Since Nok Air positions itself as “premium low-cost airline”, the firm is now facing the high cost. The costs include fuel engine price, the premium onboard service, foods and beverages, the cost of offering high weight of baggage, and so on. Also, as Nok Air has to hedge fuel engine from Thai Airways International Public Company Limited, it mainly drives Nok Air to have the higher cost, and it results in decreasing the profit (“Broken Wing Nok Air,” 2008). However, the firm cannot increase passenger ticket price. Otherwise, it will be inconsistent with Nok Air’s position.
4. Discuss the impact of any two (2) external environmental factor that challenges Ryanair company to remain competitive in the airline industry? (20 marks) Political or legal processes and legislation is one of the external environment that influence decision making made a firm that must comply with regulation which is how organization try to influence government and how government affects businesses. Among the challenges that face by Ryanair is increasing legislation in Europe that give negative impact to their business model and also increasing the cost of operation of their business. The increased cost of operation in Ryanair was adverse the aim of this company that wants to offer lower fares to their customer besides lower costs-
Also, some airport hubs cannot consolidate traffic bound for many itineraries. Having this limitation and knowing the fact that some passengers prefer non-stop flights, consideration of both hub-stop and non-stop routing strategies can be more cost-efficient than a pure hub-and-spoke network (Jeng 1987). In other words, non-stop flights are always the most desirable in terms of convenience but on the other hand less desirable in terms of price for price sensitive customers. Moreover, the stops at the hub airports increase the expenses for the airline companies due to the facility charges and landing fees. Therefore, the airlines can generate more revenue by considering these key parameters and applying best network routing
The leadership of such companies would require diverting scarce resources into the culture change program. In 2000, the airline industry was facing a downward trend, but WestJet was looking to expand by either adding more planes or merging with Jetblue, another low-cost airline. Expanding in an economy that was facing a recession would have been self surbotaging. Factually, expanding the business in such conditions
Canada being a big country and the travel time taken by road is far greater compare to air flight, the consumer prefers to travel by air to reach their destination in timely manner “The threat of substitutes is moderate due to the above stated reason. Marketing Mix: Product/ Service: As discussed earlier, Air Canada offers various services to its target market. For these services it uses Boeing 777s and Boeing 787s as a visible product. To ensure unique services are delivered it introduced some international routes to Tel Aviv and Tokyo (Air Canada, 2018). Furthermore, Executive Pod, International Business class, Economy class, North America economy class are some of the finest examples of services offered to different target market by Air Canada (Air Canada, 2018).
Most airline companies try and avoid responsibilities associated with projecting costs for maintenance and equipment break down. They prefer service providers doing it and this is precisely what Rolls-Royce offered through ‘Power by the hour’. The program qualifies as an ‘order winner ‘ for multiple reasons, firstly, the risk is transferred from the customer to Rolls Royce, secondly, Rolls-Royce will strive for more preemptive maintenance and offer better designs and lastly, the customer receives an economic benefit by saving un-necessary costs. Hence, ‘Power by the hour’ gives Rolls-Royce one more competitive advantage. (Netessine, 2014) Another order winner is the ‘in service remote engine monitoring’, these are a set of integrated services through which Rolls Royce provides engine management and predictive maintenance for over 3,500 jet engines globally.
Aircraft prices Airbus and Boeing publish list prices for their aircraft but the actual prices charged to airlines vary; they can be difficult to determine and tend to be much lower than the list prices. Both manufacturers are engaged in a price competition to defend their market share. Model Cost in million USD Model Cost in million USD Airbus A318 74.3 Boeing 737-700 78.3 Airbus
The budget airline industry in south-east Asia has been underdeveloped because the aviation market is tightly regulated by bilateral air rights agreements. Threat of terrorism, people is afraid to fly after the September 11 terrorist attacks incident. Opportunities: Deregulation of goverment presented an opportunity for new routes and airport deals through open-skies agreements between countries, or the permission of entry of private airlines. Threats: Being a low cost airline, Air Asia is subjected to aviation regulations, government policy and government restraints, and dependent on the geography and infrastructure of Asia and travelling preferences of customers.
Lower cost of flying urged more people to go on travel in a higher frequency and generated more income for entrepreneurs. This further intensified the air-bus market with additional competitors entering and existing firms were reorganizing strategically. Therefore, it was recommended that budget airline acquired another possible competitive edge, other than employing lower price, to establish an unceasing growth. References Fageda, X., Suau-Sanchez, P., & Mason, K. (2014). The evolving low-cost business model: Network implications of fare bundling and connecting flights in Europe.
It is derived from a large parent company, the International Airline Group, which also owns and manages other airlines, including Aer Lingus, Vueling and Iberia. The parent company operates a precise and effective network of operations on the domestic and foreign scale that British Airways uses. The economies of scale allow British Airways to enjoy effectively reduced costs of each operation. As a result, the British airlines in 2016 also won the award for a business traveler for the best short-distance runner (Otley,