Business Report For US Airways Group Tourism Essay

The undermentioned study is an analysis of US Airways Group, which may be referred to as US Airways subsequently in the study. This study has a description, historical background, SWOT analysis ( strengths, failings, chances, and menaces ) , recommendations, and a sum-up.

Company Description

US Airways Group, Inc. is really a keeping company for several commercial air hoses with US Airways being it ‘s largest. The company originated in Delaware in 1937 by a sailplane pilot named Richard C. du Pont. It was non until May 12, 1939 that du Pont started presenting mail across the mountains in Pennsylvania and West Virginia. It was non until 1997 that the company was renamed US Airways after traveling through extended structural alterations ( Funding Universe, 2003 ) .

Finishs and Operationss

Bing one of the state ‘s prima rider airliners, US Airways serves over 200 metropoliss around the United States, Canada, Latin America, the Caribbean, and Europe. For the company ‘s mainline paths, it uses over 350 aircrafts. Piedmont Airlines, PSA, and several other independent bearers perform regional services. This amounts to an excess 300 aircrafts ( Hoovers, 2010 ) . All of US Airways operations are run by its entirely owned subordinates. There are over 3,800 flights performed every twenty-four hours chiefly in the United States by US Airways entirely. Operating and pull offing these flights has over 39,600 people employed ( Report Buyer, 2008 ) .

Executives and Affiliates

Some of US Airways executives include the undermentioned: Keith Houk – President & A ; CEO, PSA ; Steve Farrow – President & A ; CEO, Piedmont ; Doug Parker – Chairman, President, CEO ; William Parker – Chairman, CEO ; and W. Douglas Parker – Chairman, President, CEO. These are merely a few of the executives out of a sum of 135. US Airways is besides a member of the Star Alliance which deals with code-sharing. This allows other members of Star Alliance to spread out their finishs and sell tickets through other attached air hoses. This helps the clients get to where they want to travel more expeditiously and efficaciously. Normally, there would merely be approximately 32 different states US Airways has a flight for, but because of the connexions with Star Alliance, it can supply 841 finishs and 157 states worldwide for its clients ( Profile.Portfolio, 2008 ) .

Fleet Information

US Airways fleet consists of 356 aircrafts. US Airways decided to merely utilize two different types of aircrafts and got rid of the remainder. Boeing and Airbus are the two different types of aircrafts that were kept in usage. However, there are several different theoretical accounts which include the Boeing 767, 757, and 737 aircrafts and the Airbus A330, A321, A320, A319 aircrafts.

Primary hubs are located all over the United States in Charlotte, Philadelphia, Phoenix, and Las Vegas plus other of import hubs in New York, Washington D.C. , Pittsburgh, and Boston ( Star Alliance, 2004 ) .

Historical Background

While US Airways is a multimillion dollar corporation today, it had its low beginnings in Delaware in 1937. The company was originally incorporated as All American Aviation, Inc. by a sailplane pilot named Richard C. du Pont, of the Delaware du Ponts. On May 12, 1939, the air hose began to present mail around the mountains of Pennsylvania and West Virginia. Since many communities did non hold flight strips, the company devised a system using ropes that enabled the mail plane to drop off one mail pouch and pick up another without landing.

After the war, All American Aviation changed its name to All American Airways and in 1953 the name was changed once more to Allegheny Airlines. That same twelvemonth the authorities chose Allegheny to run shuttle services between smaller eastern metropoliss and major finishs served by larger air hose companies ( AviationExplorer.com ) .

The company experienced a period of healthy growing for several old ages in the 1950s and 1960s. New equipment was being implemented as planes became more advanced. The operations and care base was besides relocated from Washington, D.C. , to a modern composite in Pittsburgh ( Spiritus-temporis.com ) .

In 1967, Allegheny began farm outing these paths to smaller independent bearers. The mugwumps were able to do a net income on the paths because they had lower costs, they were non unionized, and their equipment was better suited for the rural paths. Since the mugwumps forwarded riders largely to Allegheny, the company itself had become a big regional air hose. As air hoses were sing more and more authorities ordinance, menus got higher. Allegheny, nevertheless, was exempt from these authorities menus because they subsidized authorities air hoses. This created immense net incomes and allowed for mass regional theodolite. Alleghany officially became USAir on October 28, 1979 ( FundingUniverse.com ) .

