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Aviation Industry Analysis

Aviation Industry Analysis. Isabel Molina, Matteo Nebiolo and Mia Rabadam. Aviation Industry is Born. 1903- Wright brothers first successful flight 1926- Air Commerce Act was passed for passenger safety (postal mail flights) 1927- Charles Lindbergh crosses the Atlantic

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Aviation Industry Analysis

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  1. Aviation Industry Analysis Isabel Molina, Matteo Nebiolo and Mia Rabadam

  2. Aviation Industry is Born • 1903- Wright brothers first successful flight • 1926- Air Commerce Act was passed for passenger safety (postal mail flights) • 1927- Charles Lindbergh crosses the Atlantic • WWII research into 4 engine planes assisted the commercial aviation industry to take off.

  3. How many… • Worldwide in 2008, 93,000 scheduled commercial airline flights per day. • Over 1 billion people fly each day in the US and around the world. • There are over 18 million flights in the world per year. • About 1,000 flights cross the Atlantic every day. • These over Atlantic flights alone total about 400,000 flights a year.

  4. THE UPDATED LIST OF MAJOR AIRLINE PARTNERS

  5. The Best of the Best: Ranked in Order of Score

  6. RATING THE WORLD"S FIVE BEST AIRLINES STRICTLY ON SERVICE:

  7. The European Union Blacklist of Unsafe Airlines • Ariana Afghan Airlines • Air Service Comores • Africa One • African Company Airlines • Aigle Aviation • Air Boyoma • Air Kasai • Air Navette • Air Tropiques s.p.r.l. • Ato—Air Transport Office • Blue Airlines • Business Aviation s.p.r.l. Butembo Airlines • CAA—Compagnie Africaine d’Aviation • Cargo Bull Aviation • Central Air Express • Cetraca Aviation Service • CHC Stelavia • Comair • Compagnie Africaine d’Aviation • C0-ZA Airways • Das Airlines • Doren Aircargo • Enterprise World Airways • Filair • Free Airlines • Galaxy Corporation • GR Aviation • Global Airways • Goma Express Great Lake Business Company • I.T.A.B. — International Trans Air Business • Jetair—Jet Aero Services, s.p.r.l. • Kinshasa Airways, s.p.r.l. • Kivu Air

  8. Black List continued…. • La —Lignes Aériennes Congolaises • Malu Aviation • Malila Airlift • Mango Mat • Rwabika “Bushi Express”? • Safari Logistics • Services Air • Tembo Air Services • Thom’s Airways • TMK Air Commuter • Tracep • Trans Air Cargo Services • Transports Aeriennes Congolais (Traco) • Uhuru Airlines • Virunga Air Charter • Waltair Aviation • Wimbi Diri Airways • Equatorial Guinea • Air Consul SA • Avirex Guinee Equatoriale • COAGE—Compagnie Aeree de Guinee Equatorial • Ecuato Guineana de Aviacion Ecuatorial Cargo • GEASA—Guinea Ecuatorial Airlines SA • GETRA—Guinea Ecuatorial de Transportes Ae5eos • Jetline Inc. • KNG Transavia Cargo • Prompt Air GE SA • UTAGE—Union de Transport Aereo de Guinea Ecuatorial • Kazakhstan • BGB Air • GST Aero Air Company • Kyrgyzstan

  9. More Black Listed Airlines • Phoenix Aviation • Reem Air • Liberia • International Air Services • Satgur • Weasua Air Transport, Co. Ltd • North Korea • Air Koryo • Rwanda Air • Silverback Cargo Freighters • Sierra Leone • Aerolift, Co. Ltd • Afrik Air Links • Air Leone, Ltd • Air Rum, Ltd • Air Salone, Ltd • Air Universal, Ltd • Destiny Air Services, Ltd • First Line Air (SL), Ltd • Heavylift Cargo • Paramount Airlines, Ltd • Star Air, Ltd • Teebah • West Coast Airways Ltd. • Swaziland • Aafrican International Airways, (Pty) Ltd • Airlink Swaziland, Ltd • Jet Africa • Northeast Airlines, (Pty) Ltd • Scan Air Charter, Ltd • Swazi Express Airways • Thailand • Phuket Airlines • *Source; The Official Journal of the European Union

  10. Airlines Reviewed

  11. Air Canada (AC) • Origin: Canada • Number of Aircrafts: 355 • Number of employees: 24,700 • Passengers per year: 33, 00 million • Number of scheduled destinations: 171 • Daily Departure: 1, 370 • Founded:1937* • Frequent Flyer Program: Aeroplan • Hubs: Toronto, Montreal, Vancouver & Calgary • Affiliation: Star Alliance

  12. Singapore Air (SIA) • Origin: Singapore • Number of Aircrafts: 109 • Number of employees: 14,142 • Passengers per year: 18,30 million • Number of scheduled destinations: 65 • Daily Departure: 220 • Founded:1947* • Frequent Flyer Program: Krisflyer • Hubs: Singapore Changi • Affiliation: Star Alliance

  13. Southwest Airlines • Origin: United States • Number of Aircrafts: 500+ • Number of employees: 35,000 • Passengers per year: 100+ million • Number of scheduled destinations: 67 cities, 34 states • Daily Departure: 3,200 passengers • Founded: 1971 • Frequent Flyer Program: Rapid Rewards • Hubs: 6 (Albuquerque, Chicago, Houston, Oklahoma City, Phoenix and San Antonio) • Affiliation: None.

