Air Canada
1. Discuss briefly some challenges airline industry has faced over the past few decades September 11 attack on the World Trade Center in 2001 has a negative effect on the airline industry for two years. When it started to get better in 2003, the airline operations cost were high. In addition, the fuel price went up because the crude oil that makes the jet fuel had risen from $27 a barrel (in 2000) to $133 in 2008. Also, the landing fees went up because of the increase in the air traffic and the airport terminals. Fuel prices went down in the financial crises 2008- 2009 but the passenger air travel had declined as well by 5.4% in Canada.
2. Describe airline industry’s strategies to address these challenges?
Consolidation is the primary strategy that the airline used to address these challenges. In addition to that, global expansion is an important strategy as well because international flights are accounted for 45% of all their revenues in the U.S. And for the airline that don’t consolidate they joined code sharing alliances.
3. Discuss briefly Air Canada’s evolvement over the past 10 years
In 2001 it acquired its largest competitor (Canadian Airline) and became the eighth largest airline. However, the merging caused problems of having two systems and different approaches and that caused the customer service to be bad. That led Air Canada to file for creditor protection in 2003. Air Canada received $850 million from Deutsche Bank as support and protection from going bankrupt under a condition of a total of $1.3 billion reduction. Air Canada focused on decreasing their costs and the following three years they started to get an operating income but they lost it during the financial crisis in 2008 and 2009. After that Air Canada just focused on cutting costs significantly and they also focused on customer service and expanding its international operations, and their financial results was getting better in 2010.
4. Identify and describe the relevant
2. Describe airline industry’s strategies to address these challenges?
Consolidation is the primary strategy that the airline used to address these challenges. In addition to that, global expansion is an important strategy as well because international flights are accounted for 45% of all their revenues in the U.S. And for the airline that don’t consolidate they joined code sharing alliances.
3. Discuss briefly Air Canada’s evolvement over the past 10 years
In 2001 it acquired its largest competitor (Canadian Airline) and became the eighth largest airline. However, the merging caused problems of having two systems and different approaches and that caused the customer service to be bad. That led Air Canada to file for creditor protection in 2003. Air Canada received $850 million from Deutsche Bank as support and protection from going bankrupt under a condition of a total of $1.3 billion reduction. Air Canada focused on decreasing their costs and the following three years they started to get an operating income but they lost it during the financial crisis in 2008 and 2009. After that Air Canada just focused on cutting costs significantly and they also focused on customer service and expanding its international operations, and their financial results was getting better in 2010.
4. Identify and describe the relevant