There is no doubt the advent of readily-obtainable pricing and availability for airline travel via the internet has changed competition drastically. Not only are customers able to search and select flight times and destinations from each individual airline’s own website, but they now also have the ability to compare everything regarding the flights from plane types, durations, layovers, connecting flights, additional fees and fares on independent travel booking sites such as Travelocity and Expedia; with multiple carriers listed side by side.
For this reason, United Airlines has no choice but to implement a strategy involving their marketing which creates a positive view of the United brand. The textbook defines strategy as “an integrated and coordinated set of commitments and actions designed to exploit core competencies and gain a competitive advantage” (Hitt, Ireland & Hoskissin, 2011). United Airlines strategy is quite similar to its major competitors, but also attempts to cater to sought-after services discovered from intense market research. Travel Options by United” was a program introduced in 2008 to accommodate customer’s growing need for more personal and flexible demands. Although customers must pay extra for these amenities, the demand has proven customers value them highly and will utilize a carrier that provides them. Available services from another strategy, Premium Service (PS), include lay-flat seating, door-to-door luggage service, complementary food and beverages and several other options (p. s. 2012).
These promotions have not only generated additional revenue for United, but also loyalty amongst travelers while preventing their departure to discount airlines. Technological Changes There are numerous reasons to blame for the sharp decline in the number of business airline travelers. Advancements in video conferencing and email correspondence allow transactions and meetings to take place without the necessity of all parties being in one location. Additionally, economic limitations have limited travel budgets, and steeply discounted fares are commonly sought.
The old standard of business travel being a majority of the airline’s volume is over, and “the leisure segment of demand now constitutes the dominant one in air transport today” (Shaw 2007). This, in addition to the savvy internet shopper, requires United Airlines to update and implement more technological services to remain competitive. The main way United has accomplished this task is by harnessing the resources available through their Global Alliance, SkyTeam. Travelers seeking international destinations will find they are unable to utilize a single-source carrier except for major metropolitan areas.
In turn, they will be required to purchase flights with separate airlines, handle baggage transfers personally, and hope there are no delays or cancellations along the way. However, the alliance allows a customer to book through SkyTeam, and all the connecting flights, baggage issues, and other potential issues are resolved. Additionally, United has incorporated a competitive response to the other large carrier’s use of e-tickets, self-check kiosks and additional time saving methods (Hitt, Ireland & Hoskissin, 2011).
These advancements may have initially incurred monetary losses, but the increased number of satisfied customers will pay dividends in the long run. Human Resources Management Five out of the six major U. S. airlines incurred huge losses in revenue during 2008, and United was one of them. In a Hail-Mary attempt to cut costs and avoid additional losses, United cut 950 pilot jobs, and over 1600 salaried positions. This move only added to the discontent felt for United within the airline labor and union population.
Although considered to be part of the overall overhead costs by some in management, the departure of these employees also took several intangible resources (Hitt, Ireland & Hoskissin, 2011). Countless dollars have been spent training these employees regarding standard procedures within United, and these losses in both knowledge and morale were felt throughout the company. United had one of the most prosperous times once the employee-ownership settlement was reached. This proved that employees having a stake in the business tend to work harder and increases the customer satisfaction ratings in turn.
Although the economic downfall and 9/11 completely shattered the airline industry, the downfall of United’s ESOP was because management never enacted an ownership culture. United’s membership within the SkyTeam does afford benefits above those enjoyed by just the customers. SkyTeam has the capability for pilots and mechanics from multiple airlines to train and learn from within and upkeep of the fleets are shared. Instead of bearing the entire cost for these advantages, they are distributed amongst the complementary strategic alliance (Hitt, Ireland & Hoskissin, 2011).
General Industry Challenges United has the ability to offset the peaks and valleys of fuel costs by hedging the costs. Additionally, they are able to make use of their SkyTeam alliances to form a major buyer conglomerate, which will allow even stronger negotiation abilities. Furthermore, by keeping strong relationships with both Boeing and Airbus, they will realize lower purchase prices and greater returns on investments when selling aging aircraft. By fostering share agreements with other airlines, United will gain lower usage costs for airport slots, and potential routes for loyal customers. Finally, United is in a powerful position to negotiate with labor union leaders and convince all parties that honest wages will benefit everyone in the long run.
2012, p. s. Offered on all flights between New York (JFK) and Los Angeles (LAX) or San Francisco (SFO), http://www. united. com/web/en-US/content/travel/inflight/premiumservices. aspx, October. Hitt, M. A. , Ireland, R. D. , & Hoskinsson, R. E. (2009). Strategic management: Competitiveness and globalization. Mason OH: South-Western Cengage Learning. Shaw, S. (2007). Airline Marketing and Management. Burlington VT: Ashgate Publishing.