This paper examines the challenges Air New Zealand faces in the air transport industry. It is a major national airline carrier in New Zealand; however, it has faced many challenges especially in the last one year. Problems in the business environment are many, and sometimes when they are external, it becomes difficult to resolve them.
Nevertheless, amid several challenges in the business environment, organizations have to develop new approaches to stay afloat. Air New Zealand, in particular, has been performing well but continues to encounter many difficulties in the industry. Some of the challenges like flight delays are preventable, but challenges from the external environment are not easily solved. Hence, this section of the paper will address problems, risks issues that have arisen for management, due to external influences.
One major problem that the management of Air New Zealand has to deal with is the flight disruptions and delays. The CEO for this national airline carrier, Mr, Christopher Luxon admitted that it had been a challenging year, due to the disturbances. It was evident that when outages occur, flights are delayed. From the perspective of the customer, this is despicable and poor service delivery. Customers would always expect their flights to happen as scheduled, but any delays annoy or dissatisfy customers. According to Arguello, et al., (2018) customers’ delays and disruptions lowers customer satisfaction. If customers are dissatisfied, it should cause worry to the management. Ideally, customer satisfaction is an issue the management must deal with because it determines customer loyalty and increases client base (Kaul, 2017). Hence, the management of Air New Zealand has to solve the flight disruptions and delays to improve customer satisfaction and retain customers.
According to Luxon, unscheduled global maintenance with its partners like Rolls-Royce Trent 1000 engines is mainly affecting their operations. Rolls-Royce powers the ANZ 787 Dreamliners, but the company has not been clear on the maintenance. This is an external factor, which the management has to handle because failure to do that will ultimately impact service delivery. In the review of research by Ludvigson, & Ng, 2015) it is argued that to deal with uncertainty, it is essential to understand it to find the best approach to respond to it. In this case, the management is obligated to reach out to Rolls-Royce Trent 1000 to solve this uncertainty. It is clear that Rolls-Royce Trent’s maintenance is unscheduled and the management will not just have to keep quiet on the matter. The management of ANZ needs to raise this issue, lest it continues to paralyze its operations.
Another challenge the company faces results from durability issues (Smith, 2018). According to Luxon, the durability of the engines across the world is something of concern. Usually, they are forced to ground at least five of its Dreamliner for servicing. This makes it hard to meet customer demands. However, the management needs to consider how they can solve this problem, perhaps by buying more planes to avert the shortage that occurs as a result of engine services in Singapore.
All in all, the management of the Air New Zealand has three key issues which the management needs to see how to address. Disruptions and delays as one of the issues are said to be occasioned by unexpected interruptions in Vietnam, and Haneda Airport in Tokyo. In response, the management wants to suspend its flights to the region. Also, the unscheduled maintenance and durability are some of the critical issues the management needs to address with manufacturers and service providers. Since the demand for flights at ANZ is increasing the management, need to think on how they can get Dreamliners.
The issues raised above are critical and directly affected the operations of ANZ. However, as management, always there is a need to take action to solve the problem. The first reaction to the problem is that ANZ CEO, Christopher Luxon had to issue an apology to its customers following flight delays, disruptions, and cancellations (Smith, 2018). This was a strategic move, in the sense that the company had come to the realization that its client-base was affected and issuing an apology in some way assuages disappointment. A customer is an important stakeholder that the business should always respond to their concerns. In case of any failure to some customers their satisfaction, it is good practice to reach out to them and apologize. Therefore, this apology issued by the CEO to the customers was essential in the sense that it might have changed negative perceptions customers were developing towards the company.
The other significant action to the management is taking is to cancel its flights to places that occasion unexpected disruptions. The management has decided to stop its flights to Vietnam and Tokyo flights (Creedy, 2018). In the statement issued by the CEO, these destinations are disrupting their operations. When one flight to an area is disrupted, it affected the general schedule of other flights. Also, the management has decided to reduce the frequency of its flights to Argentina, where some disruption occur as well. The objective of this action is to minimize delays and interruptions so that the airline operates inconvenient and profitable routes. The ultimate impact of this decision or action is that the flights to destinations that are commercially viable to the company will not be disrupted. Also, the airline will be able to satisfy its customers, who were disgruntled, because of flight delays and disruptions. Davcik, & Sharma, (2016) in their research on the competitive advantage, performance and marketing sources argue that satisfying customer needs the business performance and competitiveness improves. Using this research, ANZ stands to gain a competitive advantage and improve its performance, once it solves the problem of delays, and unexpected flights.
