Corporate Social Responsibility: Airplanes and Airline Industry

In 1978, The air passage Deregulation Act was purposed and signed by President Jimmy Carter. This federal impinge onicial law came into existence for two main(prenominal) reasons stated by Carter (1978), to encourage our fight against inflation, and to ensure Ameri toilet citizens of an fortune for low- equipment casualtyd air transportation. right aways motives in the air duct business indus picture go way beyond economic decisions for themselves as tumefy as their push-down storeowners. Nowadays, businesses be an essential carve up of society and the air duct industry must exceed their compliance of order and obligations of what is expect of them and focus on the interests of society.In doing so, they must perform incorporated companioncapable business that impart help improve the community, societys youth, charity, education, and too our tabloidt. This corporate genial function should not be an option besides rather an obligation, as that they play an ess ential role in creating good result, a positive image, and a competitive edge for the industry. Corporate social responsibility excessively increases sustainability by assisting the industry in achieving its goals and increasing semipermanent sh atomic number 18holder value.One conjunction that exhibits this corporate social responsibility is JetBlue. They atomic number 18 dedicated to share the needs of Americas youth as well as their community. Ian Deason, the director of airport operations, stated that Flying is our message business our core values include caring, integrity and passion. The comp any(prenominal) will continue to demo their corporate social responsibility in April 2013 by hosting their third unrivaled-year Wings for Autism event at their Boston Logan International personal credit lineport location.The weapons platform is designed to introduce the possibility of flight travel to children with autism and give their families an opportunity to practice the boarding process, belong familiar with the plane, and interact with the pilots and crewmembers. Crewmembers will aggroup up with autism experts at The Charles River Center, where they will be trained to exemplify the expected and unexpected needs of families with children who are autistic. Since the program scooped in 2010, more than four hundred families in the Boston area have been able to participate in the program which the company plans on providing to otherwise cities in the near hereafter (McFadden).JetBlue also partners with umteen nonprofit institutions. One in particular is KaBOOM, an organization that constructs innovative kid inspired playground areas for communities. This past March, following the occurrent of Hurricane arenaceous the partnership hosted a design day in the Sandy impacted city of Long Beach, NY in which children were able to sit mow with team members and assist in the design of a playground that will be constructed there in May of 2013.JetBlue plans to expand this program to other affected cites and since their partnership with KaBOOM in 2006 they have helped build a congeries of 13 playgrounds, engaged 2,636 volunteers and provided a skillful place for children to play in cities across the airline businesss network (BlueTales). Moreover, JetBlue isnt the only airline that is signifying their corporate social responsibly to the community. Transaero, an airline company in Russia implements galore(postnominal) charitable programs. In 2012, the companys corporate social responsibility program made the top three in Russia and they were also charge the top AAA(s) corporate social responsibility rating.Transaero advocates children with cancer as well as their families. They offer camps where children can fit medical and psychological re cuttingal and also fund a year round facility in Moscow, where children and their parents can make legal aid. With cancer treatments and airfare being rather expensive, the company offe rs free flights to Moscow, St. Petersburg or even abroad so that the children can receive their needed treatment. Also many of the airlines employees are regular blood donors and take up regular visits to hospitals and cancer centers to visit with sick children.Olga Pleshakova, the companys chief operational officer stated that volunteering is not just about the companys social responsibility program, scarcely is an integral part of its HR policy that allows employees to learn their lavishly hat sides and develop their potentialthe social initiatives of employees should be met with envisioning and support by management (Tveritina). Oman argumentation and AirBus are two other immaterial airline companies. Both are committed to inspire and educate right aways youth by providing them with an appreciation for science and technology. The two airlines linked forces back in March of 2013 and acquired The Little Engineer workshop.The workshops were conducted at sultan Private Sc hool and Azzan Bin Qais InternationalSchool in Oman and gave untested Omani students a first-hand look into the world of engineering and encouraged them to wage a future career in aviation. (Awal). Furthermore, as mentivirtuosod above the airline industry can safeguard our planet by exercising their corporate social responsibility by going green. Air France-KLM is one company in particular that focuses on this issue. For eight consecutive geezerhood the Dow Jones Sustainability Index has ranked Air France-KLM transport leader in price of sustainable development in the airline sector.This merit is awarded to 19 of the c sustain to responsible companies in the world, each in their own area of activity. Air Frances environmental efforts reduce 400 tons of waste each year (Amstelveen). Air France reduces environmental wastes by recycling old uniforms as well as 80% of inflight obliges. An environmental and social approach was use in designing their vernal inflight, reusable oper atephones. After a flight, the recover headphones are cleaned and repackaged by a company that now employs 50 excess disabled workers thanks to the efforts of Air France.Also, with pollution being a ample issue in the aviation industry Air France is conducting research with experts to create more sustainable biofuels that will cut down on carbon paper dioxide emissions and provide a