Current Economic Analysis of Virgin Atlantic Essay Example

Current Economic Analysis of Virgin Atlantic Essay Similarly, the economic issues in the industry are also mostly concerned with deregulation. The evolution of industry structure plays an important role in determining the robustness and stability of lower airfares in unregulated markets (2000). Deregulation also keeps airline fares so low as compared to that of other countries. The reason for this is because despite the failure of most entrants since deregulation, investors continue to create new airlines. There is substantial evidence that entry, particularly by low-cost, low-fare airlines, has a substantial effect in constraining fare levels in markets served by the new carriers (2000). The second reason is that some in the industry have argued that financially marginal carriers may act in ways that depress prices below competitive levels, inducing contagion in financial distress (2000). In addition, some industry participants have argued that financially distressed carriers have cut prices in an effort to raise short-term cash, depressing market prices below efficient levels and threatening the financial security of healthy carriers. Another economic concern is the fact that the airline economy of the US is in a huge upset after the September 11 attack. Some of the companies declared bankruptcy while others are still struggling to survive (2003). The contribution of the airline sector to the local and world economy is also another economic issue that should be noted. In UK, one of its contributions to the economy is its role in increasing jobs, whereas it was reported that aviation directly provided 180,000 jobs in the UK in 1998 0. 8% of total employment. 0% of these jobs were in Greater London, where the industry accounted for 2. 1% of all jobs (2002). This has increased over the years as attested by DfT. It reported that the aviation industry now directly supports around 200,000 jobs, and indirectly up to three times as many (2006). The airlines industry also greatly contribute to the GDP of the UK economy as the (2002) reported that the â€Å"total value-added (i. e. the value of its output less the cost of inputs bought in from other industries) by the UK aviation industry in 1998 was estimated to be ? 10. 2 billion in 1998 prices, quivalent to 1. 4% of GDP†. It contributes specifically by region, as it makes a direct contribution as a source of output and productivity growth in its own right (2002). The Oxford Economic Forecasting (2002) also argued that good air transport links are important to encouraging inward investment into the UK and to encouraging firms already located here to base new projects in this country. Furthermore, because it is part of the transport infrastructure, it helps make business transactions faster, creates more options, and provides a boost to the tourism of the country. We will write a custom essay sample on Current Economic Analysis of Virgin Atlantic specifically for you for only $16.38 $13.9/page Order now We will write a custom essay sample on Current Economic Analysis of Virgin Atlantic specifically for you FOR ONLY $16.38 $13.9/page Hire Writer We will write a custom essay sample on Current Economic Analysis of Virgin Atlantic specifically for you FOR ONLY $16.38 $13.9/page Hire Writer As transportation infrastructure theory posits, improved transport systems can boost productivity growth across the rest of the economy. The economic prosperity that UK currently experience also have some implications on the airlines industry. According to (2003), â€Å"Economic prosperity brings with it greater demand for travel. As people get wealthier, they can afford to travel further and more often†. Currently, half the population of the UK now flies at least once a year, and freight traffic at UK airports has doubled since 1990 (2003). It has been forecasted that air travel in the UK will continue to increase over the years, but (2003) warns that this is somewhat uncertain as they may be negative factors that the industry may encounter along the way. For instance, DfT forecasted that market for air travel might mature more rapidly than expected, causing the rate of growth to slow more quickly than forecast. Furthermore, other economic concerns of the industry include the possible increase of flying costs, for instance, due to rising oil prices or due to the costs of tackling global warming. CURRENT TECHNOLOGIES OF VIRGIN ATALANTIC AIRWAYS: Technological factors include head to head competition in the technological innovations in the industry. Traveling in air is a dangerous task that’s why aircraft engineers have been researching ways to improve security in airlines. Technological advances have resulted in automated cockpit procedures to make up for the human errors that usually occur (2000). Sixty eight percent of crashes are attributed to human error. This may include error during aircraft design, manufacturing, maintenance, or installation. Security breaches that result in terrorist activities can also be attributed to human error. This is the reason why technological innovations in safety are important in the airlines industry. Other technological factors include Customer Relation Management in the Internet. Online solutions alternative to dial-up are also technological factors that may determine competitiveness as an alternative mean can basically cut the cost of the company. According to (2004), a remote access solution could provide significant cost savings by allowing the engineers, who were responsible for maintaining the aircraft, to access essential information on the companys systems from wherever they were in the world, using remote web access. Fault and service assurance solutions are also technologies that airline companies mostly invest. This type of technology provides the network management team of an airline a real-time, consolidated view of the network to help ensure the availability of network-based products and services (2002). Another technological concern in airline services today is the integration of electronic flight bag solutions or EFB. EFB is an electronic display system intended primarily for cockpit/flight deck or cabin use (2003). One of its advantages is that it can display a variety of aviation data or perform basic calculations (e. . , performance data, fuel calculations, etc. ) (Aircraft Electronic Association, 2003). EFB is categorized into two classes: Class 1 and Class 2. A Class 1 EFB can be used on the ground and during flight as a source of supplemental information, while a Class 2 EFB can display flight critical pre-composed information such as charts or approach plates for navigation (2003). CURRENT SOCIAL RESPONSIBILITY: Attention. For airlines, the two most important issues are: the reason for travel (business or leisure); and the class of preferred travel (first, business, or economy). The Frequent Flyer survey in 1997 both business and leisure consumers listed the following ten factors driving overall airline satisfaction: on time performance (22 percent), schedule/flight accommodation (15 percent), airport check-in (15 percent), seating comfort (12 percent), gate location (9 percent), aircraft interior (7 percent), flight attendants (6 percent), food service (5 percent), post-flight service (5 percent), and frequent flyer programs (4 percent) (1998). Today, consumers are more demanding especially in terms of service quality. Fortunately, the airline industry can be considered as the pioneer of customer relationship management as they are the first sector to introduce the frequent-flyers program to increase the loyalty of customers (2002). However, the airlines of today cannot keep up with the pace of CRM. A survey of 17 major airlines around the world reveals that even the most sophisticated among them have only a basic understanding of who their most valuable customers are, or could be, which factors affect the behavior of customers, and which CRM levers are most effective in ensuring loyalty (2002). They stated that most airlines lack the systems and process to implement CRM. (2002) Stressed based on their research, that data aren’t consistently or accurately collected in any of the mediums that airports use. Furthermore, another problem for airlines is that they rarely know how much their customers spend with their competitors. (2002) Stated that building customer database is the key to CRM and should be the easiest part for airlines given that they have loyalty programs. Currently, most airlines still are building or thinking of building data warehouses to store variously sourced databases (2002). Finally, another social factor to be considered is the fact that airlines are still exposed to terrorist attacks. This has a tremendous impact on airline security and economy. This is why two of the utmost concerns of the UK Department for Transport are safety and security (2003). Fortunately, the UK airlines industry has a good record in safety, with accident rates kept low despite the rapid rise in traffic levels over the past two decades. The industry continues to follow a high standard of safety, for instance, regular inspections and maintenance of aircrafts. Safety in the UK airlines industry also improved as a proactive measure on terrorist attacks. For instance, the list of prohibited items in the aircraft cabin has been extended, carrying out secondary searches of passengers and their cabin baggage at the departure gate, requiring UK airlines to fit special intrusion-resistant flight deck doors, and establishing a capability to put covert armed police on UK aircraft where necessary (2003). Service quality is another social concern in the UK airline industry. According to (2003), standards of service are a legitimate element of competition between operators. Airline consumers are now a dynamic part of the industry as they are more empowered than ever, expecting high levels of personal attention and customer service, and more confident in making complaints (2003). CURRENT ENVIRONMENT OF VIRGIN ATLANTIC AIRWAYS: In the local environment, local elections to be held on May this year could made Tony Blair’s concentration in national issues such as health and education shift into local issues such as crime, anti-social behavior and environment (). As a result, transport industries including aviation should consider this early the type of their fuels and fix emission loopholes. They must research oil suppliers that sell environment-conscious fuels and test its efficiency and compatibility with aircraft engines including preparation to possible fluctuations in present fuel costs. In fuel-related issue, the European Union resorted legal action against member countries like France, Germany and Italy of protecting their utility firms against foreign competition (). As a result, prices of fuels failed to obtain efficiencies of competitive industry making oil prices for the transport sector more costly. Local aviation firms should consider this EU action significant disincentive to their cost-effective strategies because UK, unlike the mentioned countries, fosters foreign imports making oil prices for the industry cheaper. If these countries are able to liberalize the energy sector, possible cost strategy is necessary to retain the prior upper hand. Research suggests that rural, metropolitan and London population employed, unemployed or economically inactive dispose most of their weekly budget to transportation along with food and recreation (). Since socio-cultural segment affects economic and political/ legal segments (2003), aviation industry could less be influenced by the latter outcomes despite of their ambiguity (will Blair retain position or will EU countries accept the directive) because consumers are willing to pay with little regard to price, instead, value of service. As a result, it is more strategic to focus on operations than financial structures. Another finding show that 58% of the household population has computers while 49% of which has internet connection with metropolitan areas like London posted the highest incidence (). This information is relevant to most huge firms like Virgin Atlantic Airways who heavily relies in e-business with its interactive website wherein customers can obtain flight schedules and book a flight with their fingertips. The firm through other forms of media can address the other half of the population without computers. In addition, it can also verify through additional scanning the prevalence of Internet cafe in rural areas where household ownership is relatively low.

The Importance of Infrastructure

The Importance of Infrastructure Infrastructure is a term architects, engineers, and urban planners use to describe essential facilities, services, and organizational structures for communal use, most commonly by residents of cities and towns. Politicians often think of infrastructure in terms of how a nation can help corporations move and deliver their goods- water, electricity, sewage, and merchandise are all about movement and delivery via infrastructure. Infra- means below, and sometimes these elements are literally below the ground, like water and natural gas supply systems. In modern environments, infrastructure is thought to be any facility we expect but dont think about because it works for us in the  background, unnoticed- below our radar. The global information infrastructure for communications and internet involves satellites in space- not underground at all, but we rarely think about how that last Tweet got to us so quickly. Infrastructure is not American or exclusive to the United States. For example, engineers in nations across the globe have developed high-tech solutions for flood control- one system that protects an entire community. All countries have infrastructure in some form, which can include these systems: Roads, tunnels, and bridges, including the Interstate Highway SystemMass-transit systems (e.g., trains and rails)Airport runways and control towersTelephone lines and cellphone towersDams and reservoirsHurricane barriersLevees and pumping stationsWaterways, canals, and portsElectrical power lines and connections (i.e., the national power grid)Fire stations and equipmentHospitals, clinics, and emergency response systemsSchoolsLaw enforcement and prisonsSanitation and waste removal facilities for solid waste, wastewater, and hazardous wastePost offices and mail deliveryPublic parks and other types of green infrastructure Infrastructure Definition infrastructure:  The framework of interdependent networks and systems comprising identifiable industries, institutions (including people and procedures), and distribution capabilities that provide a reliable flow of products and services essential to the defense and economic security of the United States, the smooth functioning of governments at all levels, and society as a whole. - Report of the President’s Commission on Critical Infrastructure Protection, 1997 Why Infrastructure Is Important We all use these systems, which are often called public works, and we expect them to function for us, but we dont like to pay for them. Many times the cost is hidden in plain view- added taxes to your utility and telephone bill, for example, may help pay for infrastructure. Even teenagers with motorbikes help pay for infrastructure with every gallon of gasoline used. A highway-user tax is added to each gallon of motor fuel (e.g., gasoline, diesel, gasohol) sold. This money goes into what is called the Highway Trust Fund in order to pay for repairs and replacement of roads, bridges, and tunnels. Likewise, each airline ticket you buy has a federal excise tax that should be used to maintain the infrastructure needed to support air travel.  Both state and federal governments are allowed to add taxes to certain products and services in order to help pay for the infrastructure that supports them. The infrastructure may begin to crumble if the tax doesnt keep increasing enough. These exci se taxes are consumption taxes that are in addition to your income taxes, which also can be used to pay for infrastructure. Infrastructure is important because we all pay for it and we all use it. Paying for infrastructure can be as complicated as the infrastructure itself. Nevertheless, most people depend on transportation systems and public utilities, which also are essential for the economic vitality of our businesses. As Senator Elizabeth Warren (Dem, MA) famously stated, You built a factory out there? Good for you. But I want to be clear: you moved your goods to market on the roads the rest of us paid for; you hired workers the rest of us paid to educate; you were safe in your factory because of police forces and fire forces that the rest of us paid for. You didnt have to worry that marauding bands would come and seize everything at your factory, and hire someone to protect against this, because of the work the rest of us did. - Sen. Elizabeth Warren, 2011 When Infrastructure Fails When natural disasters strike, stable infrastructure is necessary for swift delivery of emergency supplies and medical care. When fires rage in drought-ravaged areas of the U.S. we expect firefighters to be on the scene until the neighborhoods are safe. All countries are not so fortunate. In Haiti, for example, the lack of well-developed infrastructure contributed to the deaths and injuries suffered during and after the earthquake of January 2010. Every citizen should expect to live in comfort and safety. On the most basic level, every community requires access to clean water and sanitary waste disposal. Poorly maintained infrastructure can lead to a devastating loss of life and property. Examples of failed infrastructure in the U.S. include: When the Oroville Dams spillway eroded, thousands of Californians evacuated, 2017Unsafe drinking water from lead supply pipes affected the health of children in Flint, Michigan, 2014Sewer spills during hard rains in Houston, Texas created a public health hazard, 2009The collapse of Interstate 35W Bridge in Minneapolis, Minnesota killed motorists, 2007Failure of the levees and pump stations after Hurricane Katrina flooded communities in New Orleans, Louisiana, 2005 Governments Role in Infrastructure Investing in infrastructure is nothing new for governments. Thousands of years ago, Egyptians built irrigation and transportation systems with dams and canals. Ancient Greeks and Romans built roads and aqueducts that still stand today. The 14th-century Parisian sewers have become tourist destinations. Governments around the world have realized that investing in and maintaining a healthy infrastructure is an important government function. Australias Department of Infrastructure and Regional Development claims that It is an investment that has a multiplier effect throughout the economy, generating lasting economic, social and environmental benefits. In an age of terrorist threats and attacks, the U.S. has stepped up efforts to secure critical infrastructure, extending the list of examples to  systems related to Information and communications, gas and oil production/storage/transportation, and even banking and finance. The list is the subject of an ongoing debate. Critical infrastructures now include national monuments (e.g. Washington Monument), where an attack might cause a large loss of life or adversely affect the nation’s morale. They also include the chemical industry....A fluid definition of what constitutes a critical infrastructure could complicate policymaking and actions. - Congressional Research Service, 2003 In the U.S. the Infrastructure Security Division and the  National Infrastructure Simulation and Analysis Center are part of the Department of Homeland Security. Watchdog groups like the American Society of Civil Engineers (ASCE) keep track of progress and needs by issuing an infrastructure report card every year. Books About Infrastructure Infrastructure: The Book of Everything for the Industrial Landscape by Brian HayesThe Works: Anatomy of a City by Kate AscherMove: How to Rebuild and Reinvent Americas Infrastructure by Rosabeth Moss KanterThe Road Taken: The History and Future of Americas Infrastructure by Henry Petroski Sources President’s Commission on Critical Infrastructure Protection, October 1997, pp. B-1 to B-2, PDF at https://fas.org/irp/crs/RL31556.pdf Summary, Critical Infrastructures: What Makes an Infrastructure Critical? Report for Congress, Order Code RL31556, Congressional Research Service (CRS), Updated January 29, 2003, PDF at https://fas.org/irp/crs/RL31556.pdf Infrastructure, Department of Infrastructure and Regional Development, Australian Government, https://infrastructure.gov.au/infrastructure/ [accessed August 23, 2015] Elizabeth Warren: There is nobody in this country who got rich on his own by Lucy Madison, CBS News, September 22, 2011, cbsnews.com/news/elizabeth-warren-there-is-nobody-in-this-country-who-got-rich-on-his-own/ [accessed March 15, 2017] Highway Trust Fund and Taxes, U.S.Department of Transportation, https://www.fhwa.dot.gov/fastact/factsheets/htffs.cfm [accessed December 25, 2017]   Ascher, Kate. The Works: Anatomy of a City. Paperback, Reprint edition, Penguin Books, November 27, 2007. Hayes, Brian. Infrastructure: The Book of Everything for the Industrial Landscape. Paperback, Reprint edition, W. W. Norton Company, September 17, 2006. Kanter, Rosabeth Moss. Move: How to Rebuild and Reinvent Americas Infrastructure. 1 edition, W. W. Norton Company, May 10, 2016. Petroski, Henry. The Road Taken: The History and Future of Americas Infrastructure. Hardcover, Bloomsbury USA, February 16, 2016.