Airlines, no matter now big or small, experiences failures in airline business planning. The failures have resulted from the inability to acquire a sustainable, and competitive advantage. The situation has prompted most airlines to adopt the bigger is better philosophy. For airlines to remain afloat, airlines are expected to come up with innovative strategies unlike the ones implemented in the past. Recently, airlines have been affected by the decrease in government bailout packages, and therefore, they should start focusing on market dominance instead of a generation of capital. Most airlines have failed to validate the growth of revenue and profitability, and this remains the biggest failure in the airline business planning.
Most airlines have suffered from undercapitalization. This is a situation where airlines suffers from inadequate resources to maintain the normal operations or handle the high operations costs. Airlines are experiencing problems in running their operations without seeking for outside assistance. As a result, airlines companies are left with the option to solicit for short-loans, or even issue stocks or bonds so that they can raise capital. Undercapitalization also means that some airlines have inadequate funds to launch their startup or any other activities that makes them remain relevant in the airline industry.
Overexpansion in services offered is another common failure in airline business planning. Most of the airlines are implementing the bigger is better philosophy and this has detrimental effects if it’s not regulated properly (Wensveen, 2015). The executive management focuses on having a wide area where clients can access the services offered by a particular company. Most companies want to have a bigger area of operation than their competitors. Instead, they should focus on improving the quality of the services offered rather than pay attention to expansion while at the same time, the services offered do not meet a high standard.
Lack of flexibility is another brewing problem in the airlines industry. For instance, Legacy carriers has found it challenging to remain flexible in the market. The lack of flexibility results from operating in a particular type of environment that remains inefficient in the current market. Legacy carriers faces adjustment problems because they are already established and might require huge sources of capital to adopt to the market needs.
Another failure in the airline business planning is the existence of wrong money and wrong leadership (Wensveen, 2015). In the situation of wrong money, normally, an investor fail to understand the nature of the operations offered by the airline. Therefore, if they are very active in the decision-making process, they may mislead the company, and this might result in massive losses due to operations failure. Moreover, wrong leadership is also dangerous as the wrong person is delegated wrong responsibilities, or even the right person is delegated with wrong responsibilities. Therefore, it remains difficult to operate in a competitive environment and the same time generates profits.
On the contemporary world, majority of the firms perceive that the most appropriate principle is the ability to sustain a competitive advantage in the fierce market. For these organizations to adopt a cost and price leadership strategy in the economy, they depend on the government bailout suites. However, the decrease in the government bailout sets has convinced these companies to change their business tactics for them to remain relevant in the market.
An airline that does not possess the capability to spot the market needs and wants when they write their business plan in the economy is poised to fail to accrue robust revenue growth and profitability. A market-oriented business plan should possess the ability to entice the investors.
References
Wensveen, J. G. (2015). Air transportation: a management perspective. Ashgate Publishing, Ltd..
