Swot & Pest Analysis

Strengths

• UK’s largest full service scheduled airline – this makes it a popular company with customers which brings in more business which will then bring in more money for the company.

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• Caribbean routes are new and selling well – as they are selling well, the sales will be up on the flights which will bring in more money and more popularity with the customers which will then mean more and more people will use the company rather than their rivals which will then bring in more money and make rival companies miss out on money
• Head office is situated near Gatwick which is convenient – it is convenient because customers and/or staff will easily be able to get there if they need to as it is situated near the company’s main working airport and not in the middle of nowhere or in a different country.
• This means that any problems can be sorted out quicker as people don’t need to travel to the head office if it was situated anywhere else
• Pilots are well paid and tend to stay – the company are then able to keep flights on schedule which will keep the customers happy and wanting to fly with them
• Half of the Airbus and Embraer fleet has been bought new in 2002 which is good for passenger confidence – passengers will have confidence in the technology of the planes and trust them not to fail which will keep them happy and wanting to fly with them
• Passenger growth was up 16% from 2003 to 2004 with over 8 million passengers per year carried – more passengers means that the company is making more money and also means more passengers are using this company rather than rival companies

Awards won

• Business Airline 2002: What Airline?
• Best European Carrier: Passenger News
• Top Airline Cuisine 2003: The Flying Chef (Sunday Times column) – with these awards won, the company will have popularity as the best for these features and will keep customers wanting to travel with the company and make new customers from rival companies

Kestrel Air uses travel agents to sell its products – this makes it easier as travel agents are good at selling products

Has its own reservations department at head office and a website where customers can book online – customers will find it easier to book flights so the company can sell more flights easier and quicker. Also less staff will be needed so money can be saved in their wages

New features

• Participates in the Pet Travel scheme
• Telemedicine service on all flights
• Laptop plug in and telephone service in business class
• Self check in at Heathrow and Gatwick – all these features give passengers more reason to use this company rather than others if the others don’t already have the features

Weaknesses

• Operation slots are very expensive and difficult to acquire – as they are difficult to acquire, it will be hard for the company to get enough of them as they need, but even if some do become available, they will be expensive to purchase so the profits will be used to buy them
• Failed to gain permission to operate on the lucrative Heathrow/US routes – because these routes are unavailable to the company, they are losing out on money from the tickets that would be purchased by customers therefore customers would use rival companies to get to these destinations
• No eastern European routes are operated as yet – because these routes are not operated yet, the company is losing out on money from the tickets that would be purchased by customers, therefore customers would use rival companies to get to the destinations
• Being situated near Gatwick is expensive in rents