Ethical and Legal Issues Concerning West Jet Access to Air Canadas Private Information
An unauthorized access to a computer involves infringing and reclaiming information, Seizing and varying computer resource devoid of permission from the other party. The act therefore is deemed illegal and unethical. West jet admits to covert access to Air Canada private information. Jaffrey Lafond was aware of possible prosecution and violation that will result in legal action.
Extent to Which Unauthorized Access of Competitors Information Is a Common Place
Access to competitors information is very common in the business world today and many such cases have occurred around the world. The internet is an espionage threat to any organization since, with the right technology, expertise and unethical desire to access competitors data; anything could happen to any organization. The major reasons for wanting to access competitor private information is access business strategic information for countering their competitors. However, there are a number of legally acceptable ways to access competitors information. This are: newspapers, trade fares, plant tours and playing the secret shopper where these organizations employees may disclose crucial information without knowing.
Air Canadas Responsibility to West Jet Company Access to Its Private Information
Air Canada should accept some degree of responsibility over West Jets access to its systems for not being protective of their system. Information technology expert are dormant on their job, Steps were not taken to change or scrap Jeffrey Plafonds number and personal code from the payroll system which was a threat to Air Canada. This was not prudent because, West jets access accessed Air Canadas information excessively. If it was not for west jets whistle blower, it could have taken longer to catch the West Jet.
Measures to Be Instituted By Air Canada On Its Employees To Stop Unauthorized Access
People measures are steps taken to create awareness among employees on threats of unauthorized access. This includes;
Promoting high standard business code of ethics
The firm should encourage high moral and ethical Practices in relation to protection of unauthorized access of corporate information.
Password protocol
Implementing password, changing password regularly and making sure personal password remain personal.
Employees turnover management
Checking on security issues when employee leaves the organization to avoid threat of the messing the company in future.
Due care when using public or a friend computer
When using remote and public internet take care not to store password on hard drive or internet browser because they may be used by hackers.
Technology Measure to Impede Unauthorized Access
This is the process of acquiring and implementing technological product that beef up security against unauthorized access by Air Canada. The Examples include;
Update and Patching All Programs
There is no perfection in computer systems. Update and patching on a regular basis go a long way in ensuring protection against unauthorized access by malicious competitor.
Hardware and Software Firewalls
Hardware firewalls protects the connections by use of network while software firewalls prevent hackers access work stations and terminals.
Implementing the Anti-virus
Anti-Virus carries their own version of firewalls thus enhancing security to the system. Air Canada must acquire this software urgently in order enhance their security since, Spy wares protection programs counter and detect spy programs like screen scraper developed by West Jet.
Ethical and Legal Issues Concerning West Jet Access to Air Canadas Private Information
An unauthorized access to a computer involves infringing and reclaiming information, Seizing and varying computer resource devoid of permission from the other party. The act therefore is deemed illegal and unethical. West jet admits to covert access to Air Canada private information. Jaffrey Lafond was aware of possible prosecution and violation that will result in legal action.
Extent to Which Unauthorized Access of Competitors Information Is a Common Place
Access to competitors information is very common in the business world today and many such cases have occurred around the world. The internet is an espionage threat to any organization since, with the right technology, expertise and unethical desire to access competitors data; anything could happen to any organization. The major reasons for wanting to access competitor private information is access business strategic information for countering their competitors. However, there are a number of legally acceptable ways to access competitors information. This are: newspapers, trade fares, plant tours and playing the secret shopper where these organizations employees may disclose crucial information without knowing.
Air Canadas Responsibility to West Jet Company Access to Its Private Information
Air Canada should accept some degree of responsibility over West Jets access to its systems for not being protective of their system. Information technology expert are dormant on their job, Steps were not taken to change or scrap Jeffrey Plafonds number and personal code from the payroll system which was a threat to Air Canada. This was not prudent because, West jets access accessed Air Canadas information excessively. If it was not for west jets whistle blower, it could have taken longer to catch the West Jet.
Measures to Be Instituted By Air Canada On Its Employees To Stop Unauthorized Access
People measures are steps taken to create awareness among employees on threats of unauthorized access. This includes;
Promoting high standard business code of ethics
The firm should encourage high moral and ethical Practices in relation to protection of unauthorized access of corporate information.
Password protocol
Implementing password, changing password regularly and making sure personal password remain personal.
Employees turnover management
Checking on security issues when employee leaves the organization to avoid threat of the messing the company in future.
Due care when using public or a friend computer
When using remote and public internet take care not to store password on hard drive or internet browser because they may be used by hackers.
Technology Measure to Impede Unauthorized Access
This is the process of acquiring and implementing technological product that beef up security against unauthorized access by Air Canada. The Examples include;
Update and Patching All Programs
There is no perfection in computer systems. Update and patching on a regular basis go a long way in ensuring protection against unauthorized access by malicious competitor.
Hardware and Software Firewalls
Hardware firewalls protects the connections by use of network while software firewalls prevent hackers access work stations and terminals.
Implementing the Anti-virus
Anti-Virus carries their own version of firewalls thus enhancing security to the system. Air Canada must acquire this software urgently in order enhance their security since, Spy wares protection programs counter and detect spy programs like screen scraper developed by West Jet.
The aim of this paper is to conduct an analysis for the Air Canada Company that was established in 1937. It has been undergoing a rebranding process to improve its competitiveness amid the various evident operational challenges. The corporate governance arm of the company ensures that the interests of the shareholders are observed.
On the other hand, the codes of ethics ensure that the companys workforce executes its tasks in a manner that is consistent with the Air Canadas stipulated vision and mission. In the attempts to make sure that the company serves the interests of the communities in which it was established, the company subscribes to the environmental laws besides providing mechanisms of tracking derailment from the stipulation of the environmental laws.
As part of CSR, the company funds a hospital transportation program. The organization of the Air Canada Company is essentially hierarchical. The hierarchy provides the positions for CEO, CFO, and other managers who must work to realize functions such as leading, planning, and controlling, as discussed later in the paper.
Introduction
In November 2010, the CEO of the Air Canada Company made a public announcement that the company had managed to deal with various challenges that had afflicted it since 1990s. Specifically, the CEO told the business crowd the company that had more passengers, more revenue, and rapidly escalating stock prices (Cowan, 2012, p.23).
Interpreted in the manner the CEO puts it, these were good signs that the company had made pragmatic strides towards overcoming the crisis it had been experiencing financially in 2009.
Such a success, as claimed by the CEO, is essentially impossible without proactive participation by the companys management towards enhancing the measures of ensuring that the publicly traded company adhered to its mission and vision statement.
In particular, corporate governance must have played critical roles in ensuring that accountability by the management was enhanced. In this paper, corporate governance is considered as having the need to mitigate or foster the enactment of conflicts of interest, control, and prevention among stakeholders.
Generally, the mitigation of these conflicts of interest is more often accomplished through the enactment of various customs, laws, processes, policies, and institutions, which have enormous repercussions of afflicting the manner in which organizations are controlled.
From a different perspective, the paper also considers and discusses ethics within the Air Canada Company as one of the mechanisms of strategically focusing all the employees towards the realization of the goals of the company.
Ethics is used in the context of the paper to refer to the rules and regulations that are set by the Air Canada Company to ensure all employees of the organization operate in a manner that would not tarnish the name of the company.
In the realm of fostering the demand for a company to not only operate to create wealth for the shareholders, the paper argues that the Air Canada Company has managed to put a strong CSR program in place to help in conferring benefits to the communities within which the company is established.
Additionally, while attempting to conduct a thorough analysis of the Air Canada Company, the paper also pays an enormous attention to scrutinize how the company realizes its managerial functions of leading, controlling, and planning. However, a discussion of an overview of the company is done first to show how the company is organized.
Overview of Air Canada Company
The Air Canada Company was established in 1937 under the brand name Trans-Canada Airline (TCA). The corporate headquarters of the company are located in Montreal, Quebec. According to the Air Canada Review (2012), Air Canada is the worlds 13th largest airlines by fleet size that has its largest hub in Toronto along Montreal and a small mini-hub in Vancouver (Para.1).
The company is the largest full-service Canadas airline. Additionally, according to the Air Canada Review (2012), it is the largest provider of scheduled passenger services in the Canadian market, the Canada-U.S. trans-border market, and the international market to and from Canada (Para.2).
Coupled with the Canada Express, which is the regional partner of the company, the Air Canada Company extends its services to about 33 million passengers on a yearly basis. These passengers are destined to about 170 destinations across five continents. The company is also the founder of the Star Alliance. With regard to Air Canada (2011), Star Alliance is the worlds most comprehensive air transportation network (Para. 2).
The company managed to acquire a full privatization status in the year 1969. The trading of the company shares is done in the Toronto stock exchange, and is symbolized as AC-B.TO. Following the rapid expansion of the company since its establishment, it has been able to stand as one of the dominant airline companies preferred by many passengers with an employment capacity of 26000 people.
The major hub of the Air Canada Company is based in three key cities: Vancouver, Toronto, and Montreal. The extensive worldwide network of the company provides air travel services to 59 cities within Canada, 56 within the United States, and 63 cities in the Middle East, South America, Europe, Caribbean, Australia, Mexico, and Asia.
Coupled with the companys regional partners, the Air Canada Company controls an average of about 1530 flights every day besides giving services to about 1290 airports. One of the key recent endeavors of the company has been to initiate nonstop flights across its destinations.
For example, according to Air Canada (2012 (a)), in 2010, the Air Canada Company inaugurated a non-stop service between Calgary-Tokyo- Copenhagen, and Montreal- Brussels besides expanding several more non-stop services to several more U.S. destinations (Para. 3).
Furthermore, the company has also been embarking on strategic plans for expanding its service delivery to include more destinations within the areas where the company has been conducting flights across the globe.
For instance, according to Air Canada (2012 (a)), in 2011, the company added flights from Toronto to three Caribbean destinations (St.Kitts, Curacao, and St. Thomas) besides increasing services to Bogota, Santiago, Zurich, and Munich (Para. 8). The company also increased its services in Geneva and Brussels.
Governance
The theory of finance proclaims that companies that are traded publicly should put measures in place to ensure that the action of the shareholders and the market are aligned if such companies are to realize a superior performance. This stands out as the central goal of any firms corporate governance strategies.