  14. American Airlines • Origin: United States • Number of Aircrafts: 620 American Airlines • Number of employees: 82,000 worldwide • Passengers per year: 98 million • Number of scheduled destinations: 250 cities, 40 countries • Daily Departure: 270,000 passengers • Founded: 1934 • Frequent Flyer Program: AAdvantage • Hubs: Dallas/Fort Worth, Chicago O’Hare, Miami, and St. Louis, and a large concentration of Caribbean service at San Juan, Puerto Rico • Affiliation: OneWorld

  15. British Airways (BA) • Origin: United Kingdom • Number of Aircrafts: 245 (+51) • Number of employees: 48070 • Number of scheduled destinations: 148 • Founded: 1919 • Frequent Flyer Program: Executive Club • Hubs: London LHR and GTW • Affiliation: OneWorld

  16. Vueling (VY) • Origin: Catalonia • Number of Aircrafts: 35 • Number of employees: 1280 • Passengers per year: 5 million • Number of scheduled destinations: 57 • Daily Departure: 150 • Founded: 2004 • Frequent Flyer Program: Punto • Hubs: Barcelona

  17. Porter’s Five Forces

  18. 1. Rivalry in the Aviation Industry • High Rivalry • Competitive Moves include: • Changing Prices (Seasonal and holiday specials) • Product Differentiation (expanded seats, airport hubs, frequent flier miles, etc.) • Creative use of channels (social media, internet specials, email blasts) • Exploiting relationships with suppliers

  19. 2. Threat of Substitutes in the Aviation Industry • When a product's demand is affected by the price change of a substitute product. • Examples: • Ryan Air vs. EasyJet in Europe • Southwest vs. JetBlue in US • British Airlines vs. American Air in both

  20. 3. Buyer Power in the Aviation Industry • Power of buyers is the impact that customers have on a producing industry • Strong buyer power because they possess a credible threat to buy producing firm or rival • Unhappy with customer service/amenities/delays fliers can easily fly rival companies.

  21. 4. Supplier Powerin the Aviation Industry • The Bargaining power of suppliers • Suppliers are weak because: • There are many competitive suppliers (airlines) • Credible backward integration threat by purchasers (ability to use other companies) • Concentrated purchasers (buyers know where and when they want to travel) • There is no cost to the buyer to utilize another airline. Airlines must conform to customer wants.

  22. 5. Barriers to Entryin the Aviation Industry • The possibility that new firms may enter the industry also affects competition • Difficult to Enter, Difficult to exit • Government creates barriers (licenses, etc) • Patents and proprietary knowledge serve to restrict entry. • Asset specificity inhibits entry into an industry. • Organizational (Internal) Economies of Scale.

  23. Final Selection and Why? • Criteria: Timeliness • Singapore Airlines – 93,8% • Air Canada – 82% • SouthWest – 80,4%

  24. Differentiation Airlines Vs. Low Cost Airlines

  25. Differentiation Airlines vs. Low Cost Airlines

  26. Ratios We Analyzed • Current Ratio – short term indicator of the company’s ability to pay short-term liabilities from short-term assets • Payout Ratio – Percentage of Net Income distributed to the shareholder by way of dividends • Total Assets Turnover – how effective the management is at using the assets of the company • Dividend Yield Ratio – dividends given to shareholders based on market values • Net Profit Margin Ratio – how management has controlled the business and the extent to which they have generated profits

  27. Current Ratio

  28. Pay Out Ratio

  29. Total Assets Turnover

  30. Dividend Yield Ratio

  31. Net Profit Margin Ratio

  32. Conclusions • One of the largest monopoly's existing in North America. • Despite revenue have not been able to provide any form of decent dividend to the shareholders. • Government bail outs are the norm for Air Canada. • What to expect in the future….. • Unless they learn how to minimize costs they will not be able to grow in this declining economy. • Despite being a monopoly perhaps they should exam some of the cost cutting factors and short term goals that “no frills” airlines use.

  33. Conclusions • Airlines with the largest fleet (more assets) • Despite the economy faltering has remained consistent in utilizing their assets to the fullest • Has increased in capabilities of meeting short-term liabilities • What to expect in the future: • Will continue to grow as the US’ no-frills leading airline based on their ability to meet short term goals through the economic crisis.

  34. Conclusions • Best Airline in the world • Strong in assets that are • constantly renew as e.g. it is.. • One of the few companies which • bought the new A380 • Will follow the big economic growth • of east countries • What to expect in the future: • Will always continue being the airways used to link western countries with east.

  35. THANKS FOR LISTENING! Have a good journey to your family for Christmas.

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