5910_ASS 6 # REwork
DrAwesome
FPX5910_R.pptxCapstone Presentation Frontier Airlines
Dr. 10/29/2020
Introduction
The frontier airlines company is an American organization that operates within the transport industry. It is based in Denver, Colorado.
The company is among the best, currently ranked as the 8th largest airlines in America. It operates in more than 100 destinations in the US.
The success of the company is mainly attributed to the strategies put in place by the management.
However, the company has been facing a lot of competition over the past few years, due to new entrants into the market as barriers to the market are being eased and more investors are finding air transport to be a profitable industry.
Frontier airlines was founded in february1994 and commenced operations July.
With over 100 destinations, the company employs more than 3000 staff members .
In 2020, a number of lawsuits have been filed against the company due to its refusal to refund airfare to customers who could not travel amidst the COVID -19 pandemic.
Its refusal to refund airfare and the negative publicity that has been generated as a result may feature negatively in future in its attempt to be competitive with other players in the airline industry.
2
Competition in the airline industry
As technology evolves, transport by air is being rendered safer everyday and as such, more people are preferring travel by air for its speed convenience and safety as compared to other transport means (Kuhn et al. 2017)
Though transport through air plays a huge role in the global economy, it is an industry that is heavily regulated both at the domestic and the international level. The airline deregulation act of 1974 still left room for setting conditions by the government n some aspects of flight (Kuhn et al. 2017).
The three trends playing a role in analyzing competition in this industry are hybrid business models, airline mergers and financial distresses.
Deregulation and liberalization have also enabled more companies to venture into the industry, thus increasing competition.
An airport attendant cleaning the inside of a plane.
Technology evolves daily and as a result, travel through air is being made easier and more accessible and safer than travel through land or sea.
Though flying was deregulated in 1974, it is still an industry that is regulated and governed by laws set by the government.
There are still antitrust laws put in place by the government that are implemented with the aim of preserving the benefit of competition that deregulation produced in the industry.
As a result of a larger preference for flying as a mode of transport, more people are investing in the industry resulting in increased competition.
Firms in this industry thus have to me up with techniques to stay ahead of the competition just as Frontier Airlines have adopted staying ahead in terms of technology.
3
Market structures
There are four main market structures, all of which are determined by the variations in the cost of flights. They are described as follows:
Monopoly, where the seller is single. There is no competition in such a market structure.
Oligopoly, where few establishments regulate the market. Having a few organizations that dominate the market, this market structure allows the organizations to set the business mood about prices.
Perfect competition, where all sellers and customers have complete and symmetric data, no operation costs, with many manufacturers and customers who compete among themselves(Balliauw et al., 2018).
An imperfect competition where there are many producers, but they sell heterogeneous commodities instead of the perfectly competitive market scenario (Balliauw et al., 2018).
The airline industry is considered to be an oligopoly because only a few numbers of firms set the pace an control the entire industry. Also, the barriers to entry into this market are significant enough to discourage competitors from venturing into this field.
Market structures differ and they are mainly determined by the sort of competition that is found in a given industry. The four main types of structures are monopoly, oligopoly, perfect competition and imperfect competition.
The airline industry definitely fits the bill to be an oligopoly because it is a market structure that have only a few number of firms controlling the entire industry and the barriers to entry often discourage new entries into the market.
The easing of barriers to this industry by the government may however rend it into a perfect competition market as more firms invest in the air industry thus changing the market structure (Kuhn et al. 2017).
4
Use of technology to attain competitive advantage
Flight planning. It enhances proper customer management, mainly because it can share crucial information regarding the flight taking time within a specific time and any other emergency information.
Digital operations. They have increased the efficiency of service delivery, as many companies switch from manual delivery methods to digital methods.
Customer service. Through technology, it is easier for customers to communicate with the company, make complaints, compliments, and even give feedback on services offered.
Environmental conservation. The use of technology in the airline industry has minimized pollution in the form of reducing emissions.
Firms that have embraced the use of technology have a competitive advantage when it comes to attracting customers to travel with them, the services they render and can assure their clients of higher levels of safety (Levine, 2016)
The world is more an more depending on technology to ensure safety in the travel industry. Firms that are embracing the use of competiton thus are gaining a competitive advantage when compared to firms that opt to not use technology.
The once cumbersome activities of wasting time so as to book plane tickets have been reduced by technology and replaced with the swifter and more accurate online bookings.
Technology also has had a significant impact on reducing plane emission to reduce environmental pollution, repair and maintaining aircrafts and the general comfort of passengers when travelling.
5
SWOT Analysis
The SWOT analysis is an analysis of the company’s strengths, weaknesses, opportunities and the threats that may face the company.
6
VRIO Analysis
VRIO analysis pulls into focus the value of a firm, the rare points, what can be imitated and the nature of its organization.
By considering the VRIO analysis, the company can identify its internal strengths and weakness and by so doing, come up with ways to improve them.
7
PEST Analysis
The PEST analysis states the external factors that affect the company’s performance. For these factors, the company has no ability to change them and can only adapt its strategies to fit them.