Corporate governance is the set of actions and procedures used to ensure a company is managed so that shareholders receive a return on their investments in the company that is reasonable given the risks involved (Hennessey, 2004, p.4).
With this definition in mind, the central question is whether the Air Canada Company has managed to achieve the concerns of corporate governance as prescribed by the finance theory. The Air Canada Companys structures for corporate governance widely provide mechanisms for ensuring that the decisions taken by the management of the company are open to scrutiny.
This argument may be evidenced by several documents of the company claiming, the board represents shareholders interest by providing strategic directions to management besides reviewing the business of the Air Canada Company like its strategic business plans and major capital acquisitions (Hennessey, 2004, p.28).
In 1990s, many of the board members of the company were largely not related to the Canadian airline because they were members of a permanent committees board comprising five members. This meant that an opportunity existed to ensure that the management of the airline was held accountable for decisions leading to the underperformance of the company hence exposing the shareholder to risks.
Unfortunately, this never happened (Hennessey, 2004, p.29). Similar to the 1990 fiscal year, the 1998 fiscal year was equally a disappointing one.
According to Hennessey, (2004), these disappointments prompted the board of directors chairperson to write to the shareholders stating, Your board of directors is strongly supportive of the program formulated to bring about a balanced change to the airline to ensure a higher level of profitability (Hennessey, 2004, p.29).
Nevertheless, in this period, the company was characterized by market performance, operational, and financial performance challenges. Arguably, therefore, the governance arm of the company failed to ensure that the company remained under control through the inculcation of accountability and supervisory measures.
It is important to note that, during the late 1990s and early 2000, the company endeavored to become global as evidenced by its attempts of seeking an alliance with other key players of the airline industry such as the CDN.
This implies that the management would do anything within its capacity to ensure that the interests of the shareholders were reserved even if it meant seeking an amalgamation to eliminate competition. In particular, the company also sought to acquire cheap takeovers.
This was perhaps a crucial governance decision that has truncated to the incredible performance of the Air Canada Company in the recent days since, according to Spencer et al. (1998), partial takeovers are a cheap way for acquiring companies to gain either partial managerial control (p.429).
Even though it may be argued that the company has encountered a number of challenges including a failure to secure the market in the past, through corporate governance decisions, it is evident that the success of the company today would not have been possible. Additionally, the decisions have enabled the company to ensure that it has aligned both the market and the concerns of the shareholders so that they are harmonious.
This way, the company has become profitable hence increasing returns to the shareholders even if they may be optimal. Therefore, the goals of corporate governance have been realized by the Air Canada Company though having taken a long time to do so.
Ethics and Social Responsibility
Organizations set specific codes of ethics, which all employees deserve to abide by in the attempt to realize the organizational goals. Organizational goals are the road maps that lead the contributions of the employees of an organization to the desired objectives, values, and missions.
For the Air Canada Company, the mission is to connect the rest of the world with Canada while its vision is to create loyalty by deploying innovation and passion.
To realize the mission and vision, the company requires all its employees, through the code of ethics, to enhance teamwork by always ensuring that safety remains the first and the very last thing in all their tasks. Integrity is yet another requirement for all the workers of the Air Canada Company workforce.
This requirement is found ample in ensuring that accountability is fostered so that an operation environment characterized by trust is established and maintained in the attempt to make the company remain always profitable and valuable to the employees, shareholders, and other stakeholders.
The argument here is that, by prescribing integrity as one of the ample codes of ethics of the Air Canada Companys workers, the company attempts to reduce the risks of dishonesty and engagement in fraudulent activities, which in turn expose the interests of the shareholders to a threat.
Additionally, with reference to Air Canada (2012, (b)), the codes of conduct also stipulate that the companys employees are free to participate in the political process as individuals subject to applicable laws on their own (p.6).
This means that the code of ethics of the company hinders the employees, irrespective of their hierarchical position in the company, to deploy the assets of the company to fund any political party or candidate. In the context of the companys assets, all employees are required to ensure that all tangible and intangible assets of the company remain protected from willful damage, unauthorized access, loss, and even abuse.
Enshrined in the codes of ethics is also a requirement for holding the information of the company confidentially such as protecting intellectual property of the company, funding, and contracting matters of the company. Apart from ensuring that public firms create wealth for its owners (shareholders), the company is also indebted to dedicate a part of its gains to community-focused activities.
This implies that it is required to be socially corporate responsible. Corporate social responsibility (CSR) involves economic, legal, ethical, and discretionary expectations that the society has for the organizations at a given point in time (Carroll & Buchholtz, 2003, p. 36).
In the attempt to execute the obligation set out by the concerns of CSR, the Air Canada Company is dedicated to ensure that the environment is protected from emissions, pollution arising from improper wastes disposal, and or excessive energy.
Consequently, according to Air Canada (2012, b), the company has established the department for corporate safety to provide avenues through which employees can report instances of suspected violations of environmental laws or any events that may result to a discharge or emission of hazardous materials (p.18).
Another aspect of CSR requires organizations to focus on addressing the needs of the employees and other stakeholders such that no conflict takes place between them and the company. For the Air Canada Company, this includes prevention of acerbating violence against the employees, harassment, and discrimination coupled with protection of the employees personal information.
Additionally, as part of the CSR program, the Air Canada Company ensures that the employees are permitted to retain their personal information private. Apart from focusing on the interest of the employees, the company also channels a part of its efforts to serve the communitys interest.
In this perspective, Air Canada (2012, (b)) informs, The company is committed to providing a safe and healthy working environment for its employees to avoid adverse impacts and injury on the environment and the communities in which it does its businesses (p.24).
The concerns of the Air Canada Company in ensuring that the interests of the community within the area in which the company does businesses are taken care of are evidenced by the functions served by the Air Canada foundation. According to Air Canada (2012, (a)), Air Canada foundation supports charitable organizations with primary focus on children and youth in need (Para.6).
Essentially, the foundation is funded from the companys earnings and the Aeroplan miles that are contributed by customers to meet the expenses of a program meant to offer hospital transportation services to young people who are not able to provide themselves with a medical aid required within the communities where they dwell.
During instances of crisis, the foundation also seeks help from humanitarian organizations to expand its service capacity.
Organization
The Air Canada Company is organized in a hierarchical structure headed by a CEO. The CEO is the vision carrier of the company. This means that, in the Air Canada Company, the CEO is chiefly given the noble responsibility of designing goals coupled with making directions necessary for attainment of such goals.
These goals include making decisions on how the company will remain competitive by out-powering competitors operating within the line of business of the company.
However, in the execution of this noble role, the CEO is tied by the provisions of the corporate policy of the Air Canada Company, which, according to Air Canada (2012, (b)) make the company encourage competition and commitment while dealing with competitors in a respectful manner (p.20).
Consequently, the CEO must ensure that competitors are treated without bias since this would result to an anti-competitive behavior. The CEO also sits with other managerial staff to develop the corporate culture and values of the Air Canada Company.
The organizations structure for the Air Canada also provides and establishes the board of directors whose roles include overseeing the performance of the managerial staff including the CEO. Indeed, the CEO is accountable. He/she reports to the board of directors who represent the interest of the shareholders.
This means that they ensure that the management considers the interests of the shareholders besides giving them an incredible attention. This measure mitigates the management from serving its own interests as opposed to the interests of the owners of the Air Canada Company.
The board of directors is composed of seven directors and the chair of the board of directors. These directors are Roy Romanow, Michael Green, Joseph Leonard, Pierre Johnson, Bernard Attali, Vaq Sorensen, and Jean Marc Huot. The chair of the board of directors is Calin Rovinessu.
The company has also the position of CFO (Michael Rousseau) who reports to the CEO. Persons in charge of control, financial planning and analysis, and revenue management report to the CFO. The department of sales is organized into three sub-departments namely sales, customer service, and marketing.
The overall head of the department reports directly to the CEO. On the other hand, the departments of legal and human resources have only one sub-department each: international and regulatory affairs and employee relations respectively.
Other departments include COO, maintenance and engineering, network planning, cargo, ecommerce, industry and government affairs, and vacations department. The head of all these departments also reports directly to the CEO.
Planning
A growing organization such as the Air Canada Company requires a cute planning of the future expansion endeavors. The mandates of the planning department of the Air Canada Company include analysis of the future action plans so that they do not lead to exposing the organization to unnecessary risks.
In the planning process, a decision is made on the persons who are supposed to execute specific tasks by defining the resources that are required to execute these tasks. Therefore, the Air Canada planning department plans and analyzes the future necessary courses of action based on the available monetary and human resources.
The revelation forms the reason why the department of planning is also charged with the tasks of financial analysis since it is necessary for the planning process to balance the demand and supply constraints for the available resources at the disposal of the Air Canada Company.
At the Air Canada Company, planning is done in a number of steps. These include establishing objectives, planning premises, choosing between alternative actions to realize the objectives, formulating the various derivative plans, seeking corporation, and lastly conducting a plan appraisal.
The planning process is under the watch of the vice president in charge of financial planning and analysis with the inspiration of the visions derived by the CEO. However, this implies that other departments do not neither plan for their future courses of action nor dedicate this function to the department of financial planning and analysis.
The financial planning and analysis department is only charged with the major task of harmonizing the plans of other departments in making decisions on how resources are going to be allocated to the proposed plans by each department so that the resources are allocated optimally.
Leading
In the process of organizing resources coupled with people to ensure that goals of the Air Canada Company are realized, the management of the company is required to design measures for motivating, directing, and enhancing vertical and horizontal communication. These tasks are largely compliant with leading as a role of the management arm in any organization.
More interactively, leading refers to the management function that involves the managers efforts to simulate a high performance by employees including directing, motivating, and communicating with employees, individually and in groups (Anthonissen, 2008, p.67).
At the Air Canada Company, the main objective of leading the employees is enshrined in the need to make the employees look at issues and plans of the company from the context in which the managers look at them. For this purpose, hierarchical structures of management are established to enhance the supervision of employees so that they do not derail from the goals and visions of the company.
Unfortunately, there are challenges associated with leading at the Air Canada Company. For example, the CEO of the company announced that the employees of the airline needed to be motivated and empowered (Cowan, 2012, p.23).
