Vista Aerospace case
In most general terms, risk assessment can be defined as an examination of factors that can harm people in course of one’s activities. Most important issues to be considered in terms of choosing supplier include the suppliers’ capacity and their experience in producing electronic equipment in general and aviation equipment in particular. These factors can particularly influence supplier’s capacity to produce quality equipment and, in turn, passengers’ security and safety.
In case of Essilor (Brazilian supplier), an important risk deals with the fact that an extent to which the company is experienced in producing electronic equipment. Furthermore, the company does not work at full capacity. Shipping can also represent a problem, because Vista will have to make transportation arrangements. The problem with TenagaNasional is that is has just entered the aviation market (however, it already has some experience in avionics). The lack of experience in avionics is the crucial risk with regard to Wuhan Aerospace that placed the lowest bid.
I would suggest choosing TenagaNasional, based on the fact that it has significant experience in the field of manufacturing electronic equipment and also has experience in avionics. The choice of the above criteria is substantiated by the task, posed by Vista Aerospace that requires dual-channel flight control computers.
In present situation risks tend to deal with assuring high quality of delivered equipment. Thus, I would propose two steps to manage the risk. Firstly, there is a need to emphasize sanctions, stemming from the lack of computers’ quality, in an agreement with the supplier. Secondly, external quality assurance audit can be a useful tool to ensure quality of manufactured computers.
Virgin Atlantic case
Virgin Atlantic currently experiences a range of issues, stemming from its structure of flights. Evidently, concentrating on North American routes cannot be viewed as a solution. Similarly, it is problematic for the company to enter European market as a lot of LCCs already operate there (e.g., Ryanair, Wizzair, GermanWings). Thus, several options stay open. Firstly, the company can expand its route network in Asia, so that the world’s most quickly growing market is targeted. Secondly, it is possible to target Europe-Africa and Asia-Africa routes (as well, as inter-African routes). Finally, it is also possible to attempt to enter Middle Eastern market, where LCCs just started growing.
Deciding on its route structure the company needs to take into account three blocks of factors. Firstly, it is important to understand the peculiarities of external environment (e.g., political situation, legal regulation of airline business, the provisions of environmental law). Secondly, as competition tends to be very intense in the aviation sector, it is crucial to conduct an in-depth industry analysis. Industry analysis helps to understand whether or not the company can gain competitive advantage over the ones, already functioning at the market. Finally, an internal analysis needs to be conducted, so that it becomes clear whether or not the company can afford investments, necessary to transform its route structure.
SkyTeam Alliance does a lot to help its members ensure high-quality services for their customers. Among them one can mention aid in choosing the route; mobile application Go Around the World and special programs for frequently traveling individuals. Thus, the membership in SkyTeam Alliance can help Virgin Atlantic to improve the quality of its customer services and visibility of the brand. Thus, Virgin Atlantic needs to become an active member of SkyTeam Alliance, especially with regard to the planned expansion of its route structure.
True Intermodality case
The concept of FanWing combines the advantages of helicopters and conventional aircrafts. It is not an only concept under development that can significantly influence the inetrmodailty in the air. For instance, the 4X4 Aviation, the company, based in the U.K. managed to develop an unmanned-aircraft, named Versatile vehicle. The major challenge the developers of the above concepts face in practice is acquiring funds for research and development. Furthermore, it is also difficult to comply with a variety of laws and regulations, governing safety and security of air cargo. Thus, the transfer from theoretical developments to practical use of new intermodalities for air cargo is a highly complicated process.
The airline industry is highly developed Europe-wide. Airlines heavily depend on the overall health of economy that affects the volumes of transported cargo. As many costs are fixed, companies’ profitability tends to depend on favourable labour and fuel costs, as well as highly efficient operations. The market operates in tow major categories: Airmail and Airfreight. Both segments currently experience a steady growth, partly determined by a growing number of online stores. An important trend deals with the diversification of market strategies and transportation routes.
As it was already mentioned above, operating within air cargo industry is likely to be concerned with a range of issue. Firstly, the FanWing will necessarily face the need to prove safety of the concept and its practical application. Similar problem will be even more pressing for unmanned Versatile Vehicle. Secondly, obstacles can emerge with regard to complying with taxation and consumer protection legislation (due to the novelty of the concepts). Finally, a significant challenge may deal with proving environmental friendliness of the new inventions. To conclude, legal obstacles can significantly challenge market entrance for new companies.
Norwegian’s Challenge
The modern aviation industry is characterized by a rather strict borderline between traditional (legacy) and low-cost airlines. Despite the fact that this line tends to blur, there are still practices that are seldom challenged. Furthermore, the company decided to target long-haul flights, despite the fact that this market segment is usually reserved for legacy airlines. Thus, the Norwegian Airlines try to operate at the crossroads of traditional and low-cost airlines business models. Moreover, the company uses sophisticated means to reduce the costs of its operation by ensuring low labor costs and operating under Irish jurisdiction, where the respective regulations are less strict than in Norway.
European Commission can take several steps to help the Norwegian Airlines. Firstly, it can help the company substantiate its objections to the charges, made by U.S. airlines and labor groups. For instance, it can issue an official note, stating that the company has the right to establish its base elsewhere, and its decision to do that in Ireland totally complies to EU law regarding the freedom of establishment.
