In order to achieve the set organizational goals and objectives, business enterprises have to strategize and compete fairly with the aim of capturing significant market shares while offering affordable…
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Once the two airlines merge, they will operate as a single entity within the airline industry. Combining these firms’ business is seemingly detrimental to major city airfare. In this respect, there are diverse and dynamic arguments with regard to monopolization of major city airfare. The American Airlines-US Airways merger, however, is less likely to cause airfare monopoly in major cities.
In their domestic and international operations, both American Airline and US Airways operate alongside other major airlines such as Delta and United Airlines. Monopoly over airfare would have to outperform other major airline in terms of air ticket prices. In this respect, the American Airlines-US Airways merger has limited chances of controlling airfare due to high competition in the industry. Although the merger could make American Airlines the biggest airline globally (Rosenbloom, 2014), the airline will still have to face stiff competition from other major airlines both locally and internationally.
Without necessarily accounting for all major airlines, American Airlines will have to face Delta, United, and Southwest airlines as far as the domestic airline industry is concerned. Due to the competition factor, the firm, even after the merger, cannot base its primary operational strategy on airfare control. Airfare in major cities remains influenced by demand and supply factors, aspects that the merger would have to address before realizing monopolized airfares. Airfare-based monopoly will be difficult to realize in a highly competitive industry.
Debates on the American Airlines-US Airways merge contend that air ticket prices could increase following the move (Rosenbloom, 2014). Critical to note, however, is that customers are rational as far price and utility are concerned. With or without the merger, consumer tastes, preferences, and decisions will still be critical to account for. This merger
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US Airline Industry
Recently, the industry suffered poor level of profitability. There are various factors that could substantially explain this and the bottom line of doing it would mean understanding the external and internal business environment of the US Airline Industry.
US Airways Group - At the Back of the Pack
United Airlines Group was officially founded in 1979 and currently is the fifth largest aircraft carrier in the United States. For U.S. Airways as well as every other air carrier, the U.S. airline industry has always been characterized by its vulnerability to political as well as economic fluctuations.
US Airways Group - Going Global
As markets mature and companies obtain a set level of market shares it becomes harder for companies to achieve further penetration in its domestic marketplace. Good managers have to make good decisions with their money. When a market becomes saturated investing marketing dollars does not have the same effect as when making the same marketing investment in a new marketplace.
In order to transfer the operation to the global marketplace the company simply has to create new routes in a foreign market. The EU has been identified as the perfect expansion marketplace for the company to enter. A characteristic that can help US Airways obtain customers in a global market is by offering top quality customer service.
Ever since the governmental deregulation of the airline industry in 1978, the level competition and price gauging among airline competitors have brought about a level of competitiveness not seen before in the industry.
This is specifically defined when looking at the cultural clusters of the Far Eastern Countries,with an emphasis on China,and Germanic countries,with a focus on Germany. Both regions have different attitudes,beliefs and expectations that are based on flight and business principles and which create a different relationship to the business through the sociocultural aspects of each country.
US Airways Group - Putting It All Together
The level of competition in the domestic airline market is very stiff therefore the level of customer satisfaction and the quality of customer service provided becomes one of the most important factors for a successful airline.
This essay is an attempt to understand the US airline industry from the perspective of international business theories. This essay would also include a political, legal, and economic perspective of the US airline undistry today. Porter Five Forces Model and four Ps of marketing would also be used as for examples.