Amid the financial challenges, the company had been experiencing prompting dwindling of the stock prices with workers of the company appearing as if they are only largely motivated to engage in strikes. This argument is evidenced by the last Junes strike of services and sales agents. The strike lasted for three days. It was brought to a standstill by the enactment of legislation for back to work.
Controlling
Among the functions of management is the organizational control. Controlling embraces monitoring employees activities, determining whether the organization is on target towards its goals, and making corrections as necessary (Anthonissen, 2008, p.81).
Consistent with this definition, at the Air Canada Company, controlling is done to ensure that all the plans developed and the leading effort put in place by the managers truncate into the actual realization of the plans as anticipated.
Important elements of control at the Air Canada Company include control of physical resources, financial and informational resources, and the evaluation of the program for rewarding the efforts of the employees. Ideally, at the Air Canada Company, controlling is considered an ongoing and a continuous process as opposed to being an intermittent process because all aspects of management at the company require some sort of controlling.
For instance, in the making of strategic plans to acquire new destinations, plans are developed based on the anticipated levels of resource commitment to hire new staff, buying of couriers, and marketing among other issues. Since these plans must be implemented in accordance with the available resources, controlling each phase of the plans is critical in ensuring that everything is done within the budgetary constraints.
On the other hand, while the managers of the company attempt to lead the employees towards the achievement of the organizational goals, they may choose to put incentive schemes in place to enhance the motivation of the employees. However, such schemes are only practical if they are within the constraints of financial resources available to the company.
This means that, whenever fluctuations in the market take place, revisions of the schemes are vital. In particular, at the Air Canada Company, the controlling function is not a task of one department. All departments must control the processes of execution of the tasks they are mandated to do in a manner that is directly congruent with the mission and vision of the Air Canada.
Conclusion
Established in 1937, the Air Canada has undergone an immense growth in terms of the employment capacity and the number of routes of operation. This growth has been realized amid hefty financial challenges.
Many criticisms have been raised by the shareholders on the capacity of the companys corporate governance to shield them from losses especially bearing in mind that, during the period of crisis, the company had been experiencing a decrement in stock prices. The company has also faced instances of employees work boycotts.
Due to reasons related to the companys financial position, the needs of these employees have always been addressed through the enactment of legislations for return to work without meeting their demands.
Amid these challenges, this case analysis has held that the company is indebted to ensure that the arm of corporate governance tracks undue circumstances that may lead to exposing the interests of the shareholders at risk. Leading, planning, and controlling functions of the Air Canada Company management have also been found as working consistently with the vision and mission of the company.
This inference is made amid the consideration of the fact that the leading function of the company encounters challenges especially in ensuring empowerment and motivation of the employees. Finally, the case analysis argues that the Air Canadas organization is essentially hierarchical with the CEO acting as the vision carrier.
However, the CEO is accountable to the board of directors headed by a chairperson. This board of directors represents the interests of the shareholders. It is mandated to ensure that the management does not serve to advantage itself while making organizational decisions.
Anthonissen, P. (2008). Crisis Communication: Practical PR Strategies for Reputation Management and Company Survival. London, UK: Kogan Page Limited.
Carroll, A., & Buchholtz, K. (2003).Business and Society: Ethics and Stakeholder Management. Australia: Thomson South-Western.
Cowan, J. (2012). Can Air Canada be saved? Canadian Business, 2(1), 23-34.
Hennessey, S. (2004). Corporate Governance Mechanisms in Action: The Case of Air Canada. Charlottetown, Canada: University Of Prince Edward Island.
Spencer, C., Akhigbe, A., & Madura, J. (1998). Impact of Partial Control on Policies Enacted by Partial Targets. Journal of Banking and Finance, 22(3), 425-445.
Air Canada is one of the largest airline companies in the world ranked at position fifteen. Skytrax ranked the company as the best airline in North America in 2010. Despite these achievements, Air Canada faces several challenges arising from its business environment, which are majorly economic conditions, government regulations, security and political challenges, competition, and natural weather conditions.
This paper provides a background of the challenges which face Air Canada, and a statement of the problems faced by the company. It discusses the objectives for the best solution to Air Canadas problems. It also provides a situational analysis of Air Canadas strengths, weaknesses, opportunities as well as threats by analysing all its internal and external business environments. It identifies possible solutions and evaluates each alternative based upon Air Canadas ability to work within the challenging airline industry and internal business environment.
Finally, it suggests the best possible solutions that can be adopted by Air Canada based on the facts presented in this case study. It discusses short-term, mid-term and long-term solutions which can be adopted by the company to overcome these challenges that it currently faces.
Background
Air Canada, which is ranked at the fifteenth position among the largest airline companies in the world, operates in a very challenging business environment. Despite these challenges, the company continues to dominate the domestic market where its main rival is WestJet. However, in 2004, the company was forced to use bankruptcy protection to handle its major financial problems after the 9/11 terrorist attacks caused the airline industry to experience a significant decline in the number of travellers.
This was just one of the shocks experienced in the airline industry as it has hard to deal with several political, economic and environmental challenges which include government regulations, such as tax laws as well as flight restrictions; economic conditions like fuel/food prices, competitions and recessions; security challenges; political conflicts; as well as, natural weather conditions such as snowstorms, volcanic ash among other weather conditions. All these factors make the airline industry very challenging since it is difficult to adopt efficient strategies as well as plans for the unanticipated events.
Statement of the problem
The main problem facing Air Canada is how to create and plan efficient strategies that would enable it to deal with the unexpected challenges such as recessions, increase in fuel prices, natural weather conditions and government regulations, in its business environment so as to avoid or mitigate losses.
Air Canada faces many challenges which include how to overcome the impacts of the global recession which made the company incur losses in millions of dollars; and how to deal with unevenly rising fuel costs without affecting the ticket prices and in turn the customers. Air Canada also faces the problem of how to maintain its competitiveness and increase its market share and position in the market, both locally and internationally.
Again, Air Canada is also faced with how to deal the high taxes that the Canadian government charges for airport rent, security charges, provincial as well as federal fuel excise taxes, and airport improvement fees. In addition, Air Canada is faced with how to deal with the new security challenges which have resulted from rising terrorist activities.
Statement of criteria
The objective of the solution to Air Canadas challenges should aim at addressing how to cut the cost of Air Canadas operations, how to offer products or fares that would make it more competitive and attract more customers, as well as, how to negotiate with the government to lower taxes and charges imposed on the airline. Again, the solutions should address how to deal with rising fuel costs which sometimes cause the ticket prices to go high and unaffordable to most customers. Rising fuel costs negatively affect air travel as it causes ticket prices to skyrocket, thus limiting the number of people who can afford the air travels. In addition, the solutions should also address how to deal with security challenges.
Situational analysis
Strengths
Air Canadas strength lies in its reputation in the market. It is ranked fifteenth among the largest airline companies in the world, and this gives it a competitive advantage over other smaller players in the domestic and international market. This allows it to dominate the domestic market, the Canadian market, even though there are several players in Canada. It was named the best airline company in North America in 2010 by Skytrax, independent research.
Air Canadas other strength lies on its adaptability. It was able to adapt to the global recession which rocked economies in 2008 through 2009. It adopted better marketing strategies which allowed it to put its finances under control. It was able to make new agreements with its suppliers as well as major credit providers, and this allowed it to reduce its losses during that period.
Again, its strength lies in its pricing strategy. Its differentiated pricing has enabled it to beat its main rival in the domestic market, WestJet. It introduced lower-priced Tango fares to enable it to compete effectively in the low-frill as well as budget travel segment. Its ability to partner with international companies and Jazz also boosts its competitive advantage in the airline industry as it allows it to cut costs.
Weakness
Air Canadas weakness lies in its inability to maintain profitability. The company acknowledges that it has not been able to develop efficient strategies as well as plans which could enable it to mitigate unexpected challenges in its operations. Despite having made new agreements with its suppliers as well as major credit providers, it still made a loss of $138 million in the first quarter of 2010.
Opportunities
Air Canada has several opportunities to exploit. First, the Canadian government newly negotiated deal with the European Union presents new opportunities to Air Canada to expand its operations. The new deal reduced restrictions and barriers to both EU airlines and Air Canada. It provides Air Canada with the opportunity to introduce more new direct flights in European Union member countries.
In addition, the partnership agreements and alliances which it has made with other international airliners provide it with excellent opportunities to expand its operations while reducing costs. Its partnerships with Lufthansa, United and Continental airlines in the Atlantic-Plus-Plus will enable it to compete in the Trans-Atlantic segment as it takes advantage of these companies established routes. Its involvement in the Star Alliance and partnership with Jazz also provides with an excellent opportunity to build its reputation and acquire more customers.
Threats
Extreme natural weather conditions present serious threats to Air Canada and the airline industry as a whole. The major threats include snowstorms, severe winds, volcanic ash, icy weather as well as severe thundershowers which cause delays and disruptions to air travels. In April 2010, Air Canada incurred losses of $20 million a day during the six-day period of the Eyjrfiallajokull volcano eruptions which covered large parts of the Northern European skies.
The high charges and taxes imposed on the airline industry by the Canadian government threaten Air Canadas profitability. The government chargers high fuel excise taxes, airport rents and improvement fees, as well as, higher security charges which make it difficult for the company to make profits.
Finally, the airline industry is also threatened by the rising security challenges, especially terrorist activities, flu pandemics as well as political conflicts between states and civil wars. These threaten the safety of its operations, assets and customers.
Ethical and Legal Issues Concerning West Jet Access to Air Canada’s Private Information
An unauthorized access to a computer involves infringing and reclaiming information, Seizing and varying computer resource devoid of permission from the other party. The act therefore is deemed illegal and unethical. West jet admits to covert access to Air Canada private information. Jaffrey Lafond was aware of possible prosecution and violation that will result in legal action.
Extent to Which Unauthorized Access of Competitor’s Information Is a Common Place
Access to competitor’s information is very common in the business world today and many such cases have occurred around the world. The internet is an espionage threat to any organization since, with the right technology, expertise and unethical desire to access competitor’s data; anything could happen to any organization. The major reasons for wanting to access competitor private information is access business strategic information for countering their competitors. However, there are a number of legally acceptable ways to access competitor’s information. This are: newspapers, trade fares, plant tours and playing the secret shopper where these organizations employees may disclose crucial information without knowing.
