Air Transat Analysis

Introduction:

Air Transat is a Canadian airline based mostly in Montreal, Quebec. It was founded in 1987, and is owned by Transat A.T. Inc. According to Air Transat’s web site, their mission assertion is:

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“Air Transat is Canada’s main vacation journey airline. Every year, it carries some three million passengers to simply about 60 locations in 25 international locations aboard its fleet of Airbus wide-body jets. The firm employs roughly 2,000 folks. Air Transat is a enterprise unit of Transat A.T. Inc., an built-in international tour operator with more than 60 vacation spot nations and that distributes merchandise in over 50 nations.

Air Transat was named World’s Best Leisure Airline at the Skytrax annual World Airline Awards, held in July 2012.

“Transat A.T. Inc. is an built-in worldwide tour operator with more than 60 destination international locations and that distributes products in over 50 countries. A holiday travel specialist, Transat operates primarily in Canada and Europe, as well as within the Caribbean, Mexico and the Mediterranean Basin. Montreal-based Transat is also energetic in air transportation, destination services and distribution.

(TSX: TRZ.B, TRZ.A)”

Air Transat presents its services by stating that may be a main holiday journey airline that’s owned and operated by Transat A.T. Inc. The types of customers served are worldwide passengers within the 60 locations that they operate in. Air Transat geographically covers 60 locations in 25 countries. One of the ways Air Transat is distinguished from its rivals inside the industry is by being give the world’s Best Leisure Airline two years in the past in July 2012.

Nothing has been mentioned about buyer needs in their mission assertion in addition to they type of shoppers they’re targeting. We may assume that Air Transat is looking for holiday-oriented customer rather than business oriented prospects for example. This mission statement reveals no perception on how the agency will continue to compete with its competitors.

According to Air Transat’s web site, their imaginative and prescient assertion is:

“At Transat, we acknowledge the prime importance of the surroundings, host communities, cultural diversity, and our relationships with our workers, customers and companions. At Air Transat too… Then, Air Transat is dedicated to reducing its ecological footprint, and has adopted an environmental policy.”

This vision assertion doesn’t focus on the future they see of their imaginative and prescient with host communities, range, employees, prospects, and partners. However, it focuses on the environment. It has done that by creating an environmental policy, which is dedicated to doing the next in accordance with Air Transat’s web site:

1. Complying with all relevant municipal, provincial, federal, and international legal necessities, exceeding compliance wherever practical and attainable. 2. Certifying our environmental methods and efficiency to the highest standards, corresponding to ISO14001, IENVa, LEED, ICI ON RECYCLE and Fly-360-Green. three. Conserving natural sources, corresponding to vitality and water, and stopping pollution in our operations, buildings, and provide chains by way of source reduction, re-use, recycling and control. four. Continuously bettering our environmental performance by setting and reviewing objectives and targets, and by coaching and involving our staff and stakeholders whose actions have a significant environmental impact. 5. Collaborating with all of our key stakeholders (employees, suppliers, communities, governments and industry groups) relating to environmental, sustainable improvement, and corporate social duty initiatives and issues.

Surprisingly, I did not find a strategic aims statement on Air Transat’s web site. There had been no statements regarding how they’ll put their mission statement into motion, or how their objectives might be achieved. However, there’s a page that lists and summarizes all Air Transat’s awards, rewards, and recognition.

PEST analysis:

The definition of PEST evaluation based on businessdictionary.com is:

“A sort of scenario analysis by which political-legal (government stability, spending, taxation), economic (inflation, interest rates, unemployment), socio-cultural (demographics, training, income distribution), and technological (knowledge era, conversion of discoveries into products, rates of obsolescence) factors are examined to chart an organization’s long-term plans.”

POLITICAL
ECONOMIC
SOCIO-CULTURAL
TECHNOLOGICAL
Fuel taxation, and landing taxation
Fear of terrorist attacks after 9-11.
New European union regulations have led to greater ranges of competition on European routes.

Increase within the value of oil
Increase in transportation costs
Increase in disposable earnings due to rise in incomes and lower interest rates (people have more money to spend on leisure trips) Change in client conduct resulting from the growing older population in Canada may affect the variety of leisure journeys taken Increased recognition in travelling abroad

– Carbon dioxide emission
– Emirates airlines launching double decker aircrafts (A380), serving 25 destinations – Wireless web being launched in aircrafts
– Frequent flyer programs

The enhance within the value of oil and the speed at which it’s increasing is a worldwide concern. For Air Transat, this means an increase in price and expenditure. Since oil is essential on this trade, there might be not much that Air Transat can do. The improve in the value of oil might trigger pressure Air Transat to increase their prices for flight tickets. In more extreme cases, Air Transat may not have the ability to improve the costs for certain routes, and be compelled to terminate their providers to these routes.

Air Transat may benefit from the change in shopper conduct ensuing from the growing older inhabitants in Canada by targeting the elderly inhabitants via promoting and promotions. For instance, they may supply retirement packages, and certain promotions for particular destinations or at particular seasons of the 12 months. Air Transat would wish to conduct in depth market research about this matter to take into accounts that virtually all retired people are on a fixed earnings or might not be healthy enough to fly and so forth.