USAir entered 1992 battered by a hapless economic system. The company had suffered three back-to-back old ages of net losingss with the largest in 1990 at $ 454 million. This caused the forfeiture of many domestic paths, ferocious monetary value wars, and a series of staff decreases and pay freezings.

The company announced in November 1996 that the parent company would alter its name to US Airways Group, Inc. In February 1997, USAir became US Airways. At this clip the company ordered many new big air bearers and merged with several smaller air hoses. The new aeroplanes would enable US Airways to go on as a major air hose instead than being forced to shrivel into a regional one.

A freshly revitalized US Airways made a host of strategic manoeuvres during the late 1990s including the beginning of international flight. They so began flights in topographic points such as Madrid, Paris, and London. There were negotiations of a amalgamation with United, but they fell through due to consumer unfavorable judgment of a monopoly on air hoses.

Shortly after the air hose flop due to 9/11, US Airways filed for Chapter 11 bankruptcy in 2002. After old ages of battle and fiscal sufferings, US Airways and America West Airlines merged in 2005 and US Airways moved its central offices from Pittsburgh to Tempe, AZ. Today, US Airways group is still non where it wants to be. While they are more afloat financially than they were ten old ages ago, recognition sufferings still loom and they have closed many major airdromes such as Las Vegas and LaGuardia. As with most of the air hose industry, they are merely seeking to acquire by until the economic system improves.

SWOT Analysis

Strengths

With air hose companies, there are many different picks for clients every bit far as flight companies. Many air hoses vie against each other by take downing monetary values, and offering more finishs to popular metropoliss. In this instance, this is where the US Airways has its first strength as a company. It has highly low pricing compared to air hoses like Delta, Southwest. In a pricing trial from Indianapolis to Las Vegas, US Airways had the lowest unit of ammunition trip menu compared to Delta and Southwest Airlines. Along with low monetary values, US Airways has a strong operational web, broad service offerings, and great selling within the company.

Having a strong operational web is a major strength of US Airways. US Airways has hubs in many major metropoliss within the United States ( Airlines of USA hubs & A ; concentrate metropoliss ) . Some of these metropoliss are Charlotte, NC ; Philadelphia, PA ; and Phoenix, AZ. It offers more than 3,100 day-to-day flights from the United States to other states in Canada, Europe, the Caribbean, Latin American, and is still turning. In 2008, US Airways increased service in different markets from its Charlotte, NC hub. These markets include metropoliss in Texas, Florida, Mississippi, California, Montreal, Canada, and even Brazil ( Journal, 2009 ) . US Airways ‘ strong web substructure enables the company to derive more entree to of import markets, and besides heighten the great quality of its bringing services.

Another great strength about the US Airways company is that the company has broad service offerings. Many modern air hoses now have automated services for doing reserves, publishing embarkation base on ballss, and check-ins through their web sites. US Airways besides allows clients to book flights through travel bureau online web sites like Orbitz, Priceline, and Expedia and many others. In 2008, US Airways Group received 57 % of its gross revenues from online ( Datamonitor, 2009 ) . Since 2005, US Airways has doubled its gross through utilizing Bill Me Later, which is an on-line site that lets users purchase points without the usage of a recognition card ( Bill Me Later, 2009 ) . US Airways besides has client trueness plans. This includes a client gaining milage credits which can be used for travel awards and ascents.

US Airways besides has a great selling and confederation understanding. With US Airways keeping their confederation understandings, this allows the company to offer more finishs for their riders without increasing its operating disbursals and capital outgos ( Star Alliance, 2005 ) . After fall ining the Star Alliance, this helped the US Airways by heightening the value of the company ‘s domestic and international path web. This allows all of the clients to hold broad entree to the planetary market place. Further, the US Airways maintains understandings with the GoCaribbean web. This allows the company to offer increased flight frequences and supply new criterions of convenience and client service.