Air Canada’s Responsibility to West Jet Company Access to Its Private Information
Air Canada should accept some degree of responsibility over West Jet’s access to its systems for not being protective of their system. Information technology expert are dormant on their job, Steps were not taken to change or scrap Jeffrey Plafond’s number and personal code from the payroll system which was a threat to Air Canada. This was not prudent because, West jet’s access accessed Air Canada’s information excessively. If it was not for west jet’s whistle blower, it could have taken longer to catch the West Jet.
Measures to Be Instituted By Air Canada On Its Employees To Stop Unauthorized Access
People measures are steps taken to create awareness among employees on threats of unauthorized access. This includes;
Promoting high standard business code of ethics
The firm should encourage high moral and ethical Practices in relation to protection of unauthorized access of corporate information.
Password protocol
Implementing password, changing password regularly and making sure personal password remain personal.
Employees turnover management
Checking on security issues when employee leaves the organization to avoid threat of the messing the company in future.
Due care when using public or a friend computer
When using remote and public internet take care not to store password on hard drive or internet browser because they may be used by hackers.
Technology Measure to Impede Unauthorized Access
This is the process of acquiring and implementing technological product that beef up security against unauthorized access by Air Canada. The Examples include;
Update and Patching All Programs
There is no perfection in computer systems. Update and patching on a regular basis go a long way in ensuring protection against unauthorized access by malicious competitor.
Hardware and Software Firewalls
Hardware firewalls protects the connections by use of network while software firewalls prevent hackers access work stations and terminals.
Implementing the Anti-virus
Anti-Virus carries their own version of firewalls thus enhancing security to the system. Air Canada must acquire this software urgently in order enhance their security since, Spy wares protection programs counter and detect spy programs like screen scraper developed by West Jet.
This paper aims at contrasting two airlines, Westjet and Air Canada in terms of their financial performance and survival. The two airlines are based in Canada. Westjet is a low cost airline operating mainly within Canada and North America.
It was founded in 1996 and has since been able to acquire a fleet of 88 modern aircrafts “flying to over 70 destinations in Canada, the US, the Caribbean and Mexico” (Westjet, 2011). As at 31 December 2010, the firm had employed over 8000 workers.
Westjet is one of the most profitable airlines in North America besides being associated with the best customer services. Air Canada on the other hand is the largest full-service airline in Canada (Air Canada, 2011). It is the largest provider of passenger flights within Canada and from Canada to major destinations such as US.
It was founded in 1937 and has since achieved the status of “15th largest commercial airline globally” (Air Canada, 2011). As at 31 December 2010, the firm had employed 23200 workers. Currently, it serves 178 destinations directly and 1160 destinations in conjunction with its regional partners (Air Canada, 2011). The factors that affect the performance of these airlines are as follows.
Factors in Airline Business: PESTE Analysis
Political
Canada is one of the most politically stable countries in the world. The political stability has enabled the country to achieve rapid economic growth. This has led to high demand in the country’s aviation industry (Cotis, 2010, pp. 3-20).
Canada has strong political ties with most foreign countries thus enabling it to enjoy favorable terms of trade with them. Besides Canada is a member of major trade agreements and trading blocks such as NAFTA, Canada-Israel Free Trade Agreement and Canada-European Free Trade Association of Trade Agreement.
This has enabled Canadian airlines to join the markets operating under the trade agreements thus increasing their market shares (Clougherty, 2009, pp. 440-468).
Air Canada has particularly improved its profitability in the cargo flight business due to the increase in trade volume among NAFTA member countries. Currently, Canada is negotiating for more ‘free trade agreements’ with Asian countries and this will further increase demand for its airlines.
Economic
Canada has “the 9th largest economy in the world” (Cotis, 2010, pp. 3-20). Its economy has since recovered from the 2008/2009 global financial crisis. Currently, its economy is growing at a rate of 5.6% which has resulted into high economic activity and high disposable income among the citizens (Cotis, 2010, pp. 3-20).
This has led to high demand in its aviation industry. Besides, its low inflation rate of 1.6% as at 31st December 2010 has led a reduction in air ticket prices thus stimulating demand for flights (Cotis, 2010, pp. 3-20).
The airlines have been able to access cheap supplies such as petroleum due to the low inflation. This enables them to improve their competitiveness at international level through low prices. Robust economic growth in emerging economies in Asia and South America has also led to high demand for flights at international level.
Social
Canada has one of the wealthiest populations in the world. Canada’s GDP per capita by “purchasing power parity is $43100” (Cotis, 2010, pp. 3-20). Over 90% of its population lives above the poverty line (Cotis, 2010, pp. 3-20). Consequently, majority of Canadians especially those living in urban areas are able to afford flights.
Besides, the citizens are price sensitive and this explains the high pressure on prices in the aviation industry. Canadians are keen on service quality and this has prompted most airlines to focus on product differentiation (Wulung, 2008, pp. 178-185). Westjet in particular is distinguished in the market as the best provider of customer services.
Technology
Technology is the driving force in the aviation industry since it determines the ability of the airlines to meet safety standards, achieve innovation and product development. Both Westjet and Air Canada have invested in modern technology to differentiate their products.
For example Air Canada’s customers can book and confirm the status of their flights through their mobile phones (Air Canada, 2011). Both companies are using their websites for sales and marketing. Investments in modern aircrafts enable the firms to ensure the safety of their passengers. Besides, the modern aircrafts are efficient in fuel consumption thus lowering costs.
Environment
Air transportation is associated with air pollution due to the green house gases produced by aircrafts (Forsyth, 2010, pp. 204-255).
Consequently, the industry regulators and environmentalist have teamed up to ensure that airlines operate aircrafts that are mechanically sound in order to avoid pollution. Airlines normally pay for air pollution through emission fines or fees. They also actively engage in environmental protection programs. This results into high operating costs.
Legal
Legal factors refer to the rules used to regulate the Canadian aviation industry. The industry is highly regulated in order to promote fair competition and customers’ safety. Regulation focuses on the mechanical status of the aircrafts, routes to be served and ownership of airlines (Competition Bureau, 2010). The implementation of the Competition Act for instance, forced Air Canada to reduce its market share in order to reduce its dominance in the industry (Competition Bureau, 2010).
SWOT Analysis
Westjet Strengths
Westjet is associated with the following strengths. First, it is the best in the provision of customer services. For example, it was “named a J.D power house in 2011” (Westjet, 2011). Excellent customer services have enabled it to ensure customer loyalty.
Second, it has been able to maintain competitive prices. Consequently, it has been able to easily penetrate the market. Third, investment in modern aircrafts has enabled the firm to lower its expenditure on fuel.
Finally, it was “inducted into the corporate hall of fame in 2010 after being named one of Canada’s most admired corporate culture” (Westjet, 2011) for three consecutive years. This means that it has excellent management polices and this explains its robust economic performance.
Weaknesses
Westjet’s weaknesses are as follows. It has a relatively small market share as compared to Air Canada. It serves only 78 destinations as compared to the 1167 served by Air Canada. This limits its ability to realize high returns.
It also offers a limited number of products. It mainly concentrates on passenger flights, accommodation and car rental services (Westjet, 2011). Besides, it mainly operates in US, the Caribbean and Canada. Thus it is likely to be adversely affected in the vent of an economic crisis in the region it serves.
Opportunities
The opportunities available to Westjet include the following. First, the implementation of the Competition Act has led to elimination of monopolistic tendencies such as predator pricing in the industry. This gives it the opportunity to sell its products at optimal prices.
Second, Air Canada has given “42 peak hours slots at Toronto’s Passengers’ Airport” (Competition Bureau, 2010). Thus Westjet has the opportunity to use the slots forfeited by Air Canada to connect to East Canada. Finally, its partnerships with American airlines give it the opportunity to increase its route network by using its partners’ aircrafts to connect its passengers to destinations it does not serve (Westjet, 2011).
Threats
Westjet faces the following threats. First, Air Canada has always used its dominant position to prevent competition in the industry (Competition Bureau, 2010). Thus Westjet will have to depend on Competition Bureau’s ability to enforce fair competition in order to penetrate the market. Second, increase in oil prices has resulted into a reduction in the firm’s profits. Finally, restriction on airline ownership limits the firm’s ability to expand through partnerships with foreign airlines.
Air Canada
Strengths
Air Canada is associated with the following strengths. First, it has the largest market share of about 57% (Competition Bureau, 2010). This has enabled it to achieve high returns and profitability. Second, it offers a wide range of products which include car rental services, accommodation, cargo flights and specialized flights for sports organizations and private companies.
This has enabled it to increase its revenue and market share. Third, it has modern aircrafts with an aircraft age of 10.7 years (Air Canada, 2011). Besides, its aircrafts have the best entertainment and on-flight communication systems.
Consequently, it was voted the best airline by Skytrax in 2010. Finally, it enjoys economies of scale since it is a member of the Star Alliance. It connects its passengers to various destinations through airlines in the alliance at low costs.
Weaknesses
Air Canada’s weaknesses are as follows. It has not been able to maintain its market share following the implementation of the Competition Act. Its market share has since reduced from 70% in 2000 to 57% in 2010 (Competition Bureau, 2010).
As a network airline, it has been associated with customer dissatisfaction due to the inconveniences attributed to inefficiencies of airline alliances. Connecting passengers through Star Alliance’s airlines has always been characterized by flight delays, several stopovers and inconsistent baggage rules.
Opportunities
The opportunities available to Air Canada include the following. First, the world economy is already recovering from the 2008/2009 financial crisis (Franke and John, 2010, 19-26). Besides, emerging economies are realizing high economic growth.
These trends have led to high demand for flights at the international level. Thus Air Canada has the opportunity to increase its revenue by taking advantage of the high demand. Second, most domestic airlines in Canada have failed to expand their operations due to their poor financial performance.
Thus Air Canada has the opportunity to expand its operations by acquiring the underperforming airlines. Finally, deregulation at international level especially in Europe is an opportunity to Air Canada to join the deregulated markets hence increasing its market share (Morrell, 2008, pp. 61-67).
