The airline industry has undergone significant restructuring in recent years. Airlines, formerly rivals in a highly regulated industry, have become opportunistic seekers of co-operation. In today’s world, mega-carriers and small airlines are working together rather than competing with one another. Forms of co-operation include sub-contracting, code-sharing, franchising and the formation of global marketing networks. Such alliances allow firms to focus on their respective core competencies, while drawing the benefits of scale economies. In essence, co-operation among competitors has led to increased competitiveness. This has accelerated the trend of joint marketing, and the airline has become characterized by the desire to belong to a global network. The tendency has been to strive for a global presence. More recently, there has been a shift toward co-operative marketing rather than acquisitions. Instead of expanding their own services, airlines have been connecting with one another, such as to form networks. These include very small firms as well as larger corporations. In addition to using networks as a means to expand, alliances are also being used to maintain market-presence during downsizing.
DISCUSSION
Air Canada recently launched a pass program similar to cellular telephone plans: It lets customers pre-purchase a set number of flights in the U.S. and Canada at a fixed price. Some plans are targeted to vacationers heading to Florida or Hawaii; others to oil workers commuting to work for three-week shifts into northern Alberta. Big companies can buy as many flights as they want, usable by as many as 300 employees within any three month period. Some big U.S. carriers are eyeing the program with interest. AMR Corp.’s American Airlines is trying to design a prepaid travel pass for consumers, a top executive says. (American already has a version of a pass program available to business travelers: Users can buy 25,000 miles worth of travel in one year for ,000.) UAL Corp.’s United Airlines, which also has a program for business travelers, is watching the consumer offerings, says a marketing executive. Last month, Canadian discounter West Jet Airlines struck back at Air Canada by offering a package of 10 one-way flights between Toronto and either Montreal for about US,100.
Thus, airlines used to be able to buy monogamy from customers with frequent-flier programs, but those loyalty programs aren’t as powerful as they used to be. Customers find miles difficult to redeem and upgrades hard to come by. Some have more miles than they can use, so don’t care as much about accumulating more miles. As a result, airlines are looking for new ways to battle low- cost carriers without simply matching prices. Air Canada, a unit of Ace Aviation Holdings Inc., believes the pass push will help it lock in loyalty from customers who might otherwise stray to competitors like U.S. airlines for trans-border travel and to its main Canadian competitor, West Jet. “It gives customers price predictability the thing airlines always get criticized for,” says Charles McKee, Air Canada’s senior director of strategic marketing. Pass prices are generally higher than the cheapest fares and lower than the most expensive coach tickets. The customer gets the certainty of locking in reasonable fares that can be used on short notice. And while the airline loses the ability to monkey around with prices, it benefits by getting cash in advance and keeping customers from shopping at competing airlines. Since pass holders are less likely to shop around with competitors, the airline says it won’t have to spend as much on advertising, costs will be lower since Air Canada won’t have credit-card transaction and booking fees on every ticket.
The pass program transfers some of the risk of empty seats from the airline to the customer. If customers don’t use up all the segments they buy before they expire, the airline gets paid anyway. American has already had success with its program for business travelers. But at 40 cents a mile (compared with an average 12.85 cents per mile overall in the first quarter), it’s only enticing to corporate road warriors who buy tickets at the last minute and don’t want the hassle of ticket-shopping. That is why American is busy designing a new consumer-focused pass program. But to make it work, Air Canada says, the airline has to make sure it holds back seats for pass holders, who are more likely to book closer to departure rather than chasing advance-purchase fares weeks before a trip. Air Canada will consider adding all-cargo domestic service this year but only after withstanding a regulatory challenge from Cargo jet Airways and a scathing criticism from the government for operating a cargo flight within Canada. The Canadian Transportation Agency criticized the carrier’s “reprehensible” conduct in refusing early on to acknowledge that it had moved cargo on a freighter within Canada without a license. But the agency also imposed no penalty and granted the carrier a license to run cargo-only aircraft domestically, responding to a request filed June 1, 2005. The approval appears to end a dispute with rival Cargo jet and frees Air Canada to consider starting scheduled all cargo services within Canada as it also considers adding to the three freighters it uses internationally.