Failings

US Airways has some failings to travel along with their strengths. One major failing that this company has is its dependance on the American consumer and the American economic system. US Airways depends on 79.7 % of their net incomes from the United States market ( Datamonitor, 2009 ) . This is a failing because if the US market clangs, the net incomes of the company bead significantly. An over dependance of a market of any sort is merely non a good feature to hold in a concern every bit big as US Airways.

In add-on to over dependance, US Airways is be aftering on greatly cut downing flights from hot musca volitanss such as Las Vegas, Colorado Springs, and Wichita. They besides want to suspend or extinguish international flights including, five European locations and their finish in Beijing. With the retrenchment that is taking topographic point, US Airways is traveling to cut about 1,000 employees in the first half of 2010 ( Standard & A ; Poor ‘s, 2010 ) .

US Airways besides has many fixed contractual duties which is a drain on their fundss. These contractual duties include terminal leasing, new plane contracts, office infinite rentals, and other airdrome installations ( Datamonitor, 2009 ) . The recent alterations in the fiscal markets could do it more hard to make the funding needs to pay for these duties. They would hold to seek really hard to happen ways to raise capital, because any negative impact on their recognition evaluation could greatly increase their current costs and cut down the possibility of much needed funding ( SEC, 2009 ) .

Another large failing the company must get the better of is their low net incomes. US Airways has had an one-year operating loss for six of the past 10 old ages ( Standard & A ; Poor ‘s, 2010 ) . This has caused the air hose to undergo Chapter 11 bankruptcy two times, one time in 2002 and once more in 2005, as it merged with American West in hopes of making a stronger air hose company ( LexisNexis, 2010 ) .

US Airways is unluckily one of the leaders in ailments being filed against their company. In fact, out of the 19 major United States air hose companies, US Airways comes in at figure 16 with 35 ailments filed merely with the US Department of Transportation in 2009. These Numberss do non include the sum the air hoses itself takes each twenty-four hours. The ailments that are filed have a assortment of classs such as cancellations, holds, overbooking, fees, luggage jobs, favoritisms, client service, and the harming of animate beings during flights ( US DOT, 2010 ) . Adding fees in order to have comfortss such as pillows, covers, checkered luggage, premium seating, and a few other once free of charge services has driven up client ailments and driven away some clients. US Airways has began to implement these charges to clients because of the expected $ 400 million yearly the air hose could gain ( LexisNexis, 2010 ) . Even though this may assist the company financially, these charges have proven to be really unpopular with consumers and have hurt the client dealingss of this air hose company ( USATODAY, 2008 ) .

Opportunities

U.S. Airways has several favourable chances. These include fleet enlargement, add-on of new paths, cooperation with other air hoses, planetary travel and touristry industry, and engagement of other concerns.

In 2008, US Airways purchased more aircrafts and engines to spread out their concern. The company bought five A321 aircraft from Airbus and 14 from Embraer 190 aircraft. Under Amendment No.1 to the Amended and Restated Airbus A320 Family Aircraft Purchase Agreement, its 13 A319 aircrafts are traveling to be converted into A320 aircraft, one A319 aircraft to an A321 aircraft, and eleven A320 aircrafts to A321 aircrafts during 2009 and 2010. Furthermore, US Airways purchased engines for the usage on their existing aircrafts ; new IAE V2500-A5 trim engines for the Airbus A320 household fleet, three new Trent 700 trim engines for on the Airbus A330-200 fleet, and three new Trent XWB trim engines for the Airbus A350 XWB aircraft ( Datamonitor, 2009 ) .

In 2009, 18 A321 aircrafts, two A320 aircrafts and five A330-200 aircrafts arrived harmonizing to the understanding US Airways has with Airbus. With the company ‘s attempts to heighten its fleets, it plans to replace new aircrafts for older widebody aircraft aircrafts, anticipating international growing ( Datamonitor, 2009 ) .

