchallenge. However, the new entrants were few and therefore there wasno cause for alarm. It was confirmed that competition was mainly onservices and products that the company offered. The other challengessuch as capital requirement and the cost of buying the aircrafts wereseen as factors that would slow down the operations of the company(Lynes&amp Dredge, 2006).Also, lack of brandingdenied the company the possibility of competing effectively with thealready established brabds.

Conclusion

Inconclusion, it is clear that the contributions that the airline madewere essential. Through the contributions, the airline is able tocarry out a market analysis and find out when and where to invest.When a firm invests the right amount of funds into the right venture,there are high possibilities of making profits (Miller &amp Chen,1994). The number of slots that an airline has are essential indetermining the operations and the profitability of an airline. It isvital for any airline to have proper schedules in place to ensurethat it utilizes the slots awarded fully (Lynes&amp Dredge, 2006).With regards to leadership style, it is abundantly clear from thediscussion that Trippe applied the benevolent autocrat style ofleadership. While he led Pan Am, he focused on increasing thecompany’s profitability, as well as minimizing the cost.

Consideringthat the airline business is one of the most expansive business, itis clear that the chances of new entrants to make profits and succeedare high. The airline business operates across numerous countriesaround the world and the competition is not very stiff. However, ituseful to note that the airline business is an extremely expensiveventure and only companies which can take huge risks can venture intoairline business.

ReferenceList

Ahmed,A. M., Zairi, M., &amp Almarri, K. S. (2006). SWOT analysis for AirChina performance and its experience with quality, Benchmarking:An International Journal,13(1/2),160-173.

Faux,J. (2010), Theglobal class war: how America`s bipartisan elite lost our future-andwhat it will take to win it back,John Wiley &amp Sons.

Hong,S., &amp Harker, P. T., (1992). Air traffic network equilibrium:toward frequency, price and slot priority analysis,&nbspTransportationResearch Part B: Methodological,&nbsp26(4),307-323.

Houben,G., Lenie, K., &amp Vanhoof, K. (1999).Aknowledge-based SWOT-analysis system as an instrument for strategicplanning in small and medium-sized enterprises,Decisionsupport systems,26(2),125-135.

Jones,I., Viehoff, I., &amp Marks, P., (1993). The economics of airportslots,&nbspFiscalstudies,&nbsp14(4),37-57.

Kajanus,M., Leskinen, P., Kurttila, M., &amp Kangas, J.(2012). Makinguse of MCDS methods in SWOT analysis—Lessonslearnedin strategic natural resources management, ForestPolicy and Economics,20,1-9.

Le,L., Kholfi, S., Donohue, G., &amp Chen, C. H., (2003). June.Proposal for demand management using auction-based arrival slotallocation, In Proceedingsof the 5th USA/Europe Air Traffic Management R&ampD Seminar,Budapest, Hungary.

Lynes,J. K., &amp Dredge, D. (2006). Going green: Motivations forenvironmental commitment in the airline industry, a case study ofScandinavian Airlines. Journalof sustainable tourism,14(2),116-138.

Miller,D., &amp Chen, M. J. (1994). Sources and consequences of competitiveinertia: A study of the US airline industry, AdministrativeScience Quarterly,1-23.

Sevkli,M., Oztekin, A., Uysal, O., Torlak, G., Turkyilmaz, A., &amp Delen,D. (2012). Development of a fuzzy ANP based SWOT analysis for theairline industry in Turkey, ExpertSystems with Applications,39(1),14-24.

Aviation Management

15

AVIATION MANAGEMENT

AviationManagement

Part1

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 invest profitably by understanding its market andknowing the right side of the venture. Given that there is growingimbalances between the demand for the transport activities andavailable 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. The airlinerelies on the contributions to determine on the areas to investheavily and the areas to commit little funds. It is evident that whenthe airline invests wisely, there are high chances of increasing therevenues.