Market Strategy Plan is one of the fundamental influences on the way organisations are managed. Air Canada’s strategy affects the way the business is structured, and the recent reorganisation of Canada’s structure was made to allow for new initiatives to prosper and succeed. According to Chandler (1962), strategy is the determination of long-term goals and objectives and the adoption of behaviours and allocation of resources, which are necessary for the organisation to achieve these goals and objectives. Chandler believes that as companies grow, their structure needs to grow with them, moving from a simple, to a functional, to a divisional structure, if they are to remain efficient, and that if an organisation assumes a new strategy, they require a new or updated structure if the larger company is to operate effectively (Robbins & Barnwell 2002). Raymond Miles and Charles Snow has determined four strategic organizational types based on the speed of the market and product changes and based on their theory, Air Canada may adopt a defender strategy. Miles and Snow state that defenders seek stability by offering a limited range of products and or services directed at a narrow target market and be able to prevent competitors from stealing their market, defenders strive to produce a high quality service and offer competitive pricing. (Robbins & Barnwell 2002).
Although Air Canada does focus on improved efficiency and lowering operating costs but still Air Canada is continually looking for new opportunities to grow and diversify their business. Air Canada’s long-term strategy is to improve its profitability to create substantial shareholder value and to maintain its position as Saudi’s leading national air carrier and to continue to grow and diversify the business into new markets nationally and internationally. If such consumer trends continue to move towards lower airfares, the other strategy is to become the national as well as domestic airline leaving behind the international market with other key elements involved in achieving the airlines goal to maintain their position as a better domestic carrier are upgrading and expanding the fleet to improve efficiency, maintaining a flexible and diversified network, maintaining current alliances and seeking mutually beneficial relationships with other quality airlines, improving the profitability of the business organization, maintaining financial strength, high level of success as well as investing in product and customer service initiatives in order to avoid failures (Air Canada Annual Report 2000). Part of Air Canada’s broader strategy is to simplify its operations and that certain measures are being taken to implement this strategy and has simplified their fare structure by means of reducing the available fare types and its reorganisation as noted by many staff procedures and passages of communication in response to changing demands, as the Air plans to move to economy seating on some routes and also a fleet of new aircraft.
Henceforth, Michael Porter argues that for an organization to successfully perform its basic functions it must select a certain marketing strategy that will give its organisation a competitive advantage. Porter states that three business strategies should exist such as cost leadership, differentiation and focus and the organizations should choose the marketing strategy that best facilitates their strengths over their weaknesses (Robbins & Barnwell 2002). Success with the marketing strategy usually requires the efficiency of operations, economies of scale, technological innovation as well as preferential supplier agreements and that the marketing strategy should be able to break into the Canada market and be the essential provider in the industry. A differentiation strategy is where an organisation seeks to be unique in its industry in ways that are widely valued by customers. It involves emphasising an attribute that makes the firm different from its rivals and it significant enough to justify a premium price. For an organisation with a differentiation strategy to succeed, it requires many skills and resources, including strong marketing and research capabilities. Basically, Porter believes that a firm should have strong coordination among functions in research and development and marketing and that intuitive measures should be used rather than quantitative measures.
Air Canada plans to become the first international airline to offer U.S. cruise line customers the first portside check-in service since Sept. 11, 2001. The airline has been working to win approval from the Transportation Security Administration using a portable podium, along with a weight scale and wireless technology, Air Canada’s current market situation are evident as the Airlines may be able to plan and realize the use of an e-Business centre that will internet technology to allow the development, deployment and hosting of the airline’s e-business solutions and the goals of providing integration with its existing core enterprise systems and applications to meet and realize their marketing strategies and its changes in the system and approach in the business. This a series of carefully planned implementations aimed at supporting the airlines e-business marketing strategies and boosting its internal capabilities to leverage Internet technologies involving the Air Canada’s technical team relating to its general marketing and services representative for Canada as it will be successfully completed through this strategical phase.
