Air Canada Case Study

Air Canada

Huang, Yonghui (Vivian)

Li, Daoping (Dave)

Chen, Jie (Jessie)^[a]

Dana Morris

Business English 5N81 Lec2

Brock University

August 22,2016

Abstract

In this article, we briefly introduce the basic condition and history of Air Canada. Through analyzing competitive advantages and industry environment, the situation of the company become more obvious. We also provide the data of their service, financial information and current strategies so that we can predict future view in this company.^[b] We focus on financial analysis which provides us the financial capability to understand whether the firm is profitable or not.

Table of content^[d]

Abstract        3

Introduction and history        4

Current industry and competitive advantages analysis        5

Individual assessment        7

Service        7

Current Strategies        8

Individual assessment        10

Financial capacity analysis         10

Individual assignment        13

Reference        14

Introduction and history

Air Canada is Canada’s biggest airline service provider. The country’s name is used in the company’s name, so it seems like the airline company represents Canada. Air Canada is a company with the history of almost 80 years, and its headquarters are set in Montreal, Quebec. It has scheduled airline services to over 190 direct destinations, not only in the domestic market but also in the international market. Their airline services not only include passenger services but also include cargo services. The main officers of this company include David I. Richardson, who is the Chairman of the Board, Calin Rovinescu, who is the President and Chief Executive Officer, and Michael Rousseau, who is the Executive Vice President and Chief Financial Officer.^[f] (Air Canada annual report 2015) Air Canada is trying to create a positive working environment among the organization. The number of their employees was about 28,000 in 2015, and the company is taking actions to improve their employees’ engagement and train them to be responsible for their working performance. The employees with excellent working performance will be awarded ^[g]every year by their colleagues.

Air Canada used to be a part of Canada’s national airline, and its privatization started from the year 1988 when the Canadian government began to deregulate the country’s airline market. “Air Canada is a founding member of the Star Alliance® network^[h]. Through the 28 members Star Alliance® network, Air Canada can offer its customers access to approximately 1,300 destinations in 192 countries, …” (Air Canada annual report 2015, P9) Besides, it is regarded as the second best airlines in North America for 2016 by Skytrax World Airline Awards. (http://www.worldairlineawards.com/Awards/best_airlines_by_world_region.html^[i]) Compared to its achievement, this company also experienced some accidents. For example, its flight 624, which flew from Toronto to Halifax, encountered a serious crash ^[j]onto the runway when the airplane tried to land. 23 ^[k]people got injured from this accident, and it also caused great damage to both the airplane and the airport.

Current industry and competitive advantages analysis

The airline industry is a kind of industry which may be affected a lot by many conditions. Firstly, the geopolitical conditions. The development of this industry depends on a lot of the demand for the airline transportation. The social instability is one of the factors that can have an impact on the demand. For instance, the recent terrorist attacks happened in certain regions may influence the demand for the number of flights to or come from these regions. Secondly, the economic conditions. The fares of flight can be an important influence factor. Customers often prefer to choose an airline company which has the competitive advantage on fares. Meanwhile, “The airline industry is characterized by low-profit margins and high fixed costs.” (Air Canada annual report 2015, P69) This means for an airline company, if it wants to use much lower fares than other companies to attract customer, it may earn a little. The fuel price is also an unstable factor that can bring effects to the whole industry as this industry ^[l]has a large demand for fossil fuels. Thirdly, the environmental conditions. Nowadays, weather conditions can be predicted but not accurately. Terrible weathers can delay the taking off ^[m]of aircraft and cause unknown risk factors to flights.

The airline industry is a competitive industry. Compared with other airline companies, Air Canada has many competitive advantages. To begin with, it has a broad popularity due to its brand, especially in the domestic market. It benefits from being a member of Star Alliance, so it has an expanding network. It has well-positioned hubs, and it also owns its competitive products and services, such as a flexible fleet mix and lie-flat beds in Business Class. (Air Canada annual report 2015, P13) The main competitors ^[n]of Air Canada are American Airlines Group, Delta Air Lines, and WestJet Airlines. Even though Air Canada still holds the major part of the domestic market in Canada, it should also pay attention to its competitors, especially the competitors in the international market and maintain the advantages it has already have.

Individual assessment 1

From my point of view, Air Canada should not only emphasize on how to improve their products and services, how to maintain their competitive advantages, and how to reduce costs and increase revenue, but also should pay more attention on how to avoid the occurrence of accidents, and how to increase the degree ^[o]of passengers’ satisfaction. For example, the passengers of their flight 624 are still suffering from physical or mental harms. These passengers have already proposed a lawsuit and the reason of the accident is being investigated.(David,2016:http://www.cbc.ca/news/canada/nova-scotia/air-canada-flight-624-crash-plane-passengers-anniversary-1.3510935^[p]) Although who should be responsible for the accident is still not clear, Air Canada should also show a positive attitude towards their passengers’ complaints. Dealing with the unsatisfied customers correctly ^[q]can help the company to build their company’s reputation among the industry.