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 of flights per day and that translates to getting moreslots or bidding for more slots (Hong and Harker, 1992). In order tobid for more slots, the airline should consider having thehub-and-spoke (HS) networks as an alternative means of getting newslots and also a means of concentrating more flights in waves attheir hubs. This would imply improving the flight waves in accordanceto lower connecting time as well as considering expansion andincreasing the number of transfer passengers. To ensure that theventure is profitable, the model should consider creating a newflight schedule which is made of flights which are already operatedby the airline. Flights that are assigned the new slots in which theairline revenue has to be maximized should also be included in theschedule (Jones, Viehoff and Marks, 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 (Joneset al., 1993).This in short can be eluded to be route network expansion as a resultof introduction of new route. The main points that must be notedinclude two factors which are slot price at secondary market and thechanges in the realized revenue every year (Jones, Viehoff and Marks,1993). The various issues which form the output that must be put intoconsideration including 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

Leadershipprovides motivation, direction and support to a group of followers toaccomplish a commonobjective.There are two essentials for successful leadersfirst they must be positiveabout what they want to do. Second, in scenarios of potential alliesand hostile criticstheymust explain what they want to dowiththem (Miller and Chen, 1994). Inthis case study,the essay is going to analyze the style of leadership that JuanTrippe used in the management of the pan-Americanairline, and how the style contributed to its success. It willfurther describe the advantage the airline took over the Americangovernment in the expansionof their operation. Finally,the paper will give the analysis and description of the of the routenetwork that the airline set up.

Theleadership style Juan Trippe adopted in managing the pan-Americanairline is a benevolentautocrat. Benevolent Autocratis the leader with characteristics of dedication, decisiveness,industrious and commitment (Faux, 2010). This style applies to theleaders who evaluate the quality and the quantity of the job inadvance. In line with this style, autocrats are only conscious on thecompany’s costs minimization, the projected and achieved profitsand lastly, they consider if the sales targets have beenmet.In this case,they are the main pillar of the business hence they assist indeveloping and proposing the new ideas. The new ideas help inincreasing the efficiency and effectiveness in productivity whichguarantees better results (Faux, 2010 p 45).

Inthis case, Juan Trippe showed numerous initiatives.For example,the faith act from Trippein aeronautics happened to be the greatest ever to bemadeby an airline in technology. Trippeshowed development when he gained the courage to choose massivecompetitionandbest strategies for Pan American airline to enter the domestic marketin a major way. Thishappenedto be the first time in its history when the National Airlines waspurchased.

Trippewas industrious and committed to the future of the company despitethe company struggling with a huge debt. It is evident that Trippebelievedin the gamble for the firm’s future. Because of his commitment,Trippe stepped down from the active management of Pan American.However, the future of Pan American airline still looked promising.Notable, Trippe was a risk taker he secured funds for the newequipment, through loan agreements. His risky nature wasalso seenwhen he decided to invest in larger jets thatcould 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. ManyAmerican airline chief executive officers protested the move on theground that the cost of buying and maintaining jets deterioratedtheir economy in both the short and long terms (Lynesand Dredge, 2006 p 121).

Trippe’seffort was continuous, he developed many new ideas and had been acontinuous innovator. At his competitive age, it is evidet that hehad done so much to shape the Pan Am. However, it was unfortunatethat he failed to train the new leaders who would have taken over thecompany for the future consistent growth. Research has indicated that any successful leader must have apositive attitude towards his job. Additionally, it is evident thatsuccessful leaders consult their allies before making any majordecisions (Lynesand Dredge, 2006 p 121).

Theairlinetook the advantage of American government to expand in the followingways. Firstly,although many management teams feared and protested the costs ofpurchasing and maintaining the large jets, it is clear that the fearwas due to the losses in future. The airline took that advantage andbought the airline with the largest passenger capacity which savedthe economy than propeller driven aircrafts.American manufacturers were opposed to the idea and they even refusedto make the jets. Airline companies did sufficient research anddecided to settle for jets which used the engines that are used topower the air force one jets. It is evident that these engines havebeen used in jets which participate in war (Lynes&amp Dredge, 2006).

TheAmerican government failed to support single chosen instrument. TheAmerican government did not support the airline interests at first.However,other foreigners fed their traffic into the airline and this made thevarious airlines in the United States to be at odds. ThismadeTrippedesigna plan that could consolidate three airlines into a newairline called Community Company (Hong&amp Harker, 1992).Conversely, the community plan faced many challenges especially whenit became a bill in Senate.Many senators opposed the bill thatmade it to fail.

Thecompetition forinternational passengers increased with the increased number ofairlines.However, theAmerican government failed to support the move by international airtransport association (I.A.T.A) to increase airlines and regulate thefares. Other countries in Europe saw the need but America objectedthe proposal from Trippe.This issue led to stagnation of the overall travels from the US,which led to the expansionof airline to cater for the high demand. The World Warleft Europe in dire need of social-economic cooperation from theUnited States. However, America appeared to be obstructing the lowfare for the commonman. The airline went ahead to introduce new low-costfare in public traveling.Pan Am’s presence was expanded to buy airline overseas fromAmerica. ThismadeAmerican Airwayschangeto pan-Americanworld ways(Lynes and Dredge, 2006).