As another chance, US Airways increased their figure of paths. On March 11, 2010, the company introduced four new paths from the East Coast to Mexico, Canada, and between Charlotte, Ottawa, Los Cabos, Puerto Vallarta, Philadelphia, and Halifax. This add-on of new paths is expected to pull more clients with more picks and convenience to acquire to their finishs such as Mexico ‘s cheery beaches and Canada ‘s beautiful East Coast. These four lines will be available get downing May 31, 2010 ( Relations US, 2010 ) .

In add-on, US Airways decided to interchange takeoff and landing slots among Delta AirTran, Spirit, WestJet, and JetBlue. As a consequence of this understanding, 37 slots braces at Reagan National are given to the company. This means it gained entree to identify international finishs of Sao Paulo and Tokyo-Narita. This event is expected to back up the company ‘s program to spread out international flight concern ( Release Delta, 2010 ) .

Following, planetary travel and touristry industry is expected to maintain turning. Harmonizing to the World Travel & A ; Tourism Council ‘s research, Travel & A ; Tourism Economy GDP is likely to turn by 3.2 % in 2011. Another research on Travel & A ; Tourism Economy GDP shows that United States is expected to bring forth the largest sum of Travel & A ; Tourism Economy. This is expected to be a GDP of $ 1,375.90 billion in 2010 and $ 2,485.70 billion in 2020, followed by China ( CouncilWorld ) . US Airways besides gross revenues single and group travel bundles which involve US Airways, US Airways Express, and all US Airways concern spouses such as hotel adjustments and auto leases. This chance will offer discoveries for the company ( Datamonitor, 2009 ) .

Besides, US Airways started to set ads on its embarkation base on ballss. This is a concern thought adopted from Delta who foremost started selling ads on its embarkation paperss to increase its gross. Ad can make their possible clients easy who visit popular metropoliss such as Las Vegas, Orlando, or New York. There is a batch of demand for advertisement through air hoses where travellers and tourers pass through ( Gilbertson Dawn, 2010 ) .

Menaces

US Airways Group faces several menaces in the air hose industry including intense competition, monetary value discounting, competition in international markets, lifting fuel costs, added costs due to excess security steps put in topographic point, and the consequence of the lag of the economic system ( Datamonitor, 2009 ) . Price competition has caused air hoses like US Airways Group to fight to keep their pricing construction. The low-priced bearers are take downing the monetary value of their flights so significantly by merely including the bare lower limit of luxuries necessary in a flight that they are take downing the sum that airlines like US Airways can anticipate to sell tickets at. The low-priced air hoses besides use monetary value discounting during a clip of lower demand to excite people into going more. Both of these things cause a major impact on the monetary value that anyone in the air hose industry can anticipate to sell tickets at.

There is besides competition in international markets. The air hose industry can do a important income by opening up the figure of countries that they fly to. This can besides assist stabilise a company because if there is a job with one country that they fly to, the income from the other finishs of travel will be able to stabilise the company and screen disbursals. Due to several air hoses understanding this construct, more air hoses are taking to wing in international markets. This causes competition over the monetary values of utilizing airdromes. One manner US Airways has decided to battle this cost is by sharing the disbursal with certain other air hose companies. US Airways and the other air hose will divide the cost of utilizing a terminus and so find who can utilize that terminus at what clip. This besides helps them lease more terminuss at one time and barricade the other low-priced air hoses from utilizing them.

Rising fuel costs have been a major concern for the economic system as a whole, but it has significantly impacted the air hose industry. Harmonizing to the Air Transportation Association, fuel cost is the 2nd largest disbursal to air hose companies. This is 2nd merely to the cost of labour ( Forbes Digital Company, 2010 ) . One manner companies can assist stabilise their ain fuel costs is by fuel monetary value hedge. Fuel monetary value hedge is when a company contracts to pay a negotiated monetary value on fuel for a specified period of clip ( Wikipedia Contributors, 2010 ) . Fuel hedge is normally a good thing because a company can assist stabilise its costs for the twelvemonth. However, one bad thing about fuel hedge is that a company can negociate a monetary value at the beginning of the twelvemonth, and so the cost of fuel beads. The company is stuck paying the sum that they negotiated and can non exchange to the lower market sum. In 2008 the cost of a barrel of petroleum oil went from $ 145.29 to $ 33.87 a barrel ( Air Transport Association, 2010 ) . With this big fluctuation in monetary value, it is of import that companies utilize monetary value hedge and pick the best possible clip to negociate a low monetary value.