more fruitful planet for society (The Financial). Additionally, the airline industry has been global before anyone even considered globalization. harmonise to the article The respiratory tracts ball-shaped Dilemma, global travel has been around since the early 1900s. Chalks Ocean Airways had casual trips to the Bahamas and Pam Am had international routes to countries such(prenominal) as China, Japan, and Philippines in the 1930s.International flights are the airlines best chance to steel a profit as well because international flights have the most margins. The Airlines Global Dilemma article als o highlights one key aspect to the globalization of this particular industry and is un deal any other industry, for the traditional airlines, globalization is not an opportunity, but the gravest threat. The reason for this is partially laws, environmental uncertainty and complexity. In the United States, there is a lying-in on how much equity can be held by a non-American.The government keeps it at 25% and the United States is not the only field that does this. There are many diverse laws of that the airlines have to deal with. European laws are the only laws that advance cross border mergers. Mergers for airline companies make a lot of sense business wise if they can be done. If a merger is not possible, many companies do route-by-route joint ventures. The main reason to do a joint venture is to gain get at to areas that companies are weak. Joint ventures are returns agreements where on specific routes the companies share costs and profits. The joint ventures tend to be life -threateninger for he bigger companies to pose but it is a very good way for smaller companies to pose competitive. Through multi-lateral communication, groups of smaller international companies can almost act as a virtual airline itself. The airline market also has many threats. There is the threat of new entrants and threats of substitution that American airlines have to deal with. The air space is getting very crowded for the American airlines so the threat of new entrants is very real. There are many companies that are unveiling the market with many strategies. Polands international airline is an pillow slip of company with a differentiation strategy.They are the first airline in Europe to have Boeings new 787 according to AirGuide trade. The 787 Dreamliner is supposed to be more fuel efficient and more comfortable for passengers compared to older plane designs. There are also companies from the Middle East with good harvest-festival strategies and a distinct competitive returns. The new airlines from the Middle East are capitalized with government funds, running virtually tax free, equipped with new fleets operating out of new airports, are non-union, and offer top notch service according to Airlines Global Dilemma.The airlines in the United States also have strong completion from within by low cost strategy companies. The threat of substitution is most prevalent by companies like Delta-Northwest and United-Continental. American Airlines is a great example of a company currently in Chapter 11 which needs to restructure, cut labor costs, and merge with US Airways. According to an article in Time Magazine, American Airlines labor cost was 4. 4 cents, Delta 3. 4 cents, and United 3. 7 cents per available seat mile.That difference results in flowerions of dollars and probably contributed to American Airlines two billion dollars in loss last year. According to Fortune, the merger should eliminate 1. 25 billion in labor costs. not only do the airline carriers have to deal with globalization but also have deal with airplane makers. Boeing, for instance, has a very different problem than companies like American Airlines and Delta. Boeing has too many orders to fill which could whitethornbe give this supplier stronger bargaining mightiness. Boeing owes it buyers 2845 planes and is only building 35 planes per onth. At that rate, it will take Boeing six days to fill those orders and that is only if they do not get any more orders during that time. Management for Boeing needs to air efficiency. They have made promises to increase production to 60 planes per month. Even at 60 planes per month that still leaves potential buyers waiting for quite a while and that could cause them to apprehendk other international suppliers. many buyers whitethorn go to Europes company Airbus or even try to newer companies such as Canadas Bombardier according to AirGuide.In 2000 the United States Congress passed the Wendel H. crossover Aviation Inve stment and Reform Act for the 21st century. The purpose of this bill was to create a competitive plan for new entrants entering the Airline perseverance. It gives guidelines and requirements for lively airlines to allow new entrants a chance to get started in the business. Another name for the act is AIR-21, and the results for AIR-21 are significantly positive by allowing one endpoint airports to decrease their price by 10%, and for both(prenominal) endpoints to decrease their price by 20%.Some problems new entrants have when entering the Airline Industry, is operations and marketing. Marketing for a new airline can be difficult because of the loyal customers alert airlines already have. However, there are plenty of ways that airlines can increase their loyal customer base, with things such as frequent flyer miles, corporate incentive agreements, and travel federal agent commission overrides. For new entrants these would be considered a threat to entering the airline industry. Another threat to entering the airline industry is starting off with limited operating access.These would include limited boarding gates, ticket counters, baggage handling, storage facilities, and take-off and landing slots. Even though it may seem like a great time for a new airline to open, with existing airlines cutting routes, and raising prices by seat, this would be a very hard industry to enter and have a achievement story. For an airline to see any profit right now while oil prices are higher than ever, they must be able to fly full planes at all times. Lately even existing airlines have failed to see a profit. For example, Virgin Airlines did not see a profit for five years after its first flight.Even Warren E. Buffet was stated in a stark naked York Times article that an investment in US Airways, in the early 1990s, one of his biggest mistakes Here a durable competitive advantage has proven elusive ever since the days of the Wright Brothers. Indeed, if a farsighted cap italist had been present at Kitty Hawk, he would have done his successors a huge favor by shooting Orville down. There are many risks entering the Airline Industry, but there are also many rewards if a new entrant were to have a success story. JetBlue reported profits of $1. 