Secondly, the Commission can negotiate existing concern during the upcoming meeting and agree on a plan of specific measurable steps that can help the company to enter the U.S. market. This can be done at the upcoming meeting with the U.S. colleagues.
The Norwegian will face significant competition, when crossing the Atlantic, because both the European and American airlines operate this route to connect two continents. Among the major competitors of the Norwegian one can mention British Airways, American Airlines, Delta and Virgin Atlantic. The spread of the LCCs, crossing the Atlantic, is highly beneficial for customers due to their attempts to higher the quality and lower prices. However, for the Norwegian it may be hard to sustain the degree of competition at the market and overplay experienced competitors.
New York Air case
The strategy of the NYA is to gain competitive advantage through offering similar services package as its competitors do (low-cost New York- Washington flights). Free drinks and snacks serve as an important differentiation tool. In turn, Eastern does not only offer the same service at affordable price, but emphasizes “guaranteed seating” and hourly shuttle-type departures. People Express offers lowest possible prices, but it does not offer reservations in the airport and flies less frequently than its competitors. Furthermore, the drawback of the People Express lies in the fact that it flies to airports that are situated far from Manhattan, such as Newark and Baltimore.
People Express evidently has low-cost and broad strategy. While offering low fares, the company does not focus on a precise market segment (e.g., businessmen), because it flies to remote airports and does not function in a shuttle mode. Eastern strategy is focused, because it makes everything possible to target businessmen (shuttle service, emphasis on timeliness. NYA strategy is based on differentiation (offering high quality and comfort for low prices). In broadness/focus terms the NYA strategy lies in the middle between People Express and Eastern.
The key strength of NYA strategy is focus on a mixed differentiation that emphasizes both comfort and low prices. Its major weakness lies in the vulnerability to competition and even slight changes in the behavior of competitors may represent serious obstacles to the functioning of the company.
There are two ways competitors can overplay NYA. Firstly, they can offer even lower prices, so that comfort will not matter so much and customers will prefer their companies. Secondly, they can try to unite and focus on shuttle strategy in order to make NYA leave the market.
A crowded market case
The market overview, produced by GAMA (2014) demonstrates that airplane shipments grew by more than 4 percent to 2, 256 airplane deliveries, while billings increased by 24 percent. Importantly, the business jet market showed a trend towards stabilization, first after the decline, caused by the global financial crisis (GAMA, 2014, p.10). While the U.S. started to play a more important part in jet business market, the European share reduced by 5 percent (GAMA, 2014, p.10). Turboprops, turbine helicopters and piston airplane sectors demonstrated steady growth. More people started to work in the sphere of business aviation than before.
There are two major challenges, encountered by the business jet market. Firstly, it still experiences the negative consequences of the 2008 financial crisis. Secondly, the sector encounters significant competition, stemming from the growth of commercial aviation, especially with regard to the expansion of the low-cost sector.
One of the major sources of revenue for Roll-Royce deals with acting as the Original Equipment Manufacturer (OEM). It currently produces BR700 and AE30076. However, Roll-Royce did not manage to succeed in elaborating on the new generations of business jets due to competitive pressures, stemming from the novelties by Dassault and Cessna.
Roll-Royce needs to do several things to stay on the top. Firstly, it needs to continue manufacturing and successfully selling aircrafts it is broadly known for. Secondly, the company can consider an opportunity to compete with other manufacturers by elaborating a new generation aircraft, comparable to the ones, developed after 2008. Finally, it is important that Roll-Royce invests in R&D. The company already invests into the development of long-range modern aircrafts, and this investment is likely to help it sustain its market positions and gain competitive advantage.
International Airlines Groups (IAG) case
Current situation in the European aviation industry is characterized by intense competition between legacy and low-cost airlines. Under these circumstances converging the strengths of legacy and low-cost airlines can be viewed as the major key to success. Thus, it is critical to ensure really low fares, even if long-haul flights are emphasized. Load factor, as well as the number and popularity of destinations also contribute to the success of airlines. Finally, it is crucial to ensure that passengers get best possible service, despite low fares and minimum possible turnaround time.
The major factor behind the success of the International Airlines Groups deals with the fact that it managed to develop a prompt response to LCC challenge. In other words, IAG was the most successful among legacy airlines groups in competing with LCCs. It was even emphasized that severity of the challenge helped the IAG to respond both timely and effectively.
I would recommend that Lufthansa and KLM elaborate on the ways to accommodate the best practices of LCC business model. It is evident that these companies will have to lower their fares, despite offering high-quality services and sustaining arrangements with primary airports. Furthermore, the companies can emphasize inter-continental long-haul flights that are currently less targeted by LCCs than the ones, inside Europe. Alongside, Lufthansa and KLM can orient on luxury sector to serve customers, for whom the quality of service and comfort are crucial issues.
Legacy-owned LCCs can successfully compete with Ryanair. This statement is substantiated by the fact that they use similar business model and can afford themselves to have really low fares, backed by the legacy airlines’ owners.
References
General Aviation Manufacturers Association (2014). 2013 General Aviation Statistical Databook &2014 Industry Outlook. Retrieved 3 February 2016 from http://www.gama.aero/files/GAMA%202013%20Databook-Updated-LowRes.pdf
