Allegiant Airlines - Research Paper Example

? Allegiant Airlines Allegiant Airline is a company based in America; owned by Allegiant Travel Co., however, before acquiring the name Allegiant Airline, the company formerly went by the name WestJet Express when its founders started it. There was uproar from other companies, which had similar names based around the world, for example, West Jet Air Center and WestJet Airlines located in South Dakota and Canada respectively (Company, 2007). The company came into existence in January, 1997 when its founders, Mitch Allee, Jim Patterson, and, Capt. Dave Beadle agreed on the partnership details outlined by the necessary contracts needed when starting a business. Mitch served in the capacity of the CEO whereas Patterson served as president of the company. Finally, Capt. Dave served in the capacity of Chief Pilot. In 1998, the company got FAA and Department of Transportation (DOT) Certification. This officially allowed them to operate charter and scheduled flights locally within the USA and also included international destinations like Canada and Mexico (Company, 2007). Allegiant Travel Co. retained sole ownership of Allegiant Airline until December, 2000 when changes in the ownership structure occurred. These changes proved to be necessary especially with the company’s failure to generate enough revenue to stay afloat. As a result, the company had to file for Chapter 11 Bankruptcy protection in 2000 and ownership shifted to Maurice J. Gallagher, Jr. during the reorganization phase. Gallagher used his prior knowledge acquired while working with other esteemed Airlines to transform Allegiant Airline into its current form. He did this by changing the company’s market target to smaller entrepreneurs in need of chartered and scheduled services neglected by larger airlines. To this date, the company boasts over 1,800 employees working all around the world (Company, 2007). The company’s headquarters are in Enterprise, Nevada. Gallagher is also responsible for shifting the company’s headquarters from the airline’s initial hub located in Fresno, California to Enterprise, Nevada in June, 2001 (Wheelen, 2011). The new restructured company model cut down the company’s operation costs and catered for the untapped market consisting of small-scale entrepreneurs. The fact that Gallagher was the main creditor of the previously bankrupt Allegiant Airline meant that the company’s previous debts could officially be written off. This would give the company a fresh start. This allowed for Allegiant Airline to generate revenue allowing it to settle the remaining debts with its creditors. Gallagher remained CEO and guided the company through the entire processes carried out with the aim of exiting bankruptcy. His hard work finally paid off in March, 2002 when the company successfully emerged from its bankrupt state. As a result, Gallagher signed a long-term contract with Harrah’s providing charter services to Harrah’s casinos. This allowed for the company to venture into other prospects, which would allow the company to diversify the services it provided. Allegiant, therefore, begun to provide air and hotel packages to its clients (Airline, 2012). Initially, Allegiant Airline was a privately owned company. However, in November, 2006, the company decided to publically offer its Common Stock under the ticker symbol ‘ALGT’. Throughout the years, Allegiant Airline continually expands by branching out into other focus cities, for example, Florida, Los Angeles, and, Washington among others. In addition, the company continually provides exceptional services to its clients just as it did before, in its headquarters, in Nevada. Throughout the years, Allegiant Company continues to prove to other companies how proper management is an integral part in the achievement of success within any organization (Company, 2007). Allegiant’s mission statement seeks to provide affordable flight charges to individuals operating on a small scale level. This occurs via the provision of travelling opportunities to leisure destinations while boosting the company’s profit margin. The company’s mission statement lists the company’s objectives, which include; capitalizing on growth opportunities, the development of new revenue sources, reduction of operating costs, and minimization of fixed costs 9Airline, 2012). The company seeks to capitalize on growth opportunities by providing a way in which small cities can be linked to destinations which offer leisure activities, for example, Canada and Mexico. Meaning, company personnel offer, packages to customers, which are all inclusive containing, both affordable travel and accommodation expenses. Secondly, the company hopes to develop new sources of revenue through venturing into the provision of other services besides the provision of chartered and scheduled flight services. Learning from past experiences, the company seeks to reduce operating costs in order to avoid the generation of less revenue than required to sustain the business. The solution to this involves the increasing the frequency of flights within already establishes market areas. The final objective involves the reduction of fixed costs; achieved through the use of smaller, cheaper aircrafts which reduces the travel costs allowing for the company to capitalize on the small scale entrepreneurs easily ignored by larger Airline companies (Company, 2007). The company’s position on Corporate Social Responsibility is one in which a hands on approach used in dealing with the society in which the company operates in. This involves the following of outlined legislations, provided by the government in order to ensure companies operate in a way which benefits the immediate society the company works. For example, just like other companies, Allegiant Airline Company must prepare financial statements annually, which showcase the company’s financial position. Therefore, it is the company’s social responsibility to represent truthful information in their statements. This go a long way in helping individuals interested in investing through acquiring shares to make informed decisions (Wheelen, 2011). The external environment affects the operations of any given organization. The external environment involves the remote, industry and operating environment. Firstly, the remote environment revolves around the social, technological, economical, ecological and political issues affecting the daily operations of a company. Looking at the social issues affecting Allegiant Airline Company, a need arising among those involved in small scale businesses to tour leisure destinations for both business and pleasure purposes becomes identified. Therefore, finding a convenient and affordable Airline is crucial in the execution of these plans (Airline, 2012). The provision of affordable rates by Allegiant ensures the company’s capitalizing of the untapped small-scale entrepreneurs target market. These