Describe about the Report on Strategic Management Principles and Practices of the Caribbean airlines at Trinidad and Tobago?
The report is based on the Caribbean airlines at Trinidad and Tobago. It provides us information about the strategic management of the organization. The report identifies three or four management challenges. It also provides the measures to address those identified challenges with the application of useful theories. Lastly, the report ends with a vivid conclusion and recommendation.
The report has been created with an emphasis upon the Caribbean airlines at Trinidad and Tobago. It provides us information about the strategic management of the organization. The report identifies three or four management challenges. It also provides the measures to address those identified challenges with the application of useful theories. There are other important information that are provided in the report. Finally the report ends with a vivid conclusion and recommendations.
In and around the Caribbean region, transport through airline is quite essential for transportation of passengers as well as freight. The airline industry includes airports as well as ground facilities including the airplane and air control system. Despite the fact that the airline industry is operative only across small economies of island, it is said to offer key contribution of economic as well as social relation amidst countries, people and culture. These relations significantly offer employment by enacting as a catalyst which increases efficiency of business and that of productivity as the accessibility towards suppliers as well as customers is made more convenient.
The Caribbean Airlines that operate in the Caribbean region is considered the flag carrier as well as national airline of Trinidad and Tobago. It operates both in Caribbean and Air Jamaica brands at a same time. The airline is even a flag carrier to Jamaica with governmental stake of 16% in the airline ownership (Abdelghany and Abdelghany, 2007). Despite the fact that the airline industry is operative only across small economies of island, it is said to offer key contribution of economic as well as social relation amidst countries, people and culture.
The company in association with the Caribbean Star is regarded as the largest airlines in the region. These two have been competing with each other since a very long time. There has been a proposal for merging up with LIAT that would increase the market share of the company as well as its competitive advantages (Semercioz and Kocer, 2004).
Corporate Strategy:
The Caribbean airline industry has faced much share of bankruptcy since its establishment in 1974. The airline industry remains still as a government owned firm that is what several critics relate to the situation of financial crisis. While in one hand, all other airlines around the world are adopting the path of privatization, this airline is only partially privatized to different governments with the Barbados, being the largest shareholders (Albers, Koch and Ruff, 2005). This situation is quite critical as Barbados has its personal airline named REDjet that they wish to operate at the same region.
The airline industry is now facing some issues that were previously considered to be impossible – to get into complete privatization. For acquiring this objective, the Antigua airline had privatized only its part of ownership but yet its operations are not harmonized. The bankruptcy issue of the firm has been dealt with multiple changes such as rescheduling payment system with third party creditors, developing new business model, expanding from 11 to 13 Dash 8, appointing a new CEO, developing new commercial department, and eliminating city ticketing offices along with other cost-reduction measures (Benady, 2009).
The company in association with the Caribbean Star is regarded as the largest airlines in the region. These two have been competing with each other since a very long time. There has been a proposal for merging up with LIAT that would increase the market share of the company as well as its competitive advantages. Right now, the route networks for the merger are under discussion d as of now all flights are operated under the name of LIAT flights (Bowen, 2002). This imparted a greater foundation to the LIAT airline. The Caribbean airline must consider getting privatized. In the recent situation, majority of the most successful airlines are owned privately. This concept of privatization permits overseas investment by means of strategic alliances. This must anyway be restricted for avoiding exposure of the national tourism industry.
Having faced the bumpy ride where the company suffered from acute bankruptcy, there arose the need for the firm to get upon the track as well as settle every debt for minimizing its expenses (US airlines try biofuels, 2012). It was reflected during the global recession effects of 2007 that witnessed the firm planning a merger with the Caribbean Star which used to be its closest competitor. On other hand, the firm has constantly reduced its cost by removing city ticketing offices as well as other cost reduction strategies to pursue its competitive advantage (Chao and Kao, 2015). This approach along with some other mergers has given a strong foundation to the company with increased number of scheduled destinations.
No business is completely free of competition. The reason is that it draws customers and the lesser a firm places its products, the more is the gain by customers. But, the airline industry is not regarding price, rather how effective strategies have been leveraged into the services.