Threats
Air Canada faces the following threats. Firsts, fluctuations in oil prices have adversely affected its performance by increasing operating costs. Second, fluctuation in foreign exchange rates results into a reduction in its profitability.
For example, the strengthening of the Canadian dollar in 2010 resulted into high prices for Air Canada’s products at the international market thus lowering demand for its flights (Air Canada, 2011). Finally, with the implementation of the Competition Act, Air Canada will have to continue reducing its market share in order to enhance competition in the market. This will lower its profitability.
Analysis of Possible Future Trends
Factors likely to Influence Future Performance
First, technological advancement in aviation industry as well as information and communication industry will determine performance. Such technological advancements will influence operations such as ticketing, customer services and efficiency of aircrafts.
Second, oil prices will influence performance in future. Fuel costs form the greatest percentage of operation cost in aviation industry (Trethway, 2004, pp. 3-14). Thus if the prices of oil keeps rising, the demand for flights will reduce as operators pass the high oil prices to customers through high prices.
Third, economic performance both at domestic and international level will affect performance. Strong economic growth will ensure robust growth in the aviation industry. Finally regulation and competition will determine the performance of airlines (Daraban and Fournier, 2008, pp. 15-24). High competition and regulation is likely to reduce growth in the industry.
Actions to be taken by the Airlines
The following actions can be taken by the two airlines to overcome turbulent times in future. First, they can “enter into fuel hedging contracts” (Trethway, 2004, pp. 3-14) in order to reduce their vulnerability to fluctuations in oil prices.
Through such contracts, the firms will pay fixed fuel prices thus enabling them to control their fuel costs. Second, they can focus on maintaining competitive operating costs (Hazeldine, 2010, pp. 40-43). This can be achieved by acquiring modern aircrafts that are efficient in fuel consumption.
Third, Westjet can join an airline alliance while Air Canada can increase its participation in Star Alliance. This will enable them to increase their market share in future at low costs. Fourth, in order to overcome the effects of poor economic performance, the airlines can diversify their businesses by investing in other industries.
During the 2008/2009 global financial crisis, German’s Lufthansa survived since it was able to boost its passenger flight segment with revenue from its mining and real estate business segments (Hazeldine, 2010, pp. 40-43). Finally, they should focus on joining deregulated markets in order to pursue their expansion plans effectively.
Airline Product and Marketing Strategy
Marketing Strategy
Westjet’s marketing strategy focuses on maintaining low prices and providing excellent customer services. It charges low prices in order to penetrate the market and achieve its objective of being one of the top five largest airlines in Canada by 2016 (Westjet, 2011). It focuses of excellent customer services in order to ensure customer loyalty. This has been achieved by introducing new products and services such as non-stop flights and pre-reserved seating.
Air Canada’s marketing strategy focuses on product differentiation in order to maintain its dominant position in the market. This is being implemented as follows. First, the firm has introduced innovative pricing system which allows customers to “customize their tickets by paying only for services they wish to pay for” (Air Canada, 2011).
This leads to low prices and high customer satisfaction. Second, the firm is focusing on high service quality. It has since completed its purchase of new aircrafts and refurbishing its existing aircrafts. Its aircrafts are associated with comfort, memorable entertainment experiences and safety. This has enabled it to retain its existing customers.
Brand Equity
Air Canada has the highest brand equity in the industry due to its dominant market position. Through its high quality products, most customers identify with it as the best airline in the region (Air Canada, 2011). The high level of brand equity has been achieved through investing in product differentiation.
Westjet’s brand equity is relatively low as compared to Air Canada’s. Even though the firm is distinguished in the market by its low prices and excellent customer services, its brand equity has not improved due to the following reasons. First, it serves very few destinations and thus not used by many customers (Westjet, 2011). Second, it offers only a few services thus most customers find it inconvenient.
Marketing Channels
The airlines use similar marketing channels. The internet is the main marketing channel used by the airlines. They all have marketing websites through which customers can access product information, make enquiries and purchase tickets instantly.
They also use social networks to market their products. Air Canada has recently introduced marketing through mobile phones (Air Canada, 2011). The two airlines also post their adverts on both print and electronic media.
Competitors
At domestic level, Air Canada lacks intense competition especially in the full service segment of the industry. However, it competes with low cost airlines such as Canada 3000 and Westjet. At international level, it competes with major airlines such as Delta, Emirates and Lufthansa (Trethway, 2004, pp. 3-14). Westjet’s competitors in the low cost segment include Canjet, Royal and Canada 3000.
Frequent Flayer Program
Both airlines have frequent flyer programs. Westjet’s is referred to as frequent guest program (Westjet, 2011). The program allows Westjet’s customers who spend over $1500 dollars to earn ‘Westjet dollars’ which they can use to purchase Westjet tickets. The program has no restrictions on destinations. Air Canada’s is referred to as the rapider program (Air Canada, 2011). In this case, the airline’s customers can earn a minimum of 3000 miles and a maximum of 25,000 miles by flying with Air Canada regularly. However, the bonuses can only be used on limited routes such as Montreal, Toronto and Pearson.
Assessing of Success of Marketing Strategy
Passengers usually chose Westjet due to its low prices and unparalleled customer services in the industry. As discussed earlier, low prices and best customer services are the factors that differentiate Westjet. Thus these factors form its main selling point in the market. The firm’s marketing strategy led to an increase in load factor by 1.2 points to 79.9% in 2010 (Westjet, 2011).
Passengers normally chose Air Canada due to the wide range of products it offers and the high quality of its services. From earlier discussions, Air Canada is differentiated by its service quality and the wide variety of products it offers. Thus these are its main selling points. The marketing strategy enabled it to increase its load factor by 1point to 81.7% in 2010 (Air Canada, 2011).
Product Lifecycle
Airline products are at maturity stage due to the following reasons. First, there is high pressure on prices as competition increases (Trethway, 2004, pp. 3-14). Second, there is an increase in the number of firms joining the industry following the removal of entry barriers.
Third, firms are able to lower operating costs by joining airline alliances and forming regional partnerships (Trethway, 2004, pp. 3-14). Finally, the firms highly depend on product differentiation in order to increase or maintain their market shares.
Business Model
Low Cost Model
The low cost model is associated with low prices which help in increasing the sales volume, market share and profits (Graham, 2009, pp. 306-316). It is also associated with greater emphasis on efficiency in order to lower operating cost and ticket prices.
Finally it encourages fast turnaround time and full utilization of aircrafts (Graham, 2009, pp. 306-316). However, the flights are less comfortable as airlines cutback on the number of services they offer in order to reduce costs. This can lead to customer dissatisfaction. Besides, emphasis on cost reduction makes product differentiation difficult.
Full Service Model
The full service model is associated with high product quality which leads to customer satisfaction. The airlines using this model are able to offer a wide variety of services thus increasing their profits (Graham, 2009, pp. 306-316).
However, maintaining the high quality of services leads to high cost of flights which can reduce demand. These trends indicate that both models have merits and demerits and the choice of the airline depends on the customers’ preferences and financial capabilities. Thus airlines can adopt both of them to increase their competitiveness.
Financial Results
Westjet
In 2010, Westjet’s total revenue increased by 14.4% to $2.6 billion (Westjet, 2011). The firm’s operating margin also increased by 0.3 points to 9.5%. The firm’s net profit in 2010 was $136.7 million, representing a 39.3% increase from previous year’s results (Westjet, 2011).
Load factor improved by 1.2 points to 79.7%. The company’s “current asset over current liability ratio improved to 1.52” (Westjet, 2011) as compared to 1.48 in 2009. The debt-to-equity ratio was 1.39 representing a 28% improvement (Westjet, 2011).
In 2009, total revenue decreased by 10.5% to $2.3 billion (Westjet, 2011). The operating margin also dropped by 4 points to 6%. Net profit decreased by 45% to $98.2 million (Westjet, 2011). The firm’s load factor was 78%, representing a decrease of 1.4 points. “Current asset to current liability ratio” (Westjet, 2011) improved to 1.48 as compared to 2008’s 1.24. Adjusted dept-to-equity ratio also improved by 20.15 to 1.43 (Westjet, 2011).
In 2008, the firm’s total revenue increased by 19.9% to 42.5 billion (Westjet, 2011). However, operating margin dropped by 1.1 points to 10.0%. Net profit decreased by 7.6% to 178.1 million (Westjet, 2011). The diluted earnings per shared also decreased by 6.8%.
Air Canada
In 2010, total revenue increased by 11% to 10.7 billion (Air Canada, 2011). The firm’s net profit was $107 million as compared to a loss of 24 million realized in 2009 (Air Canada, 2011). Load factor improved by 1 point to 81.7% while its yield improved by 2.3 points (Air Canada, 2011).
In 2009, the firm realized 9.73 billion in total revenue which was 12% less than 2008’s total revenue (Air Canada, 2011). Consequently, the firm realized a loss of $24 million. The firm’s yield reduced to 7.6%, while the load factor reduced to 80.7% (Air Canada, 2011).
The above trends indicate that Westjet has been profitable for the last three years. Besides, it is more financially stable. Air Canada on the other hand was not able to withstand the effects of the 2008/2009 global financial crisis. This explains the huge losses it made in 2008 and 2009. Thus Westjet is performing better financially.
Conclusion and Recommendations
The SWOT analysis reveals that Westjet’s main strengths are its ability to maintain low prices and excellent customer services (Westjet, 2011). Its main weakness is that it has a small market share. The main opportunity available to it is the removal of anti-competition tendencies in the market while the greatest threat facing it is the high competition in the market.
Air Canada’s main strength is its large market share while its weakness is its inability to retain its market share (Air Canada, 2011). The greatest opportunity available to it is the rising demand for flights at the international market while its greatest threat is high regulation.
The main factors likely to affect the performance of the airlines in future include fuel costs, level of regulation and technological advancement. In order to remain profitable and competitive in the next twenty years, the airlines can adopt the following recommendations.
They should focus on fuel hedging and acquiring modern aircrafts that are efficient in fuel consumption (Trethway, 2004, pp. 3-14). Besides, they should expand into new markets as well as diversifying their businesses.
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Graham, M. 2009. Different model in different space or liberalization optimization? Comparative strategies among low-cost carriers. Journal of Transport Geography. 17(4), pp. 306-316.