Indescribing the route network that airline set up, the followingchanges should be considered the number of airlines from Americaserving the California to Hawaii route increased,andthenumber serving the Orient increased from two to four, the route alsoled to South Pacific. Another route is York and London where the farewassetat $572.88. Global operations made more routes in US and Europeduring World War II with more of the routes being within war zones.There was a trip toSan Francisco and Hong Kong for public relations. Additionally, TheMartin Aircraftcarried passengers in the longest route over the North Atlantic. Theroute was 2,000 miles between Newfoundland and Ireland. Furthermore,there is a route in Macao, south of Shanghai inmainland China. The route from America to China was a low cost routethat was developed to save on the fare.

Part3

AmericanAirlines

TheUnited Airlines otherwise know as ‘United’, is one of the majorplayers in the United States aviation industry. It is considered tobe the largest airline in the world in terms of the number ofdestinations covered by the airline. The airline which has itsheadquarters in Chicago and has hubs in different continents aroundthe world was established in the 1920s as The Boeing Company (Davies,2007). The airline has its hubs in some of the largest airports inthe united states in terms of passenger’s volumes, for example theGeorge Bush Intercontinental Airport and O’Hare InternationalAirport. Recently, United Airlines merged its operations withcontinental airlines (Corliss, 2011).

SWOTAnalysis

Strengths

  1. Large operational network and strategy.

Theoperational network at United Airlines is one of its most importantstrengths. With a fleet of over seven hundred aircrafts and about 375destinations around the world, United Airlines handles over threethousand flights daily and over forty five thousand passengers daily. Although over 70 percent of its revenue comes from main landflights, the airline has strong regional and internationalaffiliates. A significant operating capacity of the airline isdedicated to the international market. The hub and spoke strategyadopted by the United Airlines has huge impacts on the operationalstrength of the airline. The airline has hubs in the entire majorairports in the United States and has direct flights to major citiesin China, Europe, Caribbean and Latin America. The hub and spokestrategy is able to streamline the operations of United Airlineswhich enables it to combine resources (Hemeed, 2010).

  1. Strategic alliance

Throughouthistory, the United Airlines success has largely depended onstrategic alliance. This has had a huge impact on the presence of theairline in the international market. For example, the United Airlinesis one of the founding member one of the largest and most effectivestrategic alliance in the world, The Star Alliance. The Star Allianceis a comprehensive strategy that enables United Airlines access awide range of destinations around the world. Some of the benefitsaccrued from the strategic alliance include baggage and passengerhandling, ticketing and flight scheduling as well as flyer benefitprograms. Additionally, the airlines in the alliance benefits fromother shared resources with both international and domestic partners.Being a major airline in the global market, and its immense resourcepower, United Airlines is able to attract the best deals in theindustry. There are numerous benefits that an airline is able toderive from strategic alliances. This includes safeguards from pricefixing scandals and government protection (Hemeed, 2010).

  1. Strong human resources

TheUnited Airlines has a very good reputation in human resourcemanagement and talent development. As a result, the airline is ableto attract competent people in the operations and support department.The high productivity of employees at the United Airlines is animportant strength that put it’s above other airlines in the UnitedStates and the world. The company employs over eighty four thousandemployers in different parts of the world. Although majority of theseworkers are in the United States, the airline has employees indifferent parts of the world served by the airline. In the early2010, United Airlines was rated high in terms of “average monthlyavailable seat miles per full time equivalent employee” (Hemeed,2010).

  1. Resource power

UnitedAirlines is the largest airline in the world. Additionally, it isamong the largest carriers be passenger volume in the United States.The merger between the continental airlines and the United Airlinesin 2010 introduced more resources at the airlines disposal. The hugefinancial and resources power possessed by the United Airlines is oneof its greatest strengths. As a result, the airline is able toeffectively deal with threats in the market such as threats frombuyers and suppliers. Additionally, due to its size, United Airlinesis able to enjoy economies of scale, which have a significant impacton profitability (Corliss, 2011).

