research paper

Background

Although each airline is structured differently, and it is difficult to assess and quantify the performance of an entire airline, Delta Airlines, and the United airlines have stayed in a steadfast competition for the last 5 years. In the year 2014, United airlines was seen lacking behind Delta airlines and was struggling to keep up with the pace, however, in the last 3 years, airlines have become a strong competitor for Delta airlines where the competition can be seen side to side. The United Airlines is the world's third-largest airline and has gained significant value in the last years, where Warren Buffett is considered the largest investor for the airlines. One of the most crucial and critical part of maintaining a good brand image is in dealing with the negative publicities for all brands. What is important is that under such circumstances, the company remains true to its words and states facts. The basic relation between the consumer and the producer is that of trust. A consumer relies on the producer because they think that the producers understand their needs and requirements and therefore develop the product accordingly.

Problem statement: Like a grape vine, negative remarks and bad word of mouth can affect the reputation of a brand and thus can hinder and affect the sales of the product.

Key issues

Financial specialists in United Airlines parent United Continental Holdings Inc., which incorporates popular very rich person Warren Buffett, had an unpleasant week. As pictures of a traveler being persuasively hauled off a plane a weekend ago were stepped permanently on financial specialists' recollections, United's stock failed to meet expectations the aircraft area by a wide edge.

Joined's stock shed $1.81, or 2.6%, since last Friday, while the NYSE Arca Airline Index facilitated only 0.2% over a similar time. By correlation, the S&P 500 file lost 1.1% during the week. A lawyer for David Dao, the traveler, hauled off a United Airlines flight, said at a news gathering that Dr. Dao endured a blackout during the episode and will probably sue. Dao's girl Crystal Pepper additionally talked about the cost the episode has taken on the family.

With about 314.6 million offers remarkable, as per FactSet, United's value decrease has shaved $569.5 million off the transporter's market capitalization this week. Buffett claimed 28,951,353 portions of United as of Feb. 14, as indicated by a documenting with the Securities and Exchange Commission. With 9.2% of the offers extraordinary, Buffett was by a long shot the transporter's biggest investor, as per FactSet. In the event that his possessions stay unaltered, Buffett would have lost $52.4 million this week on his United wager and $135.2 million since Feb. 14. CEO Oscar Munoz, who attempted to extinguish the advertising fire by freely saying 'sorry' on various occasions, claimed 207,772 United offers as of Feb. 28, an SEC documenting appears. That infers about a $376,000 misfortune this week; however, has increased about $237,000 since United rejected a month ago to permit two preteen young ladies from getting onto a plane for wearing stockings.

While the producers rely on the consumer for the remaining brand loyal if they are satisfied with the product, and the basic basis of this trust is that the consumers believe that the producer is honest and true with them. However, what is more, significant is that the majority of the consumers rely on the feedback and the reviews of others before trying a product for themselves. And positive or negative comments and reviews on a product are regarded to be of high value and therefore play a major role in the sales and preference of a product.

Competitive situation

In the year 2014, the market cap for Delta airlines was $31 billion, and the United airlines were at a market cap of $18 billion. While the United airlines gained a significant share in the market the same year in the last two quarters to almost cover 51% shares after bearing a massive loss for an entire quarter, implying that it was back on track. For the year 2015, Delta Airlines announced a historic sales income of $5.9 billion before tax, while the United airlines made a profit of $2.3 billion in the year and reported that the year recorded the lowest number of cancellations.

The income for united airlines was $3.8 billion before tax. Although the gap between the two airlines for the year was big in terms of calculations but when it is to viewed on a general level, the progress of both the airlines seemed to be improving in terms of the quality of service in comparison to the airfare the airlines were providing. There were other similarities between the airlines as well; both of the airlines were concentrating on the service of the airlines and reported maximum pre-taxed earnings. There was maximum earnings by the employees and also the employees experienced the maximum job satisfaction for the year.

For the year 2016, United airlines again announced the lowest number of flight cancellations, lowest number of flight delays and the lowest number of reported incidents of mishandling of the luggage by the airlines. Where Delta airlines reported a lower profit for the year but continued to concentrate on the service and had the lowest number of flight delays and flowed the safest levels. Overall, the two airlines continued to satisfy the consumers and recorded years of improvement and hard work in the three years, where the service was gradually improving.

Alternatives

By definition, non-financial merits are the rewards and perks that are offered in addition to the financial rewards that are not monetary. The function of non-financial merit in a service industry such as the airlines means that the reward is more focused on the service and quality of the time and the flight and mainly the time that the consumer spends on and during a flight. The entire experience that a consumer gains from air traveling is considered the non-financial reward. The consumer pays for better quality and standard service in order to spend a good time and save up on time, while the airlines receive the payment for providing the service and experience to the consumer. In 2014 both the airlines were catching up to meet the competition and marked a significant place towards the end of the year. In 2015 both the airlines improved their service and raised profit form recording one of the highest sales in the year due to higher consumer satisfaction. For the fiscal year of 2016-2017, Delta airlines continued to work on the same platform but United airlines however, experienced turmoil in their operations. A few incidents towards the end of the year 2016 and the beginning of the year 2017, some political opinions and a few changes in the rules and regulations of the airlines led to a few incidents that created some difficulties for the airlines.

Recommendations

As per reports some passengers who had paid were not allowed to board planes, a few passengers were kicked off the flights and some were even dragged across the airplanes for not following some unnecessary requirements of the airlines. The biggest concerns were regarding the passengers who were subjected to victimization because of racial discrimination. These provocations led the United airlines to encounter a bad public image and because of the range of volatility in the stock and commodity markets the airline's shares faced a drop. Apart from the airlines Warren Buffet's separate invest in the company were also harmed and there were massive drops in regards to the upside caps. As one of the largest investors in the economic market Waren Buffett is considered as one of the most influential investors in the world and his activities of investing and his decision making is given value and makes changes in the market. In my opinion however, Warren Buffett should continue his investment share in the holdings and shares of the company. The first reason is that as per the report of the United airlines for the first quarter of the year 2017, the company claims that despite bad publicity the airlines has been experiencing profits and there has not been much change in the sales. The second reason is that Waren Buffett might influence the market by his decision of continuing to be a part of the United airlines and this might give him an edge to effect the market in future. Thirdly, the airlines are expanding at the moment and Warren's decision of leaving the airlines might result in huge losses for him as well. His stocks might lose value and this may take his chance of investing in airlines further.

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