With the elevated use of technology, wireless Internet is not only necessary for enterprise traveler but also for leisure vacationers. Even though it’s not that frequent for aircrafts to offer wi-fi Internet throughout their flight, it being launched. Air Transat ought to consider offering this service, because it might be a beautiful characteristic for many travelers.

Porter’s Five Forces:

According to investopedia.com, the definition of Porter’s Five forces is:

“Named after Michael E. Porter, this mannequin identifies and analyzes 5 aggressive forces that form every business, and helps determine an industry’s weaknesses and strengths.

1. Competition within the industry
2. Potential of recent entrants into industry
3. Power of suppliers
4. Power of customers
5. Threat of substitute products”

The threat of new entry into the airline trade could be very weak due to a couple elements together with very large capital required, main airports are highly congested, sluggish development charges and with many respected airlines already, model loyalty may not be easy to establish due to the competition. This pressure is prone to remain weak.

Competitive Rivalry is ranked as excessive because there are a excessive number of airways operating each domestically and internationally with very competitive prices that Air Transat will want to continuously try to match. The fastened price could be very high similar to the value of oil, which cannot be managed to a fantastic extent. There is also a low product differentiation meaning that even though Air Transat is a leisure airline, there are nonetheless many other airlines that offer service to the identical locations at comparable costs. Most airlines supply some type of frequent flyer program, which causes passengers who’re members of those applications to be loyal to their airways. This force may turn into even higher as a end result of elevated competition.

Bargaining energy of suppliers is Moderate. Airlines are normally in a long-term contract with airline producers, which additionally restrict drastic increases in costs throughout that contract however because there are solely two airline manufacturers; Boeing, and Airbus. They have plenty of energy to make modifications that Air Transat could be bound to accept. Labor my also be a difficulty as a result of positions such as pilots, aerospace engineers, managers, and entrepreneurs may require excessive salaries and may not be simply found in the market. However, the salaries for labor within the airline business are standardized over related airlines. This pressure is more likely to stay the same.

Bargaining energy of patrons is weak. Individual flyers, journey agencies, and online portals can all easily change to different airlines due to low switching costs. However, the pool of shoppers could be very massive ranging from individual clients to giant organizations. This force is more likely to turn out to be weaker over time.

Threat of substitutes is moderate throughout the airline business as a outcome of there are quite a few airways that offer service to the identical locations as Air Transat with similar costs, which does not limit the possibility of shoppers switching to different airways. However, that type of standardization over the industry does not make different airlines more enticing than Air Transat. Threat of substitutes exterior the trade is low as a end result of many locations can’t be reached in a timely method without flying, specifically worldwide ones. Flying is faster and safer than highway, rail, or marine. I believe this drive will turn into weaker over time.

New Opportunities:

Since Air Transat is well established in Canada, they’ve the prospect to develop internationally past Europe. They also can take benefit of the current growth within the aging inhabitants in Canada by focusing on that market and researching other ways to draw older clients. They might create a frequent flyer program specifically designed for seniors. With Air Transat’s bought popularity, they might also have contracts with European organizations to provide them companies. Air Transat might take benefits of the new developments in technology by offering wireless web on their aircrafts and likewise by launching a new type of aircraft for European destinations such because the double decker plane that Emirates airways launched.

Threats:

The primary threat is the price of oil increasing is the highest price for airways now. A sudden spike within the value of oil may have unfavorable impacts on Air Transat inflicting it to terminate service to one of their 60 destinations. There are different threats corresponding to security considerations because of the worry of terrorist attack, adjustments in authorities regulations and environmental issues.

The airline/aviation industry overall is a superb trade to be in for current airlines, but a very onerous one to get into for model spanking new airways. Air Transat has plenty of potential to grow in the European market, and even farther.

Citations:

  1. Air Transat Environmental Policy. In Resp.Transat. Retrieved February 5, 2014, from http://www.resp.transat.com/_pdf/en/airtransat.environmental.coverage.pdf?v=2.
  2. Emirates A30 News & Events. In Emirates. Retrieved February 5, 2014, from http://www.emirates.com/english/flying/our_fleet/emirates_a380/news_and_events/news_and_events.aspx
  3. External environment principle. In Business case studies. Retrieved February 5, 2014, from http://businesscasestudies.co.uk/business-theory/external-environment/pest-analysis.html#axzz2sW4YAx8I.
  4. Pest Analysis. In Business dictionary. Retrieved February 5, 2014, from http://www.businessdictionary.com/definition/PEST-analysis.html.
  5. Porter’s 5 Forces. In Investopedia. Retrieved Febuary 8, 2014, from http://www.investopedia.com/terms/p/porter.asp.
  6. Porter’s Five Forces. In Mind instruments. Retrieved February 5, 2014, from http://www.mindtools.com/pages/article/newTMC_08.htm
  7. Porter’s Five Forces. In Sites google. Retrieved Febuary eight, 2014, from https://sites.google.com/site/admn703ai/the-team
  8. Profile. In Air Transat. Retrieved February 5, 2014, from http://www.airtransat.ca/en/About-us/Profile?ID=35&type=voyageur&tmpl=GEN.