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Trethway, M. 2004. Distortions of airline revenues: why the network airline business model is broken. Journal of Transport Management. 10(1), pp. 3-14.
Contrasting the Culture of these Two Organizations
Many passengers admire WestJet Airlines for its effective culture. The company encourages it employees to support the needs of every customer. WestJet accepts its mistakes in order to remain successful. The airline company pays legal bills to different individuals. The company’s culture supports charity events. Employees get checks twice per year. Passengers receive the best treatment at the company. The company also uses its positive culture to support the changing needs of its customers. The country’s aviation industry also supports this kind of culture. This approach has made WestJet successful. WestJet embraces new managerial changes in order to emerge successful.
Air Canada is no longer supporting its original culture. The managers do not respect their pilots and employees. The current workplace relationships do not promote the best practices. The company also lacks effective mechanisms to foster mutual respect or cooperation. Air Canada’s organizational culture is currently affecting the level of performance. Organizational culture is what supports the objectives of every company. The company’s culture is not in accordance with that of the industry. This culture is no longer adaptive thus affecting Air Canada’s performance.
Which is the better performer?
The culture of WestJet continues to support its business objectives. The company is currently attracting more customers and passengers. The company’s employees are satisfied with their working conditions. This approach continues to WestJet a leading performer in the industry.
Supporting My Conclusion
Air Canada does not support the needs of its employees and pilots. This development has affected the company’s culture. WestJet learns from its mistakes in order to emerge successful. The company gives donations thus promoting its corporate social responsibility. The practice has increased WestJet’s financial performance.
Relationship between Performance and Organizational Culture
The performance of a firm is directly proportional to its organizational structure and culture. WestJet’s positive culture has supported its performance. WestJet understands the diverse needs of its customers and employees. The strategy continues to support the company’s objectives. Air Canada no longer respects its stakeholders. The approach has reduced the level of morale at the company. This situation has affected Air Canada’s performance.
The COVID-19 pandemic has affected multiple industries and organizations, from large corporations to small businesses. However, airlines were arguable the most vulnerable to government restrictions due to the fact that protective measures implied limitations on traveling. Air Canada has been affected by COVID-19 on multiple levels. Multiple workers could not operate based on regular schedules, airlines were canceling flights due to government regulations, and authorities installed mandatory policies that were limiting potential travelers from purchasing flight tickets. In this memo, Air Canada will be examined in relation to the changes and impacts the quarantine has had on business processes and organizational structure. This memo illustrates a comparison of two provinces in regard to COVID-19 restrictions that have affected Air Canada both directly and indirectly. After the examination of the outcomes, recommendations will be highlighted in relation to cooperation with the government and solutions that can minimize adverse outcomes for the company.
COVID-19 Impact on Air Canada
Air Canada, as the largest airline in the country, has largely been affected by government restrictions aimed at ameliorating the spread of COVID-19. However, while the travel restrictions have affected the corporation directly, several other implementations have had an indirect impact on sales and profit. An example is a policy that first restricted direct flights from China to Canada and later expanded to all international flights except for Canadians seeking to travel back to their country (Zhao et al. 2020, 506). This certainly led to a reduction in profit, a change in schedule, inconsistencies in sales, and the reduction of stuff. On the other hand, the government restrictions correlating with bans on large gatherings, curfews, and the closing of businesses indirectly affected the company. Thus, individuals did not have the opportunity to travel to such occasions as weddings, birthdays, and family gatherings, which indirectly affected the company’s sales during the outbreak. As a result, Air Canada has been negatively affected by the changes linked to COVID-19 government restrictions on multiple levels, including human resources, schedules, profit, sales, schedules, and market stability.
Government Restrictions in Ontario vs. Quebec
Ontario and Quebec will be analyzed in regard to government restrictions affecting Air Canada. The two regions, according to researchers, have reportedly had the most COVID-19 cases nation-wise (Detsky and Bogoch 2020, 743). However, there are certain differences in how the provinces’ authorities have approached the pandemic and, as a result, impacted the aviation industry. These are connected to approaches to domestic flights as well as local restrictions that inadvertently affected Air Canada.
It is certain that both Ontario and Quebec responded to the health threat. However, researchers mention Quebec having a more strict approach and installing preventative regulations for a longer time (Dickson 2021). Thus, the government limited indoor and outdoor gatherings for a more extended period of time, which created a lack of flight sales for individuals previously traveling for family events. Moreover, domestic traveling had certain limitations, as illustrated in a 2020 report. Based on the regulations, Nunavik and James Bay were under restrictions, which implies that air travelers seeking to enter said regions would not purchase tickets from Air Canada (Destination Canada 2020). However, while only four Canadian airports were operating, one of them, namely the Montreal Airport, was in Quebec (Allin et al. 2021, 76). Thus, Air Canada was still operating, although with limited flights. Another airport that was still operating (Toronto) was in Ontario, where the restrictions were less strict.
Compared to Quebec, Ontario has limited domestic flight limitations based on a 2020 report. Namely, all domestic traveling restrictions were installed when flying to Ontario from another province (Destination Canada 2020). Thus, Air Canada could operate fully within national perimeters when it came to flights to Ontario, one of the two most popular regions. This was beneficial for the company’s sales and opportunities to maintain a semi-regular flight schedule. Moreover, while Ontario has installed restrictions and curfews during the riskiest timespans related to the pandemic, they have not been in place for as long as in Quebec (Dickson 2021). Based on the information, travelers were able to attend family gatherings, which implies those living in other provinces were investing in flight tickets and supporting Air Canada through their purchases.
Canadian Federalism
Canadian federalism can have both negative and positive effects on Air Canada, as exemplified during the COVID-19 pandemic. For example, reporters have mentioned that Quebec may have had a quicker recovery from the devastating effect of the lockdown if people had been more diligent about wearing masks. Yet, citizens did not entirely fulfill the order due to the individuals’ partial dismissal of national authorities (Dickson 2021). Moreover, federal restrictions were strict and extensive, which ultimately affected Air Canada in regard to its operations and sales. However, nation-wise preventative measures have, to a certain extent, reduced the negative impact of the pandemic, implying that industries were able to recover faster. Thus, one can interpret government-based policies from contrasting perspectives. Nonetheless, cooperating with the authorities is in everyone’s interest, which is why Air Canada is to be resilient to new implementations.
Recommendations in Cooperation with Governments
It is certain that the government regulations installed during the COVID-19 pandemic were designed to reduce national risks and prevent the spread of the virus. Hence, it is important for Air Canada to follow the policies. However, such changes create disturbances in business processes which are challenging to overcome. Researchers mention the importance of resilience in Canadian airlines during crisis situations when schedules are chaotic, flights are canceled, and workers are quarantined (Garrow and Lurkin 2021, 3). Thus, Air Canada is to formulate a crisis plan that minimizes such limitations. Moreover, cooperating with the government implies being ready for organizational changes in advance.
Authorities provide information on potential risks and data on the evolving nature of the problem, and companies consider them while planning for future strategies. Moreover, designated people are to cooperate with the governments of all provinces as local restrictions can also impact the airline. As a result, while crisis situations cannot always be prevented due to their link to the external environment, Air Canada will be resilient and prepare to act accordingly. Moreover, monitoring local government policies can help the analyst’s product sales, hence, investment or potential cost cuts. Restrictions such as prohibited gatherings lead to a reduction in purchases of airplane tickets. Analysts can examine this information, and the airline can cancel specific flights and minimize economic losses. Moreover, similar strategies have been applied when airports have been closed (Allin et al., 2021). Thus, the organization can address the further minimization of financial challenges through effective cooperation with local and national authorities.
It is recommended that the potential solutions mentioned prior are reviewed and implemented in the organizational strategy to address future challenges.
Air Canada faces serious competition both locally and internationally, and therefore the company has to adopt strategies which will enable it maintain its market leadership in Canada and market share internationally. Its major rival in the domestic market, Canada, is WestJet although there are other small players in the market. Air Canada would better achieve its local growth ambitions by partnering with WestJet.
Evaluation
Partnership between Air Canada and WestJet would create several benefits for both companies:
It would help eliminate unhealthy competition which could further hurt the industry as a whole and Air Canada in particular. Air Canada survives in the market by offering lower priced Tonga fares; however, this pricing strategy could also be exploited by WestJet to offer relatively lower prices, making the industry less profitable as other airline companies also adopt the strategy as they try to remain competitive. Thus, by partnering with WestJet, the two companies will be able to use their different preferential rates to attract more customers; and given Air Canada’s market leadership, it will make significant gains from this partnership.
Strong partnership between these two companies which are the major players in the Canadian airline market would help prevent new entrants.
Air Canada will lower its marketing and advertising costs as it will be able to use WestJet’s marketing and advertisement channels, thereby reducing its cost of operations.
Differentiated pricing/fares
The new agreement between the Canadian government and the European Union offers an excellent opportunity for Air Canada to establish more direct routes to European countries within the EU. This would certainly help the company lower the cost of its operations. Thus, it can use this opportunity to extend its differentiated pricing strategy to international flights.
Evaluation
Extending the differentiated pricing strategy to its international flights by making some of its products (fares) to be relatively cheaper will enable it attract more customers.
This strategy will be viable since the lower cost operations in direct flights will compensate for the lower priced tickets.
Differentiated pricing will help it build its reputation and enable it to compete favourably in the low-frill as well as budget travel segment in the international market.
Partnership with the Canadian government
Government regulations especially on taxes and charges imposed on airliners in Canada remain a major threat to Air Canada’s profitability. Therefore, partnering with the government by allowing it to own shares in the company’s stake should be explored.
Evaluation
Bringing the government on board as shareholders though not necessarily major shareholders would help the government better understand the impacts of the charges and taxes it imposes on the industry.
It would now be easier to lobby the government to review these charges and taxes so as to lower them or provide subsidies which will enable the company reduce the costs of its operations within the country and improve its profitability.
Partner with major security agencies
New security challenges especially the terrorism threats remain major challenge facing the airline industry and calls for advanced and more efficient strategies for dealing with the threat. Therefore partnering with major security agencies both locally and internationally with other security agencies like the FBI, CIA, and other major security agencies would help deal with security threats.
