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BlueSky Airways is one of the leading companies in the British airline industry. The firm faces a number of challenges including stiff competition. This paper analyzes the position of the firm in the market.
Several airlines are competing for supremacy in the UK Short Haul Market. In the entire Europe, it is believed that UK significantly generates more air traffic as compared to other countries (Bamber & von Nordenflytch 2009, p.20).
Recent researches indicate that UK airports handle an annual average of two hundred and thirty million passengers. Some of the airlines competing for this market include easy Jet, Ryanair, British Airways, BlueSky Airways Flybe, bmi, bmibaby, Aer Lingus among others. These airlines fly from UK airports to other European destinations and vice versa (Lavery 2005, p. 63).
The airlines attempt to lure more customers as well as ensuring creation of more value from its operations through building a competitive strategic advantage in the airline industry. In this industry, BlueSky Airways have opted to come up with a number of strategies that may help it improve its operations in addition to competing effectively in the aggressive environment (Mitchell, Coles & Keane 2009, p. 77).
Some of the policies formulated seem quite fundamental for building a strong strategic position in the turbulent airline market while others appear to bring negative impacts on the performance of BlueSky Company (Shapiro &Varian 1999, p. 152).
Michael Porter put forward three generic strategies namely: cost leadership, differentiation and focus (Porter 1996, p. 124). For any company aiming at outperforming other firms in the market, embracing either reduction of costs in its processes or differentiating the products or services is inevitable (Nag 2007, p. 938).
However, Michael Porter also advocated for focus strategy if a market niche exist or where there is less competition in the market.
Furthermore, Porter demonstrates the application of the value chain analysis for any firm in an attempt to create considerable value in its processes/activities. The primary activities include the inbound logistics, operations, outbound logistics, sales and marketing. Moreover, some support activities most probably assist in increasing the firm’s value resulting from the ongoing primary activities (Gladwell 2000, p. 66).
The support activities include procurement, technology development, human resource management and firm’s infrastructure (Kim & Mauborgne 2005, p.183). The approaches put forward endeavor to create a competitive advantage for various firms operating in diverse industries (Liebeskind 1996, p. 125).
Regarding the above discussion, it is clear that BlueSky Airways had opted for service differentiation rather than cost reduction in gaining significant market share (Probst, Raub & Romhardt 1999, p. 223).
This was demonstrated by the unique services such as free refreshments for passengers, more legroom, better quality seats, baggage checking in addition to seat assignment. Conversely, it has appeared that other competitive firms in the market have focused on cost reduction.
For instance, the leading airlines in the market, that is, easy Jet and Ryanair are said to derive their good performance from charging low freights, which can partly be explained by substantial reduction in its operational costs (Martin 1995, p. 45).
However, it later on came to BlueSky Airways attention that lowering its fares, implementing self-service, check-in port and buy-on-board will extensively help BlueSky reposition itself in the market and hence compete effectively (Moore1995, p. 56).
Although these might have positive effect on its performance, BlueSky Airways believe that the maintenance of travel agents, mixed fleet of aircrafts as well as offering back up services will help reduce frequent delays and cancellation of flights hence building a competitive advantage over its competitors (Hamel 2002, p. 137).
Nevertheless, in the implementation of the proposed policies, a number of issues that needed to be fixed emerged among customers and the cabin crew. With the implementation of buy-on-board, the cabin crew complained that it compromises their professionalism.
On the other hand, customers complain of the difficulties in operating the self-service kiosk ((Donelan1998, p. 123). They also feel uncomfortable with the high prices charged by BlueSky Airways.
From the industry perspective, BlueSky Airways face stiff competition from the companies that employ cost leadership strategy in their operations. BlueSky Airways, which have embraced service differentiation strategy is likely to drag behind in the aggressive airline market as a result of the soaring number of price sensitive clients.
The airline company has a number of primary activities such as warehousing passengers’ luggage, controlling the inflow and outflow of the luggage, flying customers to different destination points, advertising the quality of services offered to the customers as well as selling the airline tickets, offering services such as buy-on-board among others (Frank & Cook 1995, p. 86).
The support activities include outsourcing services of other companies in an attempt to reduce cancellation and delays of its own flights, use of technology through online booking of tickets, online payment of the charges, recruitment and training of cabinet crew and other staff members.
