Challenges Facing the Aviation Industry and Boeing in Particular - Essay Example

Challenges Facing the Aviation Industry and Boeing in Particular

Over the years, the airline industry has experienced a constant growth and has remained one of the biggest industries globally. Through it, there is global trade, promotion of tourism and global investments. Additional, it is essential to the globalisation experienced by most industries. The main challenges encountered in this industry include the rise in fuel cost, overcapacity, labour unrest, and overcapacity. Each of these threats affects the entire airline industry.

Fuel Factor

Just like in many industries; fuel remains the primary concern faced by the aviation sector. An increase in the cost of fuel has led to some carriers imposing fuel surcharges on their clients since most planes made by Boeing run on old models which are energy inefficient. It is estimated that with the experienced increase in fuel prices, most of the airlines feel an effect on their bottom lines and have reduced their consumption of new models (Flottau et al. 2015). This, therefore, indicates the existing relation between the crude oil and the airline stock. Airline companies have several issues to tackle, but the fuel crisis remains its highest challenge, and it can worsen especially if an economy suffers from the economic recession.

Overcapacity

Some airline firms, like the TWA, have been pushed out of business due to issues related to overcapacity (Ben-Yosef, 2005). Most of the airline companies are still struggling to be at par with the constant changes whereas most of these carriers have been seen dragging their feet to adapt to the changes in the current economic environment. Due to overcapacity, airline operators have suffered from rock-bottom fares, circumstances that will delight the clients and not the operators. The fares will lead a problem in the industry’s revenue generation, which is already burdened with the high cost of fuel.

Labour Unrest

As witnessed in several sectors of the economy, the airline industry is not immune to labour unrests. Citing examples from the European airline operators, companies like KLM and Air France have incurred massive losses from the strikes staged by their pilots (BBC, 2015). With the experienced change in the working and economic environment, the industry is bound to experience several unrest or insubordinations coupled with high labour costs.

The increase in Operational Costs

With the numerous investments required for the expansion and maintenance of the manufacturing facilities as well as the maintenance of affiliated airports, there has been a challenge of governance most parts of the world with labour policies affecting operations globally. Change in the taxation policies also contributes to the rapid increase in the cost of maintaining the aviation labour market and facilities’ management. With this, there is also an increase in the prices of airline tickets which has also lowered demand for aircrafts from Boeing in the last decade.

What airline companies should do to address these issues?

In response to these experienced challenges, the aviation industry to adopt particular strategies to maintain their relevance in the industry. Fuel is usually a major factor in the daily operations of an airline companies which are the major customers of Boeing. From an operating perspective, the factor likely to influence the cost of fuel is the purchasing scale, and even this will result in marginal effect. The need to minimise the fuel cost is vital but is not dependent on the customers but rather on the manufacturing company, Boeing. Thus, it is the duty of management to research and develop more energy efficient planes for commercial and cargo use. Though expensive, the technological innovations are responsible for the manufacturing of fuel-efficient planes that have a better fuel consumption as compared to their predecessors. For example, the release of the Boeing 787 Dreamliner has set a new era in aviation engineering in the consumption of fuel and conservation of energy (Boeing, 2014).

Reduction of operation cost using digitisation or automation of processes is a considerable approach that Boeing can adapt and influence other dependent companies and affiliate portfolio. Airlines need to embrace new technology which will streamline and reduce the cost of operations. For instance, the use of systems that can enable real-time resource allocation and monitoring can drive maximum utilisation. Tech-developed energy can identify and notify the maintenance team of malfunctioning parts and request for a replacement when the plane lands. Such strategies can significantly influence the airline’s performance, minimising the costs of operation while at the same time bolstering passenger satisfaction by observing the departure and arrival times.

Strategic partnerships. Airline companies should seek for partnerships that can enhance their performance, as well as fill the glaring gaps. Usually, these alliances will be guided based on a company’s goal and interest. They allow for the sharing of routes and infrastructure on a broader basis. Using the example of the alliance between Qantas and Emirates, Qantas was seen as lacking the traffic to fly profitably to different cities in Europe yet it was a demand from its customers. Whereas Emirates had the capacity to fly to many destinations but lack loyal fan base in given regions. Therefore, this can be equated to a win-win partnership since it gives Qantas the access to the additional destination and at the same time, Emirates increases the numbers of its customers in Australia (Freed, 2015).