Evaluation
Partnering with security agencies will help Air Canada implement and improve its capacity to use advanced explosive detection equipment like backscatter X-ray machines as well as explosive trace-detection portal equipment to screen its passengers and their luggage.
Advanced security equipment will enable Air Canada’s security personnel detect any weapon hidden anywhere on the passenger whether underneath the clothes or even in shoes and luggage.
Partnering with major security agencies experienced in terrorist attacks prevention would enable the company improve detection of weapons and explosives before there are used on its assets, planes included.
Air Canada will be able to better to ensure the safety of its passengers and assets, and as a result, build its reputation in the industry.
Recommendations
The best and less costly strategy that Air Canada should implement is differentiated pricing strategy in international travels.
Why
This strategy will enable the company provide lower priced tickets in some international routes thereby building its reputation as it attracts more customers.
It will be cheap to implement given the opportunities for expanding its direct routes which have been made possible by the Canadian government and the European Union agreement. Direct routes are generally less costly as compared to connecting flights or routes.
Air Canada’s partnership with Lufthansa, Continental and United airlines allows it use its partners established routes, which makes the costs of its operations even cheaper, and therefore making it possible to provide lower priced fares in particular routes.
Where
Air Canada will adopt this strategy in its international flights to Europe.
When
Air Canada will implement this strategy after introducing more direct roots to European Union cities/countries.
How
Implementing this strategy will require that the company studies the costs of its operations in the newly created direct flights against those of its major competitors in the international market so as to find routes which lower priced fares can be best implemented to achieve competitive advantage.
Finally, Air Canada will adopt the best marketing strategies and advertisement channels to advertise its lower priced fares to reach the target demographics.
The aim of this paper is to conduct an analysis for the Air Canada Company that was established in 1937. It has been undergoing a rebranding process to improve its competitiveness amid the various evident operational challenges. The corporate governance arm of the company ensures that the interests of the shareholders are observed.
On the other hand, the codes of ethics ensure that the company’s workforce executes its tasks in a manner that is consistent with the Air Canada’s stipulated vision and mission. In the attempts to make sure that the company serves the interests of the communities in which it was established, the company subscribes to the environmental laws besides providing mechanisms of tracking derailment from the stipulation of the environmental laws.
As part of CSR, the company funds a hospital transportation program. The organization of the Air Canada Company is essentially hierarchical. The hierarchy provides the positions for CEO, CFO, and other managers who must work to realize functions such as leading, planning, and controlling, as discussed later in the paper.
Introduction
In November 2010, the CEO of the Air Canada Company made a public announcement that the company had managed to deal with various challenges that had afflicted it since 1990’s. Specifically, the CEO “told the business crowd the company that had more passengers, more revenue, and rapidly escalating stock prices” (Cowan, 2012, p.23).
Interpreted in the manner the CEO puts it, these were good signs that the company had made pragmatic strides towards overcoming the crisis it had been experiencing financially in 2009.
Such a success, as claimed by the CEO, is essentially impossible without proactive participation by the company’s management towards enhancing the measures of ensuring that the publicly traded company adhered to its mission and vision statement.
In particular, corporate governance must have played critical roles in ensuring that accountability by the management was enhanced. In this paper, corporate governance is considered as having the need to mitigate or foster the enactment of conflicts of interest, control, and prevention among stakeholders.
Generally, the mitigation of these conflicts of interest is more often accomplished through the enactment of various customs, laws, processes, policies, and institutions, which have enormous repercussions of afflicting the manner in which organizations are controlled.
From a different perspective, the paper also considers and discusses ethics within the Air Canada Company as one of the mechanisms of strategically focusing all the employees towards the realization of the goals of the company.
Ethics is used in the context of the paper to refer to the rules and regulations that are set by the Air Canada Company to ensure all employees of the organization operate in a manner that would not tarnish the name of the company.
In the realm of fostering the demand for a company to not only operate to create wealth for the shareholders, the paper argues that the Air Canada Company has managed to put a strong CSR program in place to help in conferring benefits to the communities within which the company is established.
Additionally, while attempting to conduct a thorough analysis of the Air Canada Company, the paper also pays an enormous attention to scrutinize how the company realizes its managerial functions of leading, controlling, and planning. However, a discussion of an overview of the company is done first to show how the company is organized.
Overview of Air Canada Company
The Air Canada Company was established in 1937 under the brand name Trans-Canada Airline (TCA). The corporate headquarters of the company are located in Montreal, Quebec. According to the Air Canada Review (2012), “Air Canada is the world’s 13th largest airlines by fleet size that has its largest hub in Toronto along Montreal and a small mini-hub in Vancouver” (Para.1).
The company is the largest full-service Canada’s airline. Additionally, according to the Air Canada Review (2012), it is “the largest provider of scheduled passenger services in the Canadian market, the Canada-U.S. trans-border market, and the international market to and from Canada” (Para.2).
Coupled with the Canada Express, which is the regional partner of the company, the Air Canada Company extends its services to about 33 million passengers on a yearly basis. These passengers are destined to about 170 destinations across five continents. The company is also the founder of the Star Alliance. With regard to Air Canada (2011), Star Alliance is “the world’s most comprehensive air transportation network” (Para. 2).
The company managed to acquire a full privatization status in the year 1969. The trading of the company shares is done in the Toronto stock exchange, and is symbolized as AC-B.TO. Following the rapid expansion of the company since its establishment, it has been able to stand as one of the dominant airline companies preferred by many passengers with an employment capacity of 26000 people.
The major hub of the Air Canada Company is based in three key cities: Vancouver, Toronto, and Montreal. The extensive worldwide network of the company provides air travel services to 59 cities within Canada, 56 within the United States, and 63 cities in the Middle East, South America, Europe, Caribbean, Australia, Mexico, and Asia.
Coupled with the company’s regional partners, the Air Canada Company controls an average of about 1530 flights every day besides giving services to about 1290 airports. One of the key recent endeavors of the company has been to initiate nonstop flights across its destinations.
For example, according to Air Canada (2012 (a)), “in 2010, the Air Canada Company inaugurated a non-stop service between Calgary-Tokyo- Copenhagen, and Montreal- Brussels besides expanding several more non-stop services to several more U.S. destinations” (Para. 3).
Furthermore, the company has also been embarking on strategic plans for expanding its service delivery to include more destinations within the areas where the company has been conducting flights across the globe.
For instance, according to Air Canada (2012 (a)), in 2011, the company added flights “from Toronto to three Caribbean destinations (St.Kitts, Curacao, and St. Thomas) besides increasing services to Bogota, Santiago, Zurich, and Munich” (Para. 8). The company also increased its services in Geneva and Brussels.
Governance
The theory of finance proclaims that companies that are traded publicly should put measures in place to ensure that the action of the shareholders and the market are aligned if such companies are to realize a superior performance. This stands out as the central goal of any firm’s corporate governance strategies.
Corporate governance is “the set of actions and procedures used to ensure a company is managed so that shareholders receive a return on their investments in the company that is reasonable given the risks involved” (Hennessey, 2004, p.4).
With this definition in mind, the central question is whether the Air Canada Company has managed to achieve the concerns of corporate governance as prescribed by the finance theory. The Air Canada Company’s structures for corporate governance widely provide mechanisms for ensuring that the decisions taken by the management of the company are open to scrutiny.
This argument may be evidenced by several documents of the company claiming, “the board represents shareholders’ interest by providing strategic directions to management besides reviewing the business of the Air Canada Company like its strategic business plans and major capital acquisitions” (Hennessey, 2004, p.28).
In 1990’s, many of the board members of the company were largely not related to the Canadian airline because they were members of a permanent committee’s board comprising five members. This meant that an opportunity existed to ensure that the management of the airline was held accountable for decisions leading to the underperformance of the company hence exposing the shareholder to risks.
Unfortunately, this never happened (Hennessey, 2004, p.29). Similar to the 1990 fiscal year, the 1998 fiscal year was equally a disappointing one.
According to Hennessey, (2004), these disappointments prompted the board of directors’ chairperson to write to the shareholders stating, “Your board of directors is strongly supportive of the program formulated to bring about a balanced change to the airline to ensure a higher level of profitability” (Hennessey, 2004, p.29).
Nevertheless, in this period, the company was characterized by market performance, operational, and financial performance challenges. Arguably, therefore, the governance arm of the company failed to ensure that the company remained under control through the inculcation of accountability and supervisory measures.
It is important to note that, during the late 1990’s and early 2000, the company endeavored to become global as evidenced by its attempts of seeking an alliance with other key players of the airline industry such as the CDN.
This implies that the management would do anything within its capacity to ensure that the interests of the shareholders were reserved even if it meant seeking an amalgamation to eliminate competition. In particular, the company also sought to acquire cheap takeovers.
This was perhaps a crucial governance decision that has truncated to the incredible performance of the Air Canada Company in the recent days since, according to Spencer et al. (1998), “partial takeovers are a cheap way for acquiring companies to gain either partial managerial control” (p.429).
Even though it may be argued that the company has encountered a number of challenges including a failure to secure the market in the past, through corporate governance decisions, it is evident that the success of the company today would not have been possible. Additionally, the decisions have enabled the company to ensure that it has aligned both the market and the concerns of the shareholders so that they are harmonious.
This way, the company has become profitable hence increasing returns to the shareholders even if they may be optimal. Therefore, the goals of corporate governance have been realized by the Air Canada Company though having taken a long time to do so.
Ethics and Social Responsibility
Organizations set specific codes of ethics, which all employees deserve to abide by in the attempt to realize the organizational goals. Organizational goals are the road maps that lead the contributions of the employees of an organization to the desired objectives, values, and missions.
For the Air Canada Company, the mission is to connect the rest of the world with Canada while its vision is to create loyalty by deploying innovation and passion.
To realize the mission and vision, the company requires all its employees, through the code of ethics, to enhance teamwork by always ensuring that safety remains the first and the very last thing in all their tasks. Integrity is yet another requirement for all the workers of the Air Canada Company workforce.
This requirement is found ample in ensuring that accountability is fostered so that an operation environment characterized by trust is established and maintained in the attempt to make the company remain always profitable and valuable to the employees, shareholders, and other stakeholders.