The airline industry is now facing some issues that were previously considered to be impossible – to get into complete privatization. For acquiring this objective, the Antigua airline had privatized only its part of ownership but yet its operations are not harmonized. The airline operational in Jamaica have been hit quite hard with increased competition upon the routes as well as rising prices of fuel (Lamberg, Savage and Pajunen, 2003). The general manager of the airline, Clive Forbes, has agreed that the entity is attempting to remain in a viable state of mind. The company has been facing difficult environment as well as competitive pressure. It continuously fights for acquiring market share, with given conditions of rise in fuel price, competitive nature of routes outside Jamaica, etc.
The only long-haul destination of Caribbean airline from Port of Spain to UK is placed on an uneven ground as depicted in one of the publications of the government of Trinidad and Tobago stating that the route to London has not been that profitable. Air Jamaica, purchased by Caribbean in 2012 had been losing several million services and gradually dropped the route.
The Caribbean airline is faced with intense competition from North America routes since JetBlue had launched flights from Spain to Fort Lauderdale (Lawton, Rajwani and O’Kane, 2011). Before the launch of JetBlue, the airline industry of Caribbean enjoyed a monopoly upon this route. The prices of the tickets had been lowering significantly. The launch of JetBlue in the similar route has resulted in the tough competition whereby the monopoly route of Caribbean has been captured by a market that has remarkable presence and service offering at low price.
The major owner of Caribbean is the government of Trinidad and Tobago, with a minor stake of Jamaican government in the carrier industry. Acquiring of Air Jamaica by Caribbean was of no success factor. The recent case of failure has been that of the protests of the pilots from carriers for not receiving incentives owed to them (Lazzarini, 2007). There has been another report saying that the government of Trinidad and Tobago would be merging with the government of Bahamas. Owing to the history of merger track record, it would not be a good idea to accompany another such merging. There can be situation of political as well as commercial complexity that may lead to new problems (Johnson, et al., 2014).
The Caribbean airline has been facing several challenges on every front – network, financial aspects, and labor factors. Almost four years later of the acquisition of Air Jamaica, the developed scale by the two carriers that could have imparted some stability has actually make it a reality. This was basically due to the illogical decisions made by the previous managerial teams of Caribbean airline (Mallikarjun, 2015). Under the control of a different management it was not effectively decided upon to place the airline upon a path of stability without the impact of a government which still aspires to be in the forefront. The dreams have been shattered. Now, at the present situation, the owners of the Caribbean airlines need to emphasize their focus upon the market realities which the airline has been facing – incurring loss through long haul flights, increased pressure upon the core routes towards North America.
Other challenges include economic sustainability as well as efficiency. Increased economic integration demands airlift, capacity issues, route to effect positively upon CARICOM nations trade as well as tourism. Some regional governments have been criticizing the government o Trinidad and Tobago to apply unfair subsidy towards Caribbean airlines that violate the rules of the trade (Mudde and Sopariwala, n.d.).
Admitting to lack of effective communication, the Caribbean airline has been seeking for mending relationships as well as winning back the travelers of Air Jamaica. Quality of services and lack of effective management have been leading to the downfall of the airline industry. Passengers have been complaining about counter personnel at the airport (Palese et al., 2012). However, the customers prefer travelling by the Caribbean airline because of the one unchanged factor that they possess is the free two=piece luggage policy. It is also the only airline that provides senior as well as child discount. Now, at the present situation, the owners of the Caribbean airlines need to emphasize their focus upon the market realities which the airline has been facing – incurring loss through long haul flights, increased pressure upon the core routes towards North America (Pierson and Sterman, 2013).
The government plays a key role here. The introduction of an innovative air traffic system is effective in maintenance of increased operational levels. Improvements in the infrastructure have led to the speeding up of the implementation of strategic plans. Developments in technology would be beneficial for leading to joint efforts. Greater cooperation as well as transparency amidst all stakeholders can be effective measure.