individuals make up majority of the country’s population. Allegiant company also uses less complicated aircrafts, which are easier to maintain, hence, cheaper reducing the company’s fixed costs. However, this does not mean that the company retains outdated aircrafts without keeping abreast with the changes in technology. Allegiant ensures its personnel stay informed on emerging technology advancements in aircrafts; therefore, they are able to make recommended changes to be implemented. Finally, political issues profoundly affect organizations; therefore, companies must keep up with changes in the political arena. This allows them to readjust their policies ensuring they match expectations of the political policies. For example, the terrorist attack in September, 2011 affected the aviation industry especially when it came to the hiring of non-nationals as pilots. Legislation passed by the government required that all pilots must be individuals who are USA nationals; therefore, aviation companies had no choice but to comply with this statute (Company, 2007). On the other hand, the industry environment revolves around the forces driving competition within the industry. These include; fare levels, the demand of passengers and changes in fuel costs. Allegiant Airline Company’s main competitors include; upcoming and Legacy Airlines among others. In order to remain at par with their competition, Allegiant’s fare levels remain favorable compared to other companies because they prove to be little, hence, attracting extra customers. They also focus on the small scale entrepreneurs as its target market of which, most large Airline disregard this group of people. Despite the Airlines not having control over fuel costs, most work around the continually changing prices by adjusting their prices accordingly. This helps to prevent losses that would otherwise be incurred from poor pricing (Wheelen, 2011). The operating environment can only be analyzed through the use of a SWOT analysis which helps in the identification of strengths, weaknesses, opportunities and threats. A SWOT analysis conducted on Allegiant Airline Company indicates the strategies employed by the company gaining an advantage over their competition (Wheelen, 2011). Cost Leadership in Allegiant Airline Company entails the formulation of lower costs compared to its competitors. This helps to attract customers motivated by the lower rates. Cost leadership works well for upcoming companies because it eases the process in which customers familiarize themselves with the new company (Company, 2007). Secondly, the differentiation of goods and service also give a competitive edge over other companies, which have not adopted such strategies. This is because; people prefer dealing with a single organization when it comes to the acquisition of services. For example, Allegiant Airline Company offers all inclusive packages which include travel and accommodation arrangements. Other companies, especially large Airlines simply deal with travel arrangements, while leaving the task of sorting out accommodation arrangements to their customers. The final generic strategy goes by the name niche strategy. This involves the identification of a target market which guarantees the success of the entire business. Companies benefit mostly from the acquisition of many niches. This is because; they provide the company with a wider market for their products and services. Allegiant’s grand strategy entails the combination of all its approaches employed in the fulfilling of outlined objectives. For this company, the grand strategy involved the increasing of its profit margin through tapping into a market, whereby, which larger Airlines previously disregarded. The main characteristic which makes grand strategies stand out includes the aspect of combining other strategies to make a single generalized strategy. The long term goals involve the reduction of fixed costs and the reduction of operating costs. The latter requires focusing on a cost driven schedule, low ownership costs of aircrafts, productive personnel and the offering of ordinary products. On the other hand, short term strategies includes capitalizing on growth opportunities through the identification of untapped resources, for example, neglected target markets (Wheelen, 2011). Challenges faced in the external environment can easily be addressed through the approaches identified. For example, the main way of addressing political obstacles is by ensuring company policies are in line with those provided by politicians in the form of legislation. This allows for peaceful co-existence between both entities. Healthy competition between competing companies should also be encouraged (Wheelen, 2011). This will help motivate the different companies to strive to be the best service provider by offering affordable rates among other services. Allegiant Airline Company might have no choice but to readjust some of the generic or grand policies in order to guarantee future success in the future within the aviation industry. For example, exploring other niche strategies might expand Allegiant Company’s market instead of the company restricting itself to a single niche. The few changes deemed necessary should not conflict with the company’s mission statement. This is because, mission statements present the objectives of a company in a quick, summarized way for interested parties. Meaning, it should remain constant as the changing aspects undergo a readjustment which will ensure they remain in line with the current mission statement. In conclusion, Allegiant Airline Company continues to grow despite the obstacles it encounters along the way. This can be attributed to the fact that Gallagher, acting in the capacity of the CEO, portrays impeccable leadership skills. His quick identification of the untapped target market also plays a key role in the company’s steady growth rate. The fact that personnel working within the organization share the companies strategies, allows them to work efficiently resulting in the provision of high quality services to their customers. Venturing into the provision of other services besides chartered and scheduled flights also expanded Allegiant’s market, for example, the provision of all inclusive packages which contained both travel and accommodation rates. Therefore, Allegiant’s switch from traditional approaches of established Airlines paid off in the long run. Other companies continue to borrow from this company because of the way it overcame bankruptcy and went on to become a leading company in the aviation industry (Wheelen, 2011). References Airline, A. (2012, May 14). Home. Retrieved from Allegiant Air: http://www.allegiantair.com/ Wheelen, T. L. & Hunger, J. D. (2011). Concepts in strategic management & business policy. (13th Ed.) Pearson-Prentice-Hall. Company, A. T. (2007). Annual Report for the Year Ended December, 2007. Nevada: Allegiant Airline. Read More