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BRIEF OVERVIEW OF THE AIRLINESDISCUSSED IN CASE
EUROPEAN AIRLINES (A brief outlook) Post WW2, Commercial Airlines sprang up Small Airlines Converted to National Flag Carriers(Tail of the plane) Colonial aims fulfilled by respective Govts.- eg. Imperial Airways International Routes focused upon, intra country service was sparse. Domestic fares kept high to subsidize international flights. WW2- A great leap forward in aviation. Bilateral, multilateral agreements did a task of protectionism. IATA( International Air Traffic Association)-fixed fares. Pooling agreement in Europe (eg: Route b/w France and Italy given to Air France and Alitalia)
EUROPEAN AIRLINES (A brief outlook) contd.. Revenue and capacity divided in an agreed upon manner by the Flag Carriers. Restrictions also involved compulsory operations (begin or end) in the domestic soil; New entrants discouraged.
EUROPEAN AIRLINES (A leap forward) Introduction of jet engines capable of crossing Atlantic-caused the flag carriers to reinforce on their efforts on routed across Northern Atlantic in late 1950s. Troubling factors: Failiure of European regulation Collapse of unification of France, Germany, Belguim & Italy. Inefficient, undercapitalized and unprofitable venture. Increase in jet fuel prices & recession reduced the demand of air travel (1970) High fixed costs and unionisation of staffs added to worries. (1970)
EUROPEAN AIRLINES (A leap forward) 1960s- Leisure travel lead to an increase in the charter flights Shipping Cos. Funding, cheap fares and ‘inclusive tours’ offered on non scheduled flights Flag carriers’ discounts under IATA (retaliation to the above point) 1970s- Introduction of 747s
EUROPEAN AIRLINES (Deregulation of US airlines) 1978- US Congress decision to deregulate domestic US airlines industry New entrants, 27 new low cost carriers between 1978-1980 Introduction of new routes; American, Delta, United airlines successful. 1984- Counter reforms: Introduce Deregulation in European Aviation Industry Remove pooling agreements, price fixations, Govt. subsidiaries.
BRITISH AVIATION & AIRWAYS (A Brief Outlook) 1971- Airline regulator encouraged the establishment of British Caledonian (B.Cal) to compete with British Airways. Margaret Thacher Bill stated equal weightage to consumer and operator, focused on the privatisation of state owned cos. Profit trend was slumping and subsequently went into losses.
BRITISH AVIATION & AIRWAYS (A Leap Forward) 1985-John King reduced the BA staff strength from 54,300 to 38000. Profit scaled up, although deregulation scenario slowed down during the BA’s turnaround. 1986- BA had the most extensive network 145 destinations, 68 countries; Almost 80% passengers passed through Heathrow Airport. Invested 700 million in the purchase of 55 new aircrafts; Tickets sold over telephone, 171 retail shops, 49000 independent travel agents.
IRISH AVIATION & AER LINGES (A Brief Outlook) Govt and Private parties formed Air Linges 1930s & 40s Losses between 20% and 100% of the revenue. Initial route – Great Britain and England; Britain had 40% stake in Aer Linges. Monopoly of Aer Linges over Irish Sea. Onwards right in Europe, start of Bilateral Agreements. End of British stake from Aer Linges; latter formed its own trans-Atlantic route.
IRISH AVIATION & AER LINGES (A Brief Outlook) Causes of losses in North Atlantic Route in 1970s: Mostly tourists were the fliers who demanded high concession and promotional fares. Tourists stayed home during the 1970 recession.
IRISH AVIATION & AER LINGES (A Leap Forward) Diversification through: Enginnering and Maintenance Service to other airlines. Computer consultancy and data processing 1986- Hospital Management in Baghdad, Investment in Robotics.
RYAN AIR ( A Strategist Icon) Innovative step by the founder Declan Ryan- Leasing of excess capacity to other airlines 1975- Formation of Guinness Peat Aviation which became the largest aircraft leasing company in the world. Leasing provided revenues to launch airline. Aggressive strategy adopted to operate in Dublin-London route where biggies like BA and Aer Lingus were already successfully operating. Launched 4 round trip with 44 seat turboprop. First rate customer service with cheapest fare of British Pound 98 as against lowest fare of B.A and Aer Linges of British Pound 189 at one time.
"When once you have tasted flight, you will forever walk theearth with your eyes turned skyward, for there you have been,and there you will always long to return.” -Anonymous Thank you for Listening