Conclusion:
It has been identified from the report that the company has been suffering from various problems associated with transportation within the region. It is also said to be incurring losses due to the ownership of the government. Most of the passengers and global customers complain about the poor services offered by the airline industry. Besides, other issues are lost luggage, poor customer services, etc. The Company should have also proceeded with alliances with other international airlines.
The option of getting into alliance with Caribbean Star is lucrative, with consideration of further alliances to be even more beneficial. This would impact upon economic benefits owing to productivity, enhanced customer services that impart competitive advantage, reduction of cost resulting from lounge facilities share, code and terminal share amidst others. Alliance would even enable the firm to penetrate new markets that were previously restricted for other local airlines (Rajasekar and Fouts, 2009). The Caribbean airline must consider getting privatized. In the recent situation, majority of the most successful airlines are owned privately. This concept of privatization permits overseas investment by means of strategic alliances. This must anyway be restricted for avoiding exposure of the national tourism industry (Schermerhorn, 2000). Some issues in the airline transport of the specific region involve market invasion by foreign airlines that are threatening. The company must consider invading the international market by means of alliance or by itself (Johnson, et al., 2014). The Company must also evaluate its performance each year. Ineffective leadership has resulted in the issues of bankruptcy as well as spoilt images of the firm. This has resulted in the series of failure in revenue growth as well as profitability and lack of competitive sustainability.
References
Abdelghany, A. and Abdelghany, K. (2007). Evaluating airlines ticket distribution strategies: a simulation-based approach. International Journal of Revenue Management, 1(3), p.231.
Albers, S., Koch, B. and Ruff, C. (2005). Strategic alliances between airlines and airports—theoretical assessment and practical evidence. Journal of Air Transport Management, 11(2), pp.49-58.
Benady, D. (2009). Trouble in the air for Virgin (airlines). Strategic Direction, 25(3).
Bowen, J. (2002). Network Change, Deregulation, and Access in the Global Airline Industry*.Economic Geography, 78(4), pp.425-439.
Chao, C. and Kao, K. (2015). Selection of strategic cargo alliance by airlines. Journal of Air Transport Management, 43, pp.29-36.
Lamberg, J., Savage, G. and Pajunen, K. (2003). Strategic stakeholder perspective to ESOP negotiations: the case of United Airlines. Management Decision, 41(4), pp.383-393.
Lawton, T., Rajwani, T. and O’Kane, C. (2011). Strategic reorientation and business turnaround: the case of global legacy airlines. Journal of Strategy and Mgt, 4(3), pp.215-237.
Lazzarini, S. (2007). The impact of membership in competing alliance constellations: Evidence on the operational performance of global airlines. Strat. Mgmt. J., 28(4), pp.345-367.
Mallikarjun, S. (2015). Efficiency of US airlines: A strategic operating model. Journal of Air Transport Management, 43, pp.46-56.
Mudde, P. and Sopariwala, P. (n.d.). Relative Strategic Variance Analysis: The Case of American Airlines. SSRN Journal.
Palese, A., Colognese, S., Pellicciari, C. and Mecugni, D. (2012). Implementation Strategies of Measurement Instruments and Their Validity as Adopted in Italian Hospital Nursing Practice: An Italian Cross-Sectional Study. International Journal of Nursing Knowledge, 23(2), pp.75-85.
Pierson, K. and Sterman, J. (2013). Cyclical dynamics of airline industry earnings. System Dynamics Review, 29(3), pp.129-156.
Rajasekar, J. and Fouts, P. (2009). Strategic alliances as a competitive strategy. International Journal of Commerce and Management, 19(2), pp.93-114.
Schermerhorn, J. (2000). Vietnam Airlines’ CEO Dao Manh Nhuong on strategic leadership. Academy of Management Perspectives, 14(4), pp.16-19.
Semercioz, F. and Kocer, B. (2004). Strategic Alliances in the Aviation Industry: An Analysis of Turkish Airlines Experience. Journal of Transnational Management Development, 9(2-3), pp.29-45.
US airlines try biofuels. (2012). International Journal of Climate Change Strategies and Management, 4(1).
Johnson, G., Whittington, R., Scholes, K. and Angwin, D. (2014). Exploring Strategy: Texts and Cases. 10th ed.
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