Operational and Scheduling Challenges Affecting Flybe - the Largest Regional Airline in Continent Europe - Example

Flybe’s Hub Analysis Report Name Institution Professor Date TABLE OF CONTENTS I. Executive Summary.................................................................................................3 II. Introduction..............................................................................................................3 III. Operational and scheduling challenges affecting Flybe...........................................3 IV. Recommendations....................................................................................................4 V. SWOT analysis.........................................................................................................5 VI. Conclusion................................................................................................................7 VII. Appendixes...............................................................................................................7 References..............................................................................................................9 I. Executive Summary Flybe Inc. is the most independent and largest regional airline in the continent Europe and it is based in the city of Exeter. The company operates more domestic flights in United Kingdom compared to any other regional airliner. It operates on only 149 routes and 9 countries with total of 69 destinations. Through the 149 routes in the 9 countries, 7,000,000 passengers are served every year. The company’s routes connect Amsterdam, Paris, Dublin, Birmingham and Manchester’s long-haul hubs. This company is registered as one of the members of the great European Regions Airline Association. This paper discusses the operational and the scheduling challenges affecting the company, gives recommendations on the possible ways that the company can reduce the challenges and analyses the company’s strengths, threats, weaknesses and opportunities. II. Introduction Flybe Group PLC, which is the parent company of Flybe features in the list of the London Stock Exchange. Flybe Inc. was launched in the year1979 as a Jersey European Airways after the Express Air Services and Intra Airways Companies merged. In the year 1983, Jersey European Airways Company was sold to another company by the name Walker Steel Group. On buying the company, the Walker Steel Group had another airline by the name Spacegrand Aviation. The company merged the two airlines, Jersey European Airways and Spacegrant Aviation, under the name of European Jersey in the year 1985. In the year 2000, the merger was renamed as British European, BE. In the year 2002, British European received the current name, Flybe. Manchester and Birmingham is the company’s hub. III. Operational and scheduling challenges affecting facing Flybe At the end of the year 2007, Birmingham International Airport had 9,100,000 passengers. Since then, the airport has been experiencing decreases in the number of passengers due to the acts of Germanwings, Alitalia, Mytravellite, Aer Arran and CSA which cease other airline companies’ operations from the Birmingham International Airport. This has been reducing Flybe’s passenger traffic hence affecting its revenue and profits because the company’s customer base is decreased. Secondly, the decline in the number of passengers in this airport has been associated with reduction in Flybe Airline Company’s aircraft movements’ number. This brings confusion in the scheduling of the Flybe Airline’s operations. Disruption in the scheduling of the company’s operations reduces customers’ trust and legitimacy hence making the customers to shift to other company’s service. This shift reduces the the company’s sustomer base hence the revenues and profits. Reduction in the company’s revenues and profits makes it difficult for the company to emphasize in improving the quality of the services provided. In the Birmingham International Airport, there has been increase in the environmental lobby, government taxation and prices for aircraft fuel. This has been associated with increase in the ticket price hence discouraging customers and reducing the number of customers who use the airport. Decrease in the number of customers has led to reduction in the Flybe’s customer base hence resulting to reduced revenue and profits. Finally, Birmingham International Airport management team cancelled Flybe’s early flights from BHX. This cancellation forced Flybe Company to refund those customers who had purchased tickets hence reducing the number of customers for the company, the revenues and the profits. This cancellation also led to reduction of customer legitimacy and trust for the services offered by this company. It has also led to delays of Flybe Company’s early flights. In other, the cancellation disrupted the company’s scheduling and operations. Finally, Flybe Birmingham flights have so many disruptions which lead to loss of luggage by passengers and cause delays hence reducing customer trust and making others to prefer other airlines. IV. Recommendations The following can be adopted in the process of addressing the operational and the scheduling challenges discussed above. First, to address the problem of deteriorating economic conditions in the countries where it operates and which exert pressure on load and revenue factors, the company should employ skilled commercial teams that can accurately monitor the route performance and make proper adjustments on the flying patterns so as to increase customer satisfaction, expand the customer base and meet all the needs of the customers already satisfied with the services offered by the company. This challenge can also be addressed through designing the company’s fleets in such a way that there is very low reliance on the domestic market of the United Kingdom which is prone to economic instability stances. Reduced reliance on the domestic market of the United Kingdom can be achieved through the use of joint ventures with increased activities of contract flying. The management team should continue to exploit opportunities that can enable the company to grow its business outside the domestic economy of those countries with unstable economy. Secondly, to address the problem of high competition in Europe, the company should expand its plans outside the existing markets where there are minimal competition and improve the quality of its services so as to attract more customers. Thirdly, to avoid the challenges associated with regulatory changes in the countries where it operates, the company’s management should be engaged with the governments of the respective countries where it operates through membership and contact of the industry organizations in those countries so as to ensure that their company can be given time to acquire the requirements of any change in regulation rather than stopping its activities up to the time that it acquires the documents or any other requirement of the regulatory change. This engagement reduces inconveniencies in the departure time hence increasing the trust of the customers, increasing the customer base and increasing the profitability of the company. Fourthly, to address the challenge of fluctuations in fuel prices, the company