The eBusiness Centre could be the milestone in driving Air canada’s corporate e-business strategy and be able to improve corporate capabilities as well as to reduce costs and improve services to the loyal customers. It provides the Airlines with new capabilities and opportunities to serve their customers, partners and employees in an integrated manner while leveraging existing investments and middleware technology was a result of a research that started on finding the partner that could provide an open, portable and scalable solution that would best integrate with its existing enterprise and marketing environment. It is important that Air Canada to address issues of acquiring technologies components, knowledge as well as competencies transfer and most importantly the Airlines should be able to adopt a proven process of its marketing value in lieu to its strategic plan of organization and useful methods for operating the e-Business Center which has the key pillars and pivotal for a successful implementation of such a large scale of their marketing process and to ensure a successful completion of its strategies while sticking to the boundaries of their original allocated budgets in terms of their market situation. Furthermore, the Airlines possibly takes on a unique approach in the way that it has decided to move forwards with its marketing environment and that is the importance it has given to its marketing integration to be able to provide and develop more on its quality service in aspiring satisfaction to their valued customers.
Marketing Mix strategies
There are certain marketing mix strategies and sales techniques which have to be observed in order to develop and sustain business relationships
Ø Air Canada should be constantly reviewed for market evaluation, adaptation process and change assessment
Ø Complete services should be in detail and should be introduced in order to benefit from greater demand stimulation and cost reductions
Ø The airline should be in communication with the Air Canada Standards Organization on the precise implementation of the standards pertaining to their services offered with respect to the country
Ø Efforts should be made to improve the appearance of value and areas involving its commodities by means of quality assurance to their services
Ø In the case of any machinery and equipment problems including warranties as well as maintenance should be prompt and efficient.
Relevant marketing mix approach to their strategy in handling business has offered Air Canada the unleashing of important information and functionalities on their mainframe platform in engaging the high standards and goals in providing best services to their customers and that such strategic feature will be able to reduce the time needed by the user to perform a specific business process in relation to the application of its respected business strategies wherein, Air Canada Airlines has set plans to expand into specific projects to increae their market sales and profit in enhancing more on their marketing strategy in terms of balancing and maintaining their current business scale in the market field and proper management resource.
Segmentation
The presence of any market segmentation of the Air Canada has involved several areas being in constant coverage by their business operations in serving countries worldwide. Air Canada has involved to such division in their sales and profit process but its major marketing operation is directed to several destinations outside Canada then, there could be such clear indication that the airline has applied its segmentation process.
The strategy and its implementation
The airline believes that Carmen’s solutions will provide opportunity to vastly improve their planning process, increase flexibility and bring greater efficiency to their marketing operation and performance with the aim of reducing lead-times and crew costs of such matter. The optimization software from Carmen will also support the airline with exact simulations which will be useful to maintain the daily efficiency of the operation to meet the demands of their marketing strategy and its implementation and can also be essential when evaluating major changes regarding new business opportunities and or consequences from modifying the market strategy and be able to start working in guidance to the values found in within the process. The goal is to strengthen further the profitability of Air Canada and assist in resolving their challenging planning situation in relation to their marketing planning approach as of today’s epoch. Global events and market downturns have continued to put pressure on the airline and railway sectors. It is a permanent structural change. The companies in the airline’s key markets that have been able to adapt well are poised to become the leaders in profitability and in view to their primary role as being the support of their current and future clients in building a stronger position in their respective industry and market segment by helping them control cost structures and changes to their business strategy.
As Air Canada continues their efforts to build a complete and integrated market strategy planning and decision support software solution combining the major revenue and cost drivers and the proficiency coupled with a strong knowledge based service offering as it can be essential to any idea of expansion of services.
The sustainable strategy
Air Canada must plan to develop a communication analysis tool such as the Sustainability Reporting Spider web as it will advocate the business industry for sustainability. The Sustainability Reporting Spider web illustrates the management paradigm shift involved in moving towards a more inclusive stakeholder organization (KPMG, 2001). It comprises four of the Balance Business Scorecard dimensions joined by four additional sustainability dimensions.