The BlueSky Airways also receives great support from the restructured departments such as the accounting and finance department, which takes into consideration the amount spend in its operation and the resulting revenue (Scholes 2008, p. 167).
It also evaluates on the best services to be employed by BlueSky Airways as it may have the potential effect of increasing its value and consequently earning it a strong strategic position. Other support departments include legal department and quality management (Stewart 1997, p. 105).
The support activities have the potential of increasing the corporate value of BlueSky Airways. For instance, the availability and accessibility of BlueSky Airways’ website ensures busy and distant clients are able to access the website for instant booking. Furthermore, online booking reduces expenses as well time wastage associated with the movement back and forth in an attempt to get an air ticket at the booking offices (Bates 1999, p. 112).
However, a number of primary activities are perceived as not adding considerable benefits to the airline operation. For example, cabin crew claimed that buy-on-board would strongly affect their professionalism. This will accordingly influence the corporate image in terms of the professionalism of its employees. As a result, existing and prospective customers may opt to choose other airline companies.
Therefore, it will be prudent for BlueSky Airways to employ other value-adding services in order to maintain the long lasting good public image portrayed by its Cabin crew in the entire British airline industry (Kaplan 1992, p. 123). To ensure high level of competency in the UK Short Haul Market the company should however embrace cost leadership strategy bearing in mind that a large number of airlines dominates the industry.
Certainly, the leaders in this market such as easy Jet and Ryanair seem to do better in the market. Their great performance is derived from their constant strategy focused on targeting the large price sensitive market segment. This has seen its grand performance attract new investors into the two airline companies.
On the other hand, the service differentiation seems to add more costs on the plane operational costs. The BlueSky Airways therefore analyze its primary activities such as flying of passengers from one destination to another and try as much as possible to reduce the costs by employing support activities such as technology. Technology is to be utilized in online booking of tickets as well as the payment of charges (Sveiby 1997, p. 91).
List of References
Bamber, GJ & von Nordenflytch, A 2009, Up in the Air: How Airlines Can Improve Performance by Engaging their Employees, Cornell University Press, Ithaca.
Bates, A 1999, Managing technological change: Strategies for college and university leaders, Jossey-Bass, San Francisco.
Donelan, J 1998, “Value chain analysis: A strategic approach to cost management”, Journal of Cost Management, Vol. 7, Issue 15.
Frank, R & Cook, P 1995, The Winner Take All Society, Free Press, New York.
Gladwell, M 2000, The Tipping Point, Little Brown, New York.
Hamel, G 2002, Leading the Revolution, Plume (Penguin Books, New York.
Kaplan, R 1992, “Activity-based systems: Measuring the costs of resource usage”, Accounting Horizons, V0l. 1, Issue 13.
Kim, LM & Mauborgne, C 2005, Blue Ocean Strategy, Harvard Business Press, Harvard.
Lavery, B 2005, “International Business; Former Chief of Aer Lingus To Get British Air’s Top Post”, The New York Times, Retrieved
Liebeskind, JP 1996, “Knowledge, Strategy, and the Theory of the Firm”, Strategic Management Journal, Vol. 17.
Martin, J1995, The Great Transition: Using the Seven Disciplines of Enterprise Engineering, AMACOM, New York.
Mitchell, J, Coles, C & Keane, J 2009, “Upgrading along value chains: Strategies for poverty reduction in Latin America”, COPLA Global Overseas Development Institute, London.
Moore, MH 1995, Creating Public Value: Strategic Management in Government, Harvard University Press, Cambridge.
Nag, R 2007, “what is strategic management, really? Inductive derivation of a consensus definition of the field”, Strategic Management Journal, Volume 28, Issue 9, pp 935–955.
Porter, ME 1996, “What is strategy?” Harvard Business Review, Harvard.
Probst, G, Raub, S & Romhardt K 1999, Managing Knowledge, Wiley, London.
Scholes, K 2008, Exploring Corporate Strategy, 8th edn, Essex, FT Prentice Hall.
Shapiro, C &Varian, H 1999, Information Rules, Harard Business School Press, Boston.
Stewart, T 1997, Intellectual Capital, Nicholas Brealey, London.
Sveiby, KE 1997, The New Organizational Wealth: Managing and measuring knowledge-based assets, Berrett-Koehler Publishers, San Francisco.
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