A factor such as how the clients behave cannot be change by Frontier Airlines but they can better train their staff to deal with clients.
By understanding the external factors affecting a company, the firm can come up with better ways to change its structure and to create a better impression on the clientele.
8
Overcoming Barriers to Competition
Aggressive innovation. Innovative organizations have a competitive advantage because they are ahead of their competitors.
Provision of training and development programs for employees to increase the quality of service delivery.
Revising the prices. The flight prices should be affordable so as to increase the number of customers.
Introduction of low capacity aircraft. This will reduce the cost of operations for the company due to the lower maintenance costs of the aircraft.
Provision of high-quality customer service. This would increase the satisfaction levels of clients and hence increase their retention rate.
Guaranteeing air safety and effective maintenance of aircraft would also be significant in increasing the market size for the company.
Aggressive marketing of the company’s flights. The aim will be to reach out to travelers and show them the merits of flying with Frontier Airlines (Levine, 2016).
Competition is a challenge in all industries but, to get a share of the market, every firm must have means in place by which it can trump it.
The tactics chosen by a company must be such that they give it a competitive advantage over its competitors.
The tactics recommended to Frontier in this case are: 1. aggressive innovation, 2. staff training 3. reduce flight prices 4. higher quality services, 5. increased flight destinations and . Aggressive marketing.
Adopting these techiques will make it one of the most competitive firms.
9
Ethical considerations
Among the most important virtues within the airline industry are:
Honesty
Fairness
Confidentiality
Privacy
Employees in Frontier Airline Company ensure they are honest with the clients and also the colleagues for efficient operations.
They are also encouraged to keep client information confidential.
Ethics are a key concern when training the staff working with Frontier Airlines as they are the image of the company.
Frontier Airlines works to ensure that all customers will have a great experience and enjoy their flights (Levine, 2016).
Ethics form the backbone of treatment in any institution. As Kant puts it, one should treat others just as he would expect to be treated.
Honesty, fairness, confidentiality and maintaining the privacy of clients are all factors that should be considered when dealing with clients.
An ethical company will maintain clients because its treatment of clients will be impartial and equal for all people.
10
Leadership and collaboration
Leaders must think big. This ensures that the organization stands out from the crowds.
Leaders must have a vision. This enables the leader to guide their team to do their best to achieve the goals.
Leaders must motivate collaboration and teamwork. Collaboration and teamwork help an organization to consolidate ideas from different employees within the organization.
Leaders should promote the creation of relationships. Employees who have positive relationships with their leaders are motivated and willing to do the extra to help the organization achieve its goals.
The company’s vision is clearly outlined and known to all staff members to ensure they understand the goal they are working towards.
The stellar performance of a company is heavily dependent upon the type of leadership that is displayed.
Leaders must have characteristics such that they motivate the staff to work towards the success of the company.
A company must also have a broadly accepted vision to ensure that the staff know what they are working towards, what the achievement will be.
11
Recommendations
Innovations will help the company to upgrade its services to a globally competitive level (Park & Seo, 2019).
Training and development programs. Training equips leaders and employees with skills and strategies will armor them with what they need to support the mission and vision of the company.
Promote collaboration. Frontier Airline should encourage and promote Collaboration and teamwork help an organization consolidate ideas from different employees within the organization
Encourage leaders to build positive relationships. Employees who have positive relationships with their leaders are motivated and willing to do the extra to help the organization achieve its goals (Cote, 2017).
The company can adopt a variety of strategies to ensure that its performance now and in the future is better. Embracing the recommendations will also make it more competitive and the returns from its business will be more.
12
Conclusion.
Frontier airlines can be considered an upcoming firm in the airline industry.
To become competitive however, it has to take into consideration the factors recommended.
If the company were to boost its image to America, it could end up being one of the greatest airlines in the world.
References
Balliauw, M., Meersman,aH., Onghena, E., & Van de Voorde, E. (2018). U.S. all-cargo carriers' costs structure and efficiency: A stochastic frontier analysis. Transportation Research Part A: Policy and Practice, 112,229-45. Retrieved from https://www.sciencedirect.com/sciece/article/abs/piii/S096588564188300168
Cote, R. (2017). Vision of effective leadership. Journal of Leadership, Accountability, and Ethics, 14(4). Retrieved from https://articleegateway.com/indeex.phf/JLAE/article/view/1486
Park, A.H., & Seo, K., (2019). Common Ownership and Product Market Competiton: Evidence from the U.S. Airline Industry 48(5), 617-640. Retrieved from http://www.e-kjfss.org/upload/pdf/KJFS-2019-0-488-5-617.pdf
Kuhn Jr, J. R., Courtney, J. F., Morris, B., & Tatara, E. R. (2017). Agent-based analysis and simulation of the consumer airline market share for Frontier Airlines. Knowledge-Based Systems, 23(8), 875-882.
Levine, M. E. (2016). Airline competition in deregulated markets: theory, firm strategy, and public policy. Yale J. on Reg., 4, 393.