On the durability issue, the CEO of Air New Zealand has not indicated any action they should take. Durability is a problem is supposed to be addressed by manufacturers to reduce frequent repairs (Reddy, & Kansas, 2016). The safety and security of the travelers are essential, and AZN in its statement is committed to safe and secure travels. Addressing this problem seems hard since it appears the manufacturers do not have any other option to address the durability issues. According to AZN’s CEO, five out of its 13 787 Dreamliners have to be grounded in Singapore to allow proper servicing of the engine (Smith, 2018). This is to imply that if the organization acquires an additional five Dreamliners, it would be able to address the challenges occasioned by durability. Further, the company can also go ahead to deliberate with manufacturers on the way forward.
On the unscheduled maintenance by Rolls-Royce Trent 100, the company has not indicated how it will respond to this issue. This is to imply that the company is uncertain about how it is going to address this problem. Although the CEO says it is not just a problem that affects them only, it has to take action. Perhaps it has to agree with Rolls-Royce Trent on possible times they can offer maintenance rather than making it impromptu. In business, time is crucial and doing things timely or as planned is necessary. The management of ANZ needs to share with Rolls-Royce Trent its concerns, and perhaps this will see the corporation schedule its maintenance.
In the identifying and examining reactions section, an apology was the first action of the management of ANZ made to its customers. The impact of this is that customers will have a positive perception of the airline after several letdowns. Schweitzer, Brooks, & Galinsky, (2015) describe this kind of apology made by ANZ’s CEO to its customers, organizational apology. However, the issue of concern is if this apology matters to customers and changes their perceptions for the business ten (Brinke, & Adams, 2015). These authors claim that issuing an apology is both uncomfortable and risky because it clearly shows an admission of failure or liability. However, Schweitzer, Brooks, & Galinsky, (2015) believe that it is still the right thing to do, especially if the business is ready for a change. Therefore, it was the right decision for the CEO to come out and take responsibility for the mistakes they have made. Most importantly, ANZ’s CEO indicated a raft of solutions to the problems and this would give the customers the perception that past failures are likely to happen and service delivery will be met to their expectations.
Suspension of flights to destinations with unexpected disruptions is one decision that the airliner must have arrived at after a lot of considerations. It is not clear if this is the right or wrong decisions. From the perspective of ANZ, it is the right decision because it will help the company over flight delays and disruptions. From the analysis of the statement of the CEO following the imminent flight’s suspension to Tokyo and Vietnam, the biggest challenge is a disruption. The company feels that it will be able to minimize the flight disruptions, but there could have been another approach to solve this problem. Sandin, & Francis, (2018) believe that international negotiations can be used to resolve some key issues affecting business, though this should be done within the business ethical framework. Since there is an option of bargaining, it would have prudent if the CEO Luxon went to the table with the airport managers of Tokyo and Vietnam to address the issue. An international mediation would have helped the company address the issue, to eliminate flight disruption to have smooth operations within these two destinations (Huo, Chen, & Hung, 2017). These routes are commercially viable and living them to concentrate on solving the problem flight disruptions will not prevent them entirely.
For this reason, it would have been plausible to negotiate with the airport managers of Vietnam and Tokyo on how to improve their operations, to continue making profits from these routes. The global business environment is challenging and competitive, and businesses that so resilience and agility in the face of difficulties are likely to achieve profitability in the long run (Hasani, & Zegordi, 2015). However, ANZ seemed to have avoided the problem not solve it. Thus flight delays and disruptions are likely to continue even with suspension of its operations to Tokyo and Vietnam.
Since the company has given one firm decision, there are some key recommendations the management needs to consider. It is recommended that the management cancels its decision to suspend its operations in Vietnam and Tokyo and pursue negotiations that will improve its operations on the two routes. Also, it is recommended that the company attracts investors to address challenges occasioned by high demand. CEO Luxon reports that in 2017, the demand increased by 5.7 percent. Attracting more investors will enable the company to buys more Dreamliner to meet the demand. Also, the company should seek alternative routes or destinations in Africa or emerging markets in Asia to boost it’s competitive, and it suspends its operations to non-commercially viable routes.
Conclusion
Air New Zealand has faced many challenges in its operations some of which are internal and others external. It is the role of the management to ensure that it overcomes such a challenge before it becomes a menace in the organization and that might alter the whole system. The solution on providing services to the client on a reliable base will be on purchasing a Dreamliner due to the increased demand for flights. Canceling of flights to risk areas will also minimize the chances of engaging in risky business that can make the company collapse. The company has failed to address the issue of durability of the airplanes. To address this issue, it must ensure that it purchases quality and durable airplanes and related materials from reliable suppliers and to sell the old machines to ensure security and safety of the travelers. The company should focus on those routes that have high demand to increase on their profitability. Airline New Zealand should concentrate on implementing the recommendations made if they are viable.
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