The eight dimensions are as follows:
Ø financial management
Ø eco-efficiency
Ø sustainable management
Ø operational performance
Ø competence management
Ø innovations
Ø stakeholder management
Ø product performance
A sustainable development management and reporting system is increasingly becoming a common base line for many organizations. This is a way of implementing a strategic framework that will integrate present and planned initiatives and programs for social, environmental and economic management. According to KPMG (2001) the hallmark of commitment to sustainable business development is the move to triple bottom line reporting. Air Canada can seek to monitor, measure, report and continuously improve their performance in three areas:
Ø financial responsibility
Ø environmental responsibility
Ø corporate social responsibility
Design/methodology/approach
There are two phases involved. In the first phase, the current research develops a web-based mobile airline ticketing (W-MAT) model to study usability features necessary to perform mobile air ticketing commerce. Thirty-six features are mapped and identified based on the W-MAT model. In the second phase, the air ticketing web sites for 27 most popular airline companies and online air travel agencies are examined to analyze their existing implementation patterns on these 36 features. The pattern analysis is based on web site features analysis and web site versatility analysis. The W-MAT model-based air ticketing features with usability emphasis are crucial to develop efficient mobile air ticketing web sites; and thereby, accelerating the adoption of m-commerce for the air travels industry in the near future. Most organizations in the airline industry have attempted to respond to the financial turmoil through drastic evolution. Since the tragedy in September 2001, the carriers have sought ways to improve business values and minimize losses by cutting jobs, eliminating routes, decreasing infrastructure, streamlining production costs, improving customer services and creating a profitable market (Will, 2004).
One of the most effective solutions for increasing business values, attracting more customers, and increasing customer satisfaction is to provide internet-based low-fare air travel tickets (Marks, 2004) to sell low-fair air travel tickets and expedite boarding processes through company web sites. Currently, many airlines are utilizing their own web sites to market and sell their products to current and potential customers. Some airlines also offer discounts to customers who purchase their tickets online (Hanke and Teo, 2003). Through the expanded use of the internet-based ticketing, airlines are able to reduce labor costs and in some cases eliminate commissions altogether so as to improve profit margins. To sustain a significant competitive advantage, innovation and product differentiation are critical for organizations. The next opportunity for airlines to reach new markets, maintain low distribution costs, and enhance customer values and satisfaction can be achieved through the use of mobile technologies, including using mobile devices to purchase online air tickets (Hanke and Teo, 2003). However, unlike e-commerce participants, users of mobile commerce usually find themselves in an unfamiliar and unpredictable environment (Perry et al., 2001); and therefore, developing a user-friendly interface can reduce the constraints put by the unpredictability of the mobile environment.
The adoption of mobile ticketing (m-ticketing) will enhance the flexibility and effectiveness of using electronic ticketing (e-ticketing) due to its inheriting mobility by using mobile devices. However, the adoption of m-ticketing in the air travel industry is still slow and has not been widely implemented. In the US, the United Airlines is the only airline company that currently provides m-ticketing. The development of m-commerce environment with user-friendly features is important to accelerate the adoption of m-commerce in the air travel industry. Motivated by the apparent lack of literatures in the area of m-ticketing, the current research aims at studying web-based features that are crucial to the success of mobile air ticketing commerce. Generally, e-commerce is defined as a monetary transaction conducted using the internet and a desktop or a laptop computer (Will, 2004).
M-commerce usability
Research indicates new challenges in usability design in m-commerce that are not present in e-commerce, including small screen size, limited screen resolution, limited processing capabilities, limited battery power of mobile devices, and cumbersome input mechanisms (Ghinea and Angelides, 2004). Sears and Arora (2002) mentioned that the most important user-related obstacle in m-commerce was the limited data entry and data retrieval capabilities.
