Business Environment; Air Canada
Introduction
Air Canada traces it origin from 10th April 1936. The airline was created by federal government legislation to supplement the activities of Canadian National Railway (CNR). It was formed on the name, Trans-Canada Airlines (TCA). It started its commercial business in passenger operations in 1937. By 1939, the TCA launched its engagement in transcontinental flights. Air Canada became the first airline to use computer reservation system involving remote terminals in 1953. There were attempts in 1964 to change the name to Air Canada. The Company’s name eventually changed in 1965 when the rejected bill was resubmitted for vetting. From 1965, it used the Air Canada identity.
Air Canada made Ville-Marie in Montreal its central position for conducting its operations hence becoming an independent corporation. In 1987, the airline pioneered the use of fleet-wide non-smoking policy. In 1988, the company underwent privatization. During this ordeal, 43% of the company’s shares were made available to the public market. The process was completed in the following year. In 1997, Air Canada association with other organizations founded Star Alliance. In 2001, Air Canada expanded its volume and operations by acquiring the second largest air carrier in Canada (Canada Airlines). In 2003, the company filed a bankruptcy protection. The airline took one and half years to emerge from such engagement. Airbus A340s model of planes replaced the Boeing 747-400 models in 2004. In the recent years, the airline has attained improved level of efficiency by upgrading its fleet, bringing new planes into the business, and enhancing the existing ones. The company’s mission is to connect Canada with the rest of the world. The vision of the company is building loyalty through passion and innovations.
Non-Market Environment
Non-Market environment refers to political, social, and legal agreement that structures interactions outside the business. These agreements are in conjunction with the market and private arrangements (Needle, 2010). These factors cannot be managed by individual or organization’s market interactions. As a company in the airline business, Air Canada faces several non-market environment cases that are law pertaining. One of the most recent non-market environments involves Air Canada machinists (Lu, 2012). The non-market environment is discussed below using the 4I’s technique (Issue, Interests, Institutions, and Information). This entails discussing the problem at hand, which stakes are at risk through this problem, institutions involved in the problem, and the source of the information about the problem.
Issue
Machinists through their largest union within Air Canada file legal petition. The case intends to challenge the legislation by the federal government preventing strikes at Air Canada. According to Paul Cavalluzzo, the constitutional lawyer, arguing the case on behalf of International Association of Machinists and Aerospace Workers, Bill C-33 violates freedom of association and freedom of expression stipulated under the Canadian Charter of Rights and Freedoms. The case in hand is clearly stated out in the Canadian constitution hence the union feels that the freedom of the workers is being restricted.
Interests
Individuals or groups with much interest at this non-market environment include; the International Association of Machinists and Aerospace Workers, Air Canada Company, Federal Government and the Judiciary arm of the government (Canada Industrial Relations Board). The interests of employees at Air Canada are at stake with the implementation of this legislation. The government has interest in the case because taxes are collected from the airline and worker. In the event of this strike, the government will lose large sums of money.
Institutions
Within this non-market environment experienced by the Air Canada Company involves different institutions. The institutions involved includes; Federal government (political institution), International Association of Machinists and Aerospace Workers (social institution), and the Canada Industrial Relations Board (legal institution). Media institution is also involved in the non-market environment by relaying to the society, the proceedings of the court in relation to this case.
Information
The interested party, International Association of Machinists and Aerospace Workers, are well informed on the matter at hand. They know about their rights and freedom as stipulated in the Canadian Charter of rights and freedoms. They base their information from the ruling by the Supreme Court in 2007 supporting the need for a collective bargain. The vital information in this case is the constitution implemented by the federal government.
Integrated Strategy
Air Canada has put in place different strategies to help address the market and non-market environment. The integrated strategies applied by Air Canada include the discount airline program, promotions/advertisements aimed at enlarging the market coverage, legal acts to protect the workers, corporation and the consumers, website transaction of business, sponsorship of sports activities, and enhancement of the airline’s capacity. These integrated strategies are analyzed based on strengths and weaknesses of the airline company. This illustrates whether the integrated strategies are efficient and effective or less productive/inefficient.
Strengths/Success of Air Canada
The Air Canada is ranked 10th globally amongst the largest airlines available. This is credited to the ever-increasing volumes of passengers annually. The four divisions (Jets, Vacations, Cargo and Express) increase the operation levels of the airline company. The increasing volume is because of the strong Air Canada reputation. The discount airline program adopted by the executive of Air Canada has increased the number of passengers who uses the airline. Appealing advertisements has increased the market coverage of the airline. All these strategies in place prove to be effective to their intended course of increasing volumes of trade in the airline trade. These strategies enable Air Canada to compete effectively in the air business against big players in the industry.