Weaknesses

  1. Decline in profitability

Thehigh debt burden and declining profitability has been one of thegreatest weaknesses facing United Airlines. The airline hasexperienced poor and weakening financial performance in the lastdecade. For example, in 2008, the airline made a loss of over fivebillion dollars. Due to poor financial performance, United Airlinesstocks have performed relatively poor compared to other airlines inthe industry. Although this has changes in the recent past, theresults are not satisfactory compared to other players in theindustry. Thus, inefficient cost management is a critical weakness atUnited Airlines (Hemeed, 2010).

  1. Dependence on outsourced services

UnitedAirlines outsource majority of the services to a third partyproviders. For example, the airline depends on thirty party providersin key operations such as fueling and maintenance of aircrafts andsome aspects of customer service. This over dependence on outsourcesservices increased the cost of operations in the airline.Additionally, due to the agreements between the provider and theairline, the airline has no direct control over the operations. Thus,poor performance by the provider may result into losses to theairline or breach of security. This has affected the reputation ofthe airline, especially after the September 11 attack (Corliss,2011).

  1. Strong employee unions

Majorityof employees at United Airlines are affiliated to strong laborunions. This includes pilots, engineering workers, flight attendantand dispatchers. The main function of the union is to promote jobsecurity and salary negotiations on behalf of the workers. Strongunions are good for the employees but may negatively affects theoperations of the airline due to union actions such as strikes(Hemeed, 2010).

Opportunities

  1. Global business and tourism travels

Businesstravel and tourism forms the most important target for major airlinessuch as United Airlines. Statistics indicates that global tourism andbusiness travel is expected to grow steadily in the next few years.This presents a good opportunity to the United Airlines to increaseits revenues from international operations revenues. Through itstrategic alliances and significantly large fleet, United Airlines iswell positioned to benefit from this opportunity (Hemeed, 2010).

  1. Economic recovery

Economicindicators suggest that the United States and the global economy haverecovered from the recent financial crisis. This is an opportunity tothe airline industry business due to the resultant increase inpassengers and cargo volume. Although the impact of the economicrecovery may be smaller that what is anticipated, a steady growth inthe economy will result in increased business travel and tourism.Through competitive pricing and effective marketing strategies,United Airlines can tap into this opportunity (Hemeed, 2010).

  1. Rapidly growth in the domestic market

Therapidly growing airline industry in the United States is a greatopportunity for United Airlines. It is expected that the industrywill continue to grow in the next few years with increased domesticflights. Domestic travels in the United States market have animportant influence on an airline. Since domestic travelscontribution in the United States aviation industry is more thatthree quarters, the expected growth at the local level is asignificant opportunity in United Airlines operations (Hemeed, 2010).

Threats

  1. Intense competition

Theairline industry in the United States is a highly competitiveindustry. Although United Airlines has immense financial andresources power, it is threatened by intense competition in theindustry. Airline in the industry compete in pricing, customerservice and efficiency in operations. The intense competitionsignificantly affects profit margins and therefore major airlines arelikely to make losses. For example, in the last ten years, severalairlines have been declared bankrupt or suffered major losses partlydue to intense competition in the industry (Detzen et al, 2012).

  1. Unstable crude oil prices and supply

Fuelcost is the most important expense in airline operations. The fuelcost has significant impacts on the operational expenses and thisprofitability. Due to political instability in the Middle East, themajor supplier of crude oil in the global market, the supply andprices of fossil fuels are unstable. Due to the high dependence onfossil fuel, United Airlines and the aviation industry in general isthreatened by fluctuation in global fuel supply and prices (Hemeed,2010).

  1. Strict regulations

TheSeptember 11 attacks had a huge impact on the United Airlines and theglobal aviation industry. United Airlines was directly affected bythe terrorist attack. Due to the high susceptibility of the aviationindustry, especially due to increased threat of terrorism, theaviation industry has strict security and operational regulations.Threats in the aviation industry have a direct impact on nationalsecurity. The increased security requirements and operationalregulations such as sound financial management and aircraftmaintenance in the airline industry is an additional cost to theUnited Airlines (Corliss, 2011).

Conclusion

UnitedAirlines is one of the major players in the United States aviationindustry, handling both domestic and international flights. Since thebeginning of the 21th century, the airline has been faced withnumerous challenges which have affected its profitability. Althoughthe airline has reported improved performance in the last threeyears, cost management has been an important challenge to the unitedairlines. As a result, the airline has performed below average inprofitability and in the stock market compared to other airlines inthe industry. Although there are significantly strengths, mainly itsfinancial and resources power, it does not have unique opportunitiesrelative to other airlines. In my view, United Airlines is notattractive for investments.

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