The goals m-commerce customers try to achieve are different than their goals in the e-commerce environment, because in m-commerce environment goals are often conducted based on a location or time pressure (Sadeh, 2002). M-commerce aims at providing services to support time-critical activities, and designers need to leverage the desires for specific usability aspects of m-commerce. From a customer perspective, the issue of information privacy is of growing concern as our society becomes more and more digitized (Kelly and Erickson, 2004). The increasing acceptance of the mobile technology is conspicuous in the air travel industry, in particular. Air travelers are on the go, and mobile devices give them a tool to stay informed at all times (Marks, 2004). Therefore, the current study focuses on understanding the opinion of mobile air travel ticket shoppers from a usability perspective and developing a successful m-commerce environment for the air travel industry by uniquely combining and studying the concepts of m-commerce, usability and the air travel.
A web-based mobile airline ticketing model
Shih and Shim (2002) developed an m-commerce framework that focused on the inside of business scenarios to utilize m-commerce. The current research develops a web-based model for mobile air travel ticketing that sprung from Shih and Shim’s (2002) framework and focuses on the usability features of the web sites through which transactions are conducted. A secure electronic payment system with many payment alternatives developed by O’Brien (2004) is also integrated into the web-based mobile air travel ticketing model to enhance the features for payment transactions by adding in a payment server. The communication between a client and a server is based on wireless network and wireless application protocols. On the airline ticketing server site, the wireless web server is used and wireless web development is based on wireless markup language.
There are eight transaction flows involved in order to complete the m-commerce information transactions:
Flow F1 (send request). A mobile customer enters data and specifies the requests. The request is sent via a mobile device to the client browser.
Flow F2 (access account). The customer uses a wireless device to log onto m-commerce sites of major airlines or air ticket agencies that are available. The airlines and airline agencies recognize the customer.
Flow F3 (search flight information). The travel agency transfers the mobile customer’s request to multiple airlines databases.
Flow F4 (retrieve flight information). Airlines that have matching flights to the customers’ requirements send back the information to the customer via online travel agency’s user interface.
Flow F5 (submit payment). When the customer accepts the proposed itinerary and the fare, payment information is sent to the credit card processing company.
Flow F6 (check payment). The credit card processing company credits the payment to the online travel agency’s account.
Flow F7 (purchase confirmed). Upon positive indication from the payment company (such as credit card company), the airline travel ticket server accepts the customer’s travel request and issues a confirmation number. The customer can also get an mobile boarding (m-boarding) pass with bar codes through a wireless device.
Flow F8 (complete purchase). When the purchase is completed, the mobile customer can check schedule and gate information for the booked flights. More links to other web sites such as weather information and destination maps.
Therefore, e-ticketing that is more widely and popularly used should provide a good platform to analyze m-ticketing framework and provide guidelines on how mobile airline ticketing may be approached from existing web sites of the dominant air travel companies and major online air travel agencies that offer e-ticketing used for the development of the W-MAT model-based m-ticketing features in the current study. (Sears and Arora (2002) The W-MAT model-based m-ticketing features can be validated by comparing m-ticketing features developed in the current research with the existing implementation patterns of these features in the e-ticketing.
The current research developed a web-based mobile air travel ticketing commerce model by considering the usability features and studied the existing m-commerce environment. The breakdown of the m-ticketing information transaction flows from the W-MAT model can allow airline companies and air travel agencies to determine what features need to be concentrated on differentiate themselves from their competitors. The findings from the current research indicate that developing user-friendly m-commerce features is crucial to the success of m-commerce. The air ticketing feature adoption pyramid developed in the current research reflects the availability of air travel ticketing features.
Air Canada could possibly continue to create a national transportation network and established its own integrated airline and passenger-ship network as the airlines have been becoming increasingly involved in horizontal relationships which strengthens market share. The dynamism of the airline industry makes it a challenge for any one player to respond to the broad spectrum of competitors experienced by Air Canada as many foreign airlines implemented a variety of innovations to lure passengers, especially business travelers. In 1998, Air Canada opened its own arrivals lounge, the lounge has private showers, shoe-polishing and clothes pressing services and a breakfast area within the business centre areas with telephone and Internet facilities as it is open to Air Canada’s most frequent travelers.
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