Increased security steps due to the terrorist onslaughts on 9/11 have besides created a important cost to the air hoses. The United States Transportation Security Administration entirely is passing about $ 6 billion dollars a twelvemonth to protect the air hoses ( Stewar & A ; Mueller, 2008 ) . Airlines are responsible for run intoing the ordinances imposed by the TSA for new security steps. This is done by engaging excess forces and directing all employees to added preparation for security intents. Extra forces are needed to assist screen riders before they get onto the air hose. They have to be updated on all the alterations on the of all time altering engineering being used to increase air hose security.

The lag of the economic system has besides had an impact on the air hoses. The current national unemployment rate is 9.7 % ( Bureau of Labor Statistics, 2010 ) . Because people are losing their occupations and their incomes, less people are winging. Business people fly rather often to travel to concern meetings, and they normally do non utilize the low-cost air hoses because they enjoy the excess luxuries that low-priced airfares do n’t supply. Business people contribute a big per centum of income to the air hose industry. Since there are a batch of concerns shuting down and a batch of concern people losing their occupations, the air hoses are experiencing the impact.

Recommendations

The usage of fuel efficient jet engines and aircrafts can assist US Airways cut the cost of fuel which is the 2nd largest disbursal they incur. Besides, US Airways doing the determination to take certain finishs that are non fuel efficient from their list of flights will assist with fuel costs. The usage of monetary value hedge to contract monetary value sums for fuel will assist stabilise their fuel costs for the twelvemonth.

Along with more fuel efficient engines and aircraft, US Airways can go on to add new finishs to popular locations both in and out of the United States while cutting less executing paths that do n’t draw in much gross and cost more on a per rider footing. While adding finishs increases cost, these new finishs can increase net incomes and assist broaden the stableness of US Airways ‘ income.

US Airways can utilize more advertizement of attractive forces, auto lease companies, and hotels during battles with either booklets or pictures played on takeoff and landing. Another option would be to let advertizement on luggage faux pass to cut luggage fees. Adding advertizement to the luggage faux pass can assist maintain cost down while non go throughing the cost on to riders. This will be an inducement for clients to utilize US Airways alternatively of other companies who have high luggage fees. This advertisement infinite can add to US Airways ‘ gross.

Drumhead

US Airways ‘ strength comes from its lower pricing compared to other air hoses like Delta and Southwest. US Airways besides has a strong operating web with hubs in Charlotte, NC ; Philadelphia, PA ; A andA Phoenix, AZ. US Airways has a broad assortment of service offerings on their web site including the ability to do reserves, print embarkation base on ballss, automatic check-in at the airdrome, and a client trueness plan. Another one of US Airways ‘ strength is its rank in the Star Alliance, assisting to heighten the value of their domestic and international path web.

US Airways ‘ failings come from it ‘s over dependance on the American consumer and the American economic system to do up most of its net incomes. Another failing is US Airways ‘ program on cut downing flights to and from hot musca volitanss every bit good as some international flights. Besides, their fixed contractual duties can travel against them. US Airways besides struggles maintaining clients due to the fact that they add fees to have comfortss, which can turn riders off.

US Airways has an chance to assist place itself better with its swift enlargement of extremely efficient planes. Domestic and international paths of travel are an ever-growing possibility of chance. US Airways has another chance in its cooperation with other air hoses in interchanging takeoff and set downing musca volitanss, every bit good as its rank in the Star Alliance.

US Airways besides faces several menaces in the air hose industry including intense competition, monetary value discounting, and competition in international markets. Another menace US Airways faces is the lifting cost of jet fuel as demand for oil continues to lift around the universe. They besides have to cover with added costs due to excess security steps put in topographic point and the consequence of the lag of the economic system.