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Introduction
Over the years, the airline industry has experienced massive inventions concerning the design, construction and operation of aircrafts (Doganis, 2002). The report analyzes the external environments, customer base as well the financial performance indicators of Delta Airlines as the industry leader, Emirates Airlines as an emerging company and Kingfisher Airlines as the firm at risk.
Justification for selection of the firms
The number of scheduled passengers, fleet size and the number of destinations served are critical for the selection of the firms. In fact, Delta Airlines is the leading company in the industry due to higher numbers of passengers, amplified size of fleet as well as ever-increasing number of destinations served. On the other hand, Emirates Airlines continue to exhibit a steady expansion in global operations thereby emerging as a critical player in the industry (Sundaresan, 2013). On the other hand, the operations of Kingfisher Airlines face termination due to continuous financial challenges as well as the suspension of its flying license. The macro-environment will be examined though the application of PEST analysis.
Delta Airlines
The Georgia headquartered firm commenced operations in 1929.
Political
The airline enjoys political stability particularly at the regional market. Further, nations where the airline operates encourage trade through agreements thereby setting favorable political stage for the airline’s operations within the region and beyond.
Economic
The firm serves over 240 destinations worldwide and approximately 730 fleets, which form significant sources of revenue. In addition, most destinations in the region are experiencing expansion in economic growth thereby augmenting the firm’s revenues.
Social
The airline has highly skilled employees that infrequently claim for higher wages. The decreased cost in terms of wages falls within the reduced-cost strategy of the airline and is significant in increasing international competitiveness (Sundaresan, 2013).
Technological
The firm uses technology to gain competitive advantage over other firms. For instance, the firm applies online ticketing, research and development activities, which are critical areas that enhance the firm’s success.
Financial performance and customer base
The firm’s assets, revenue and operating income amount to over $44, $36 and $2 billion respectively. Besides, the firm serves over 250 destinations worldwide
Emirates Airlines
The firm was established in 1985 in the United Arabs Emirates. The major goal of the firm is to provide global air connections and be a leader in the airline industry. External environment
Political
The airline enjoys political stability particularly at the regional market. Most Asian countries where the airline operates support trade through concords that have set complimentary political stage for the airline’s operations within the expanse and afar. In addition, the UAE have also signed trade agreements with other countries outside the region including US and most of the European countries.
Economic
The firm majorly operates in the regions including Asia pacific and the Middle East, which have experienced an incredible economic growth in the last decade. Most countries in the region are experiencing expansion in economic growth, which has a positive influence in the overall income of the firm.
Social
The airline has highly experienced human resources that rarely demand for higher wages. The reduced cost in terms of wages falls within the reduced-cost strategy of the airline and is significant in increasing the global competitiveness.
Technological
The firm uses technology to gain competitive advantage over other airlines. In fact, most of the services are provided at the clients’ convenience through the application of technology. The advancements in technology have brought about new opportunities, increased customer base as well as rapid expansion into new markets.
Financial performance
The company’s financial performance has improved over the years despite the 2008/2009 financial crisis and weather drawbacks experienced in Western European markets. For instance, the growth in revenue in 2011 was 26% while the total revenue in 2012 was 44% representing 15.6 billion increases in total revenue. The increases indicate the growth in gross, operating and net margins of the firm. The growth in the net profit margin was up by 1.8%, which is an increase from 8.1% to 9.9% from the previous year. The increase in the profit margins indicates the financial strength as well as capabilities of the firm.
Customer base
The firm’s customer base is majorly derived from the Asia pacific and the Middle East regions, which have seen a tremendous economic growth in the last decade.
Kingfisher Airlines
The firm was founded in 2003 and began operations in 2005. Nevertheless, the firm ceased operations and suspended flights in 2012 due to persistent losses and financial crises. Additionally, firm’s flying license was revoked in 2013 jeopardizing its operations.
Political
The firm’s failure to respond to concerns of Indian regulators caused the suspension of the firm’s flying license thereby jeopardizing operations.
Economic
The airline struggles with financial crises ranging from high debts to failure to pay dues. As such, the Mumbai Income Tax Department (MITD) has frozen the firm’s bank accounts. The scraping of the firm’s worldwide flying liberties as well as national slots affects proceeds and smooth operations of the firm.
Social
The firm’s flight accident that occurred at Chhatrapati Shivaji Airport was blamed on pilot error. As such, many clients abandoned boarding the firm’s flights.
Technological
The accumulation of high debts by the firm hinders the attainment of decisions relating to research and development activities as well as automation and innovation.
Financial performance
Since the formation of the firm, huge losses have been recorded. For example, the firm reported losses of about a billion US dollars in 2012. In addition, the airline owes the service tax department over $10.5 million.
Customer base
Kingfisher Airlines’ customer base is mainly drawn from India where it serves over twenty local destinations. The firm also serves London.
Conclusion
The number of individuals using air transport has increased tremendously. The reason is that the utilization of air travel has revolutionized the way individuals conduct daily activities. For instance, people are nowadays capable of travelling to remote and far destinations within the shortest time possible (Taye, 2006). Transportation of business travelers as well as passengers is the major source of revenue for the airline companies in the industry.
References
Doganis, R 2002, Flying off course: the economics of international airlines, Routledge, New York. Web.
Sundaresan, S 2013, “Competitive Strategy,” EWM, vol.1 no.1, pp.1-7. Web.
Taye, T 2006, “The view from Dubai: international and industry affairs Emirates Airlines,” Harvard Business Review, vol.4 no.2, pp.87-94. Web.
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