The argument here is that, by prescribing integrity as one of the ample codes of ethics of the Air Canada Company’s workers, the company attempts to reduce the risks of dishonesty and engagement in fraudulent activities, which in turn expose the interests of the shareholders to a threat.
Additionally, with reference to Air Canada (2012, (b)), the codes of conduct also stipulate that the “company’s employees are free to participate in the political process as individuals subject to applicable laws on their own” (p.6).
This means that the code of ethics of the company hinders the employees, irrespective of their hierarchical position in the company, to deploy the assets of the company to fund any political party or candidate. In the context of the company’s assets, all employees are required to ensure that all tangible and intangible assets of the company remain protected from willful damage, unauthorized access, loss, and even abuse.
Enshrined in the codes of ethics is also a requirement for holding the information of the company confidentially such as protecting intellectual property of the company, funding, and contracting matters of the company. Apart from ensuring that public firms create wealth for its owners (shareholders), the company is also indebted to dedicate a part of its gains to community-focused activities.
This implies that it is required to be socially corporate responsible. Corporate social responsibility (CSR) involves “economic, legal, ethical, and discretionary expectations that the society has for the organizations at a given point in time” (Carroll & Buchholtz, 2003, p. 36).
In the attempt to execute the obligation set out by the concerns of CSR, the Air Canada Company is dedicated to ensure that the environment is protected from emissions, pollution arising from improper wastes disposal, and or excessive energy.
Consequently, according to Air Canada (2012, b), the company has established the department for corporate safety to provide avenues through which employees can report instances of suspected “violations of environmental laws or any events that may result to a discharge or emission of hazardous materials” (p.18).
Another aspect of CSR requires organizations to focus on addressing the needs of the employees and other stakeholders such that no conflict takes place between them and the company. For the Air Canada Company, this includes prevention of acerbating violence against the employees, harassment, and discrimination coupled with protection of the employees’ personal information.
Additionally, as part of the CSR program, the Air Canada Company ensures that the employees are permitted to retain their personal information private. Apart from focusing on the interest of the employees, the company also channels a part of its efforts to serve the community’s interest.
In this perspective, Air Canada (2012, (b)) informs, “The company is committed to providing a safe and healthy working environment for its employees to avoid adverse impacts and injury on the environment and the communities in which it does its businesses” (p.24).
The concerns of the Air Canada Company in ensuring that the interests of the community within the area in which the company does businesses are taken care of are evidenced by the functions served by the Air Canada foundation. According to Air Canada (2012, (a)), Air Canada foundation “supports charitable organizations with primary focus on children and youth in need” (Para.6).
Essentially, the foundation is funded from the company’s earnings and the Aeroplan miles that are contributed by customers to meet the expenses of a program meant to offer hospital transportation services to young people who are not able to provide themselves with a medical aid required within the communities where they dwell.
During instances of crisis, the foundation also seeks help from humanitarian organizations to expand its service capacity.
Organization
The Air Canada Company is organized in a hierarchical structure headed by a CEO. The CEO is the vision carrier of the company. This means that, in the Air Canada Company, the CEO is chiefly given the noble responsibility of designing goals coupled with making directions necessary for attainment of such goals.
These goals include making decisions on how the company will remain competitive by out-powering competitors operating within the line of business of the company.
However, in the execution of this noble role, the CEO is tied by the provisions of the corporate policy of the Air Canada Company, which, according to Air Canada (2012, (b)) make “the company encourage competition and commitment while dealing with competitors in a respectful manner” (p.20).
Consequently, the CEO must ensure that competitors are treated without bias since this would result to an anti-competitive behavior. The CEO also sits with other managerial staff to develop the corporate culture and values of the Air Canada Company.
The organization’s structure for the Air Canada also provides and establishes the board of directors whose roles include overseeing the performance of the managerial staff including the CEO. Indeed, the CEO is accountable. He/she reports to the board of directors who represent the interest of the shareholders.
This means that they ensure that the management considers the interests of the shareholders besides giving them an incredible attention. This measure mitigates the management from serving its own interests as opposed to the interests of the owners of the Air Canada Company.
The board of directors is composed of seven directors and the chair of the board of directors. These directors are Roy Romanow, Michael Green, Joseph Leonard, Pierre Johnson, Bernard Attali, Vaq Sorensen, and Jean Marc Huot. The chair of the board of directors is Calin Rovinessu.
The company has also the position of CFO (Michael Rousseau) who reports to the CEO. Persons in charge of control, financial planning and analysis, and revenue management report to the CFO. The department of sales is organized into three sub-departments namely sales, customer service, and marketing.
The overall head of the department reports directly to the CEO. On the other hand, the departments of legal and human resources have only one sub-department each: international and regulatory affairs and employee relations respectively.
Other departments include COO, maintenance and engineering, network planning, cargo, ecommerce, industry and government affairs, and vacations department. The head of all these departments also reports directly to the CEO.
Planning
A growing organization such as the Air Canada Company requires a cute planning of the future expansion endeavors. The mandates of the planning department of the Air Canada Company include analysis of the future action plans so that they do not lead to exposing the organization to unnecessary risks.
In the planning process, a decision is made on the persons who are supposed to execute specific tasks by defining the resources that are required to execute these tasks. Therefore, the Air Canada planning department plans and analyzes the future necessary courses of action based on the available monetary and human resources.
The revelation forms the reason why the department of planning is also charged with the tasks of financial analysis since it is necessary for the planning process to balance the demand and supply constraints for the available resources at the disposal of the Air Canada Company.
At the Air Canada Company, planning is done in a number of steps. These include establishing objectives, planning premises, choosing between alternative actions to realize the objectives, formulating the various derivative plans, seeking corporation, and lastly conducting a plan appraisal.
The planning process is under the watch of the vice president in charge of financial planning and analysis with the inspiration of the visions derived by the CEO. However, this implies that other departments do not neither plan for their future courses of action nor dedicate this function to the department of financial planning and analysis.
The financial planning and analysis department is only charged with the major task of harmonizing the plans of other departments in making decisions on how resources are going to be allocated to the proposed plans by each department so that the resources are allocated optimally.
Leading
In the process of organizing resources coupled with people to ensure that goals of the Air Canada Company are realized, the management of the company is required to design measures for motivating, directing, and enhancing vertical and horizontal communication. These tasks are largely compliant with leading as a role of the management arm in any organization.
More interactively, leading refers to “the management function that involves the managers’ efforts to simulate a high performance by employees including directing, motivating, and communicating with employees, individually and in groups” (Anthonissen, 2008, p.67).
At the Air Canada Company, the main objective of leading the employees is enshrined in the need to make the employees look at issues and plans of the company from the context in which the managers look at them. For this purpose, hierarchical structures of management are established to enhance the supervision of employees so that they do not derail from the goals and visions of the company.
Unfortunately, there are challenges associated with leading at the Air Canada Company. For example, the CEO of the company announced that the employees of the airline needed to be motivated and empowered (Cowan, 2012, p.23).
Amid the financial challenges, the company had been experiencing prompting dwindling of the stock prices with workers of the company appearing as if they are only largely motivated to engage in strikes. This argument is evidenced by the last June’s strike of services and sales agents. The strike lasted for three days. It was brought to a standstill by the enactment of legislation for back to work.
Controlling
Among the functions of management is the organizational control. Controlling embraces “monitoring employees’ activities, determining whether the organization is on target towards its goals, and making corrections as necessary” (Anthonissen, 2008, p.81).
Consistent with this definition, at the Air Canada Company, controlling is done to ensure that all the plans developed and the leading effort put in place by the managers truncate into the actual realization of the plans as anticipated.
Important elements of control at the Air Canada Company include control of physical resources, financial and informational resources, and the evaluation of the program for rewarding the efforts of the employees. Ideally, at the Air Canada Company, controlling is considered an ongoing and a continuous process as opposed to being an intermittent process because all aspects of management at the company require some sort of controlling.
For instance, in the making of strategic plans to acquire new destinations, plans are developed based on the anticipated levels of resource commitment to hire new staff, buying of couriers, and marketing among other issues. Since these plans must be implemented in accordance with the available resources, controlling each phase of the plans is critical in ensuring that everything is done within the budgetary constraints.
On the other hand, while the managers of the company attempt to lead the employees towards the achievement of the organizational goals, they may choose to put incentive schemes in place to enhance the motivation of the employees. However, such schemes are only practical if they are within the constraints of financial resources available to the company.
This means that, whenever fluctuations in the market take place, revisions of the schemes are vital. In particular, at the Air Canada Company, the controlling function is not a task of one department. All departments must control the processes of execution of the tasks they are mandated to do in a manner that is directly congruent with the mission and vision of the Air Canada.
Conclusion
Established in 1937, the Air Canada has undergone an immense growth in terms of the employment capacity and the number of routes of operation. This growth has been realized amid hefty financial challenges.
Many criticisms have been raised by the shareholders on the capacity of the company’s corporate governance to shield them from losses especially bearing in mind that, during the period of crisis, the company had been experiencing a decrement in stock prices. The company has also faced instances of employees’ work boycotts.
Due to reasons related to the company’s financial position, the needs of these employees have always been addressed through the enactment of legislations for return to work without meeting their demands.
Amid these challenges, this case analysis has held that the company is indebted to ensure that the arm of corporate governance tracks undue circumstances that may lead to exposing the interests of the shareholders at risk. Leading, planning, and controlling functions of the Air Canada Company management have also been found as working consistently with the vision and mission of the company.
This inference is made amid the consideration of the fact that the leading function of the company encounters challenges especially in ensuring empowerment and motivation of the employees. Finally, the case analysis argues that the Air Canada’s organization is essentially hierarchical with the CEO acting as the vision carrier.
However, the CEO is accountable to the board of directors headed by a chairperson. This board of directors represents the interests of the shareholders. It is mandated to ensure that the management does not serve to advantage itself while making organizational decisions.
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Cowan, J. (2012). Can Air Canada be saved? Canadian Business, 2(1), 23-34.
Hennessey, S. (2004). Corporate Governance Mechanisms in Action: The Case of Air Canada. Charlottetown, Canada: University Of Prince Edward Island.
Spencer, C., Akhigbe, A., & Madura, J. (1998). Impact of Partial Control on Policies Enacted by Partial Targets. Journal of Banking and Finance, 22(3), 425-445.