can enter into contracts with specific fuel companies about the prices and promise the companies that it will remain permanent and it will be an all time customer. Finally, to address the challenge of increased tax levied in some countries where the company operates, the company can seek to increase its fee in such a way that the customers are not affected and the tax expenses are catered for. V. SWOT analysis of Flybe All the weaknesses of Flybe are addressed under the operational and the scheduling challenges affecting Flybe. The strengths of this company include: first, it has employees who are properly equipped such that they can carry up their tasks safely. This leads to few accidents for the company’s aircrafts since the employees put in place nice plans that are capable of mitigating accident’s consequences and any other emergencies. Secondly, the company has a training academy that trains the company’s staff and employees on provision of quality services. This training equips the employees with skills and knowledge that they can use in provision of efficient and effective operations hence attracting more customers and expanding the customer base. Thirdly, the company’s management team is very talented. This team ensures that the services offered by the company are excellently delivered to the loyal customers in every day basis. The management enables that the right employees of the company are in the right place, doing the right thing and doing the things with the right people (Bourjade, Huc & Muller-Vibes, 2017: 30). This employee monitoring practice reduces the chance of terror attack because corruption is not allowed hence increasing customer’s trust, confidence and legitimacy on the services offered by the company. Fourthly, the company is very committed in reducing emissions and noise. This commitment changes the brand image of the company on customers every day hence proving to the customers that the company does not only aim at increasing profits but puts more concern on the customers’ affairs by taking care of the environment. Finally, the company’s board of governance is made up of highly skilled and intelligent members who plan attainable, realistic, specific and manageable goals for the company. This company has many opportunities through which it can use to improve its services and win the largest customer base in the world. Some of the opportunities of the company according to Zuidberg, 2014: 86, include: first, the company can merge with smaller airline companies in the country it operates so as to form one big company that is capable of providing services in all parts of the globe. Merging can help the company increase its customer base hence increasing its revenues and profits which can be reflected in high quality goods and services. Secondly, the company can use the political and charitable donations to improve its brand image and attract as many customers in the world as possible since this convinces the customers that the company is concerned with their affairs. Finally, through its involvement in the implementation of the European Leadership Strategy, the company can manage to build a leading regional group of aviation in Europe. According to Starkie, 2008: 193, the threats of this company, although they are seasonal, are very many. First, some of the countries where it operates have unstable economy and prices keeps on changing hence affecting the profitability of the company through the fuel’s prices. Secondly, there are other airway companies in the United Kingdom that are very competitive hence posing challenge to the company when it comes to winning of customers and expanding the customer base. Thirdly, terrorist threat from both the external and the internal sources affects the operations of the company. Finally, the likelihood of the future economic conditions of the countries where the company operates posses this company with a threat as it always fears to make plans that may lead to the expansion of the customer base because of uncertainty about the future economy of those countries. VI. Conclusion This company has a lot of strengths and opportunities and it can expand its services to cover more area than it currently covers. The more the countries it covers, the more the customers the company will have (Baumeister & Onkila, 2017:1370). Therefore, the company should utilize the opportunities and the weaknesses to address its challenges and threats so as to be able to provide high quality services, expand its customer base and increase its revenues hence the profits. High quality services can increase the competence of the company hence enabling the company to meet it targets at the planned time (Dutton, 2016:4). VII. Appendices SWOT analysis summary Weaknesses Natural disasters Deteriorating economy Regulatory changes Heavy dependence in the information technology systems High competition Heavy duty for air passengers Threats Unstable economy Insecurity Challenge of winning customers Poor economy Opportunities Political and charitable donations Merging European leadership strategy Strengths High revenues Organized board of directors Skilled employees Employee training academy Environmental concern (Flybe, 2012: 32) Comparison of the Flybe and its competitors It is clear from the above analysis that the company faces stiff competition from the other airliners in the United Kingdom (Dennis, Smyth & Stevens 2008:118). The graph below compares the productivity of investment of Flybe and other two airline companies. A graph of the value of £100 invested against Time in months in 2012 This graph shows that Flybe’s value of investment is low compared to the other two companies. This means that, Flybe’s profitability in the year 2012 was very low because its value of investment could not attract more investors (Flybe, 2012: 54). References Baumeister, S. and Onkila, T., 2017. An eco-label for the airline industry? Journal of Cleaner Production, 142, pp.1368-1376. Bourjade, S., Huc, R. and Muller-Vibes, C., 2017. Leasing and profitability: Empirical evidence from the airline industry. Transportation Research Part a: Policy and Practice, 97, pp.30-46. Dennis, N., Smyth, A. and Stevens, K., 2008. Comparative analysis of regional airline industry in Europe and North America and some insight into current developments. Transportation Research Record: Journal of the Transportation Research Board, (2052), pp.118-125. Dobruszkes, F., 2006. An analysis of European low-cost airlines and their networks. Journal of Transport Geography, 14(4), pp.249-264. Dutton, J., 2016. Flybe aims for long-term profitability. Air finance Journal. Pp. 1-4 Flybe, 2012. Building Europe’s Leading Regional Aviation Group. Retrieved from http://www.flybe.com/corporate/investors/2016/Flybe-FY17-half-year-result-presentation.pdf on 9th of February, 2017. Pp. 35-96 Starkie, D., 2008. The dilemma of slot concentration at network hubs. Airport Slots-International Experiences and Options for Reform, pp.193-203. Zuidberg, J., 2014. Identifying airline cost economies: An econometric analysis of the factors affecting aircraft operating costs. Journal of Air Transport Management. Retrieved from http://www.sciencedirect.com/science/article/pii/S0969699714000817 on 10th of February, 2017. Pp. 86-95 Read More