Air Canada through the integrated strategies, is considered the largest airline service provider in the Canadian market. It is also the largest airline entity in the US-Canada trade region. Among the airlines operating internationally to and from Canada, Air Canada is the largest full-time service provider in the airline industry. This achievement indicates the vital role played by the integrated strategies applied by the airline company. During the year 2011, the airline in conjunction with its express division transacted airline business involving 33 million passengers. This was achieved through over 180 destinations in five continents globally. Air Canada offers employment opportunities to close to 25000 individuals globally. This is an indicator of the volume of trade conducted by the airline.
Challenges faced by Air Canada
Air Canada in its daily operations experiences mechanical hitches leading to cancellation of travelling tickets. These technical/mechanical problems are reflected in the annual financial status of the company in form of losses. Bad weather also affects the operations of the airline company. During these periods, the airline company experiences losses as little trade is conducted (Cento, 2009).
Another challenge Air Canada has to deal with is the looming workers strikes. During the strikes, operations of the airline company are paralyzed. This leads to losses on the part of the company. The company also experiences losses in attempts to reason with the organizations taking part in strikes in the industrial law courts. During strikes, facilities of the airline are vandalized in most cases.
Bankruptcy affects the operations of the airline. This calls for abandonment of all the activities of the airline company. Whenever such event occurs, the company runs at a loss in the sense that, it has to refund the passengers who had already requested for the tickets. Since no activities take place when the company goes bankrupt, the cost of running business become expensive thus losses are recorded (Cento, 2009).
Another problem faced by Air Canada is stiff competition from other airline service providers. The airline industry is composed of large airline companies against which Air Canada cannot compete. This result into low revenue collected at the end of the financial year. Inadequate revenue collected at the end of each financial year because of the discount program applied by the airline company, is a challenge faced by the business entity.
Conclusion and Recommendation(s)
Air Canada is one of the prominent business entities globally. Based on the way it treats its loyal customers, the airline has grown over time. The official takeover of Canada Airlines boosted the economic strength of Air Canada as it expanded its market area and business volume. The introduction of Airbus models enhanced the chances of Air Canada to compete with the largest airlines in the industry. Having pioneered the use of computer system use in airline industry, Air Canada is considered a leader in the business. Air Canada proves to be the safest means to travel when using air mode of transport. This is based on the few cases of accidents it experiences over the years. Through integrated strategies, Air Canada is able to solve its market and non-market problems/environment.
In order to improve the weaknesses it experiences in the daily operations, Air Canada needs to take into consideration the following recommendations; improve the level and quality of advertisement in order to improve the growing passengers’ volume further. This would boost the total revenue at the end of every financial year. The discount program is ineffective hence should be scrapped out of the system. It contributes to the dropping total revenue at the end of each financial year. In order to compete well in the airline industry, Air Canada should improve its treatment towards consumers and increase the number of destinations globally. This will increase the awareness of the products by the consumers.
Increased involvement in sports sponsorships also helps to promote the image of the company hence should be considered by the Air Canada. This will help the airline to increase its market coverage, as it will be able to attract new customers and maintain the existing ones. Finally, honesty and loyalty are vital values in any business activity. These values should be implanted in the employees of the company. Those who uphold these values should be rewarded as a form of motivation. This will encourage other employees without these values to adopt them in order to receive the award as well. If all these are observed, the goals, vision, and mission of the Air Canada will be realized.
References
AIR CANADA. Retrieved from,
http://www.aircanada.com/en/about/career/about_faq.html
Air Canada machinists to fight anti-strike bill in court. Retrieved from,
http://news.yahoo.com/air-canada-machinists-fight-anti-strike-bill-court-144906007.html
Lu Vanessa (2012). Air Canada machinists launches charter challenge over back-to-work law. Retrieved from,
http://www.thestar.com/business/article/1155503–air-canada-machinists-launches- charter-challenge-over-back-to-work-law
AIR CANADA – HISTORY. Retrieved from,
http://www.seatmaestro.com/airlines-seating-maps/air-canada/history.html
Cento, A. (2009). The airline industry: Challenges in the 21st century. Heidelberg: Physica-Verl.
Hill, C. W. L., & Jones, G. R. (2008). Strategic management: An integrated approach. Boston: Houghton Mifflin.
McRae, B. (2010). British Columbia and the Canadian Rockies. John Wiley & Sons Canada, Limited.
Needle, D. (2010). Business in context: An introduction to business and its environment. Andover: Southwestern Cengage Learning.