5 billion dollars last year, and its revenue at $192 billion dollars.They opened in 2010, and they are now an international airline. At the end of 2011, JetBlue was reported to have an average of seven hundred flights a day. JetBlue is becoming more of a success story than most other new entrants. For a new airline to start up, they need to understand how their investment breaks down. Landing and associated airport charges makes up 4%, depreciation and amortisation 7%, maintenance and overhaul 10%, fuel and oil 12%, flight crew 7%, enroute facility charges 2%, station expense 11%, passenger service 10%, ticketing, sales and promotion 16%, general administrative 12%, and the rest is miscellaneous.The above infor mation was prone by The Airline Industry Trends, Challenges, and Strategies authored by Dr. John Wensveen. Dr. Wensveen noted that there have been twenty five airline failures since 2007. This is because of the global economic crisis in 2008 airlines were forced to increase their rates because of the high oil prices and the falling enquire of people needing to fly. A SWOT Analysis for an airline would go as followed Strengths The AIR-21 act gives new airlines a chance to get started * The reward of having a successful airline is very big * Opening an airline is a Cost-Leadership strategyWeaknesses * The is a very big risk * Oil prices are high * It cost a lot of money to open a new airline * Loyalty systems other airlines have with their customers Opportunities * Being able to start something new * Opening up in an industry that will always be improving Threats * The US Airways merger with American Airlines * The United States Airlines Industry has the potential to become a monop oly with the merger of airlines * Not being able to move loyal customers to a new airline On February 14, American Airlines and US Airways publically announced their proposal to merge with one another.Higher power executives and presidents in these 2 substantially large companies ensure that the soon-to-be merger will lessen competition in the airline industry, provide the airlines customers with a broader network, more choices, and better service (Lawton). However, others do not agree. Many believe that because this newly merging company will be determine at $11 billion and will make-up a thumping 26% of U. S. market share, which would be the worlds largest airline, this will in truth lead to an increase in fares (The Wall Street Journal).Although the future of airfares is uncertain, it is safe to say that both companies are doing an excellent job in organisational communication during this transitional phase. US Airways and American Airlines are currently in a bumpy transitional phase in merging to become an airline powerhouse. US Airways and American Airlines must establish strategies to achieve crude goals and develop this approach, which will require extensive mutual planning. Doug Parker, the former chief executive officer of US Airways, will be taking the role as head of the new company, which will be taking the name in favor of American Airlines (Jones).In a previous interview, Parker stated that theyve got some advantages in qualification the marriage go more smoothly. New management taking the reins of the new American must use a strategic approach to rise a long-term plan. In doing so, this strategic approach will be more beneficial than considering a short-term volatile schedule. There may be a large internal advantage to already having a sufficient amount of employees within the companies, but the public consumer will be more concerned about what disadvantages will affect them through extraneous company decisions.A conflicting potential imp act of this merger is combining obedience programs. Frequent flyers may certainly be an airlines most valued customer. just now as their most valued customer, they should not reap harmful personal effects throughout the process of this combination. According to article American, US Airways Can obligate Lessons from Other Airline Mergers the frequent flyer members of the Aadvantage rewards program will receive perks from both the US Airways program and American Airlines program. Although this is rational decision devising trying to smoothly overlay both reward programs to satisfy existing members, this rationality is bounded.Because of this bounded rationality, decision making is limited because it would be out of the question to add all reward benefits from both airlines into one blended program. For example, American Airlines members, who carry the Express Platinum Card and Black Card had bottomless access to first class lounges. When this merger is finalized, these card memb ers will lose this privilege. (Jones) There may be some rough patches in reorient these airlines but the potential benefits will greatly outweigh the troubles that may be faced. Darryl Jenkins has said that The financial deal is easy the challenges are always in the integration. The new American must show sustainability for their firm to achieve long-term shareholder value. As of April 9th 2013, American Airlines (AAMRQ) closed with a stock price of $3. 58 US Airways (LLC) closed at a price of $15. 70 but dropped . 14 points throughout the course of the day (YAHOO Finance). Work Cited Air France Committed to Sustainable Development. FINCHANNEL. com. The FINANCIAL, 4 Mar. 2013. Web. 08 Apr. 2013. . Amstelveen. Sustainable Development Air France-KLM initiation Air Transport Leader in 2012. KLM Royal Dutch Airlines. KLM Corporate, 17 Sept. 2012. Web. 08 Apr. 2013. . Awal, Jamadil. Oman Air, Airbus Bring little Engineer Workshops Muscat. Arab News. SAUDI RESEARCH & PUBLISHING COMPAN Y, 28 Mar. 2013. Web. 08 Apr. 2013. . Business & Industry News Aircraft Finance News. (2012). AirGuide Business, 1-16. Hawes, A. (2012, May 25). The Challenge of Starting an Airline. The New York Times.