Lastly, the involvement of company’s staff in the decision-making and management is the key to labour unrest. This will ensure the grievances of the employees are heard, and their well-being is taken care of. If the pilot strike in Air France were predicted and averted, then there would be no loss of working hours and the losses incurred by the airline operator would have been prevented. Both the industry and its employee work towards a common goal and each should consider the other as a partner for there to be the effective achievement of the set objectives.

Role of managers in integrating the stakeholders

It is vital that the aviation industry management fosters enhanced positive engagement with its stakeholders. A company that achieves integration of stakeholders has more capability to shape the resulting outcome into a significant advantage for the firm in regards to its productivity and sustainability. Boeing managers are responsible for planning and setting objectives to run the airline (Jeffery, 2009). To do this, these managers first define who their stakeholders are, segmenting them according to their needs and expectations. It is through these expectations and needs that drive managers to set basic objectives that should be adapted. Stakeholders in the airline industry include customers, suppliers, employees at the airline, partner airlines and the local communities.

Managers align their objectives with stakeholders’ and engage them in negotiations to identify common grounds that draw to win-win situations for both sides (Jeffery,2009). They build trust with the parties concerned by ensuring that they deliver quality service to all the interested parties. Managers consult with the interested parties aiming for a fair presentation of all stakeholders and responding to their interests with equal importance as that accorded to the benefit of the airline company. Communication fostered by the manager minimises chances of disagreements and issues that would hamper the reliable performance of the company.

During consultations, managers are required to provide detailed and comprehensible background information to the stakeholders. Transparency by managers helps build trust and achieve agreement between stakeholders and management, increasing productivity in the long run. After consultation, managers respond to shareholders presenting to them possible strategies to particular issues. After discussions, managers decide on the course of action to implement to put the plan into being and to ensure productivity. They monitor the process of implementation, noting any issues and sharing the results with their stakeholders (Jeffery, 2009). Managers present their evaluation through documented material that can be stored for further reference. They receive feedback and measure the objectives that have been met.

A Three Year Action Plan for the Boeing Organization

The Boeing organization is a multinational aircraft manufacturing company based in America. As a company built on a foundation of innovation and aspiration, it requires to consider its place today in the society and where it would fall in future. It focuses on a vision and mission that creates a platform for people to work together as a global enterprise on aerospace industry leadership. An idea of fueling growth through productivity and creating an adamant emphasis on technical and functional excellence. Therefore, the Boeing organization requires to a committed set of core values such as integrity, safety, quality, stakeholders' success, trust and respect to ensure commitment to its vision. For instance, the organization should take the high road by practicing the highest ethical standards and honoring its obligations. Boeing needs a vision integrating a sequence of principles that leads the organization to future success (Rebecca, 2009).

Nevertheless, Boeing's mission statement is what it should refer to as its vision since it requires to take a multi-faceted approach to achieving its vision. Also, it needs a strategic plan that embodies certain values such as ethics and equality throughout the organization in its entirety.

The structure should provide customers and employees with the ability to promote further in the agency's success. It should also include rewarding investors with an addition to their shareholder value by the use of strategic management to increase output. The organization also requires business imperatives that foster its ability to achieve its vision in all its business portfolios. In other words, the Boeing team would need a comprehensive and mastered plan to ensure sustainability in the achievement of its vision (Rebecca, 2009).

Leadership is a responsibility for each and every member of the organization as all should be leaders in ethics. For instance, Scott Carson, president, Boeing Commercial Airplanes, said that employees should work through their leaders to find solutions to issues that create uncertainty and stress in the lives. Taking part in sorting challenges together with the teams is what leaders should take into consideration to achieving success in the future. Managers should also take full participation in providing tools and training to employees, and this would promote personal leadership in creating an ethical and open culture by nurturing trust and integrity across the organization, hence better future performance. In a corporate organization like Boeing, leaders need to listen well and give guidelines for addressing ethical issues, and this would make employees more comfortable even to raise potential concerns prevailing in the organization. Therefore, combining these actions with leaders both shaping ethical behavior and enhancing accountability would positively influence employee's perception of the organization’s leadership climate (David, 1998).

The Boeing organization should have leaders who talk about ethics, keep promises and should not let go, employees, accountable experience an improvement in the general working environment. Throughout this organization, there should be numerous examples of leaders mapping the right path and working alongside their departments in ways that would create an urge for an open culture. Leaders also need to act in manners that are consistent with their values and words by taking appropriate action when individuals come forward with issues or suggestions. In a typical Boeing situation, managers should establish a communicative environment with their teams by accepting any feedback. The organization needs leaders that would create the culture that is open to generating thoughts and new ideas. The organization’s management should provide a platform for employee engagement as this makes them feel recognized and valued, hence re-establishing a close relationship with their managers (David, 1998).

In the Boeing organization, there are procedures and processes that empower and motivate employees to work more efficiently towards the goal of the organization. For instance, Maslow's hierarchy of needs points out that there are five levels including physiological needs, safety and security requirements, psychological needs, self-actualization and peak experience. He suggests that employees cannot move to the next step not until the lower levels have been satisfied fully (Leigh, 2016). The highest levels are considered to be tied to empowerment. Empowered employees can practice their judgment in their achievement of success for themselves and their organizations. An employee enjoys involvement in decisions hence managers need to take time in understanding employee needs as a step in establishing a motivated and empowered team workforce. Another way to motivate employees is the need for their input on issues and this involvement represents a stable condition between employers and staff. Nevertheless, some employees are driven by both external and internal factors. Those driven by external factors responds to praise publicly by their leaders or even the customers of the organization. Those that are driven by internal factors respond mostly to the attainment of personal goals and not praise from their managers (Leigh, 2016).

The Boeing organization is also exposed to some challenges as outlined earlier. The leaders are responsible for any outcome and should therefore be very keen when addressing most issues since some cannot be predicted. One major challenge these leaders face is bankruptcy and shutdowns hence rendering them unfit to run the organization's operations. It often results from embezzlement of funds hence poor profits thus leading to a closure of the organization. The challenge of insecurity is another threat to leaders since it renders the organization unsafe to relate with hence leading to shrinking in the demand for travel. The rising costs of fuel, labor, maintenance and security poses another challenge since this additional charge replace profitable funds that could have been invested in some other flexible plans within the organization. Also, leaders face a great financial pullback where congestion in airport and airspace is a concern. It requires them to cancel some flights, in an aircraft organization, since there is no enough space for landing and taking off (John, 2010).

Another issue of concern leaders might face is competition from other forms of transport and the emerging trends in the technology. In the Boeing organization, some internal factors like poor relations between staff would also lead to a decline in the efficiency of the management in controlling the situation and its operations. New technology is also a major challenge to the administration of the organization since it demands expertise and it is also very expensive. Failure to demonstrate revenue generation and profitability makes it difficult for leaders to obtain sustainable and competitive advantage (John, 2010).

Action Plan Analysis Matrix

Low Priority

Needed

High Priority

Highest Priority

Year 1: 2017

Competition

Research & Development

Integrating affiliates

Patenting innovation

Year 2: 2018

Energy Conservation

Research & Development

Developing Energy Efficient Planes

Lowering production Costs

Year 3: 2019

Ethics

Ongoing

Year 4: 2020

Evaluation

Ongoing

Priority

Table 1

The table above gives a brief on the issues Boeing is to consider priorities to improve its performance within the first 3 years. In year 1, the company is to address competition by research and development to integrate affiliates and patent innovations. In year 2, the company is to consider energy conservation by integrating energy efficient planes through the use of research and development to with the need to lower production costs and also influence customers into buying the new technologies. Year three would take into account the evaluation of ethics where customers, shareholders, and employees will be updated on new policies to include all stakeholders in mission of the company to realize. In the fourth year, the company will evaluate the entire three-year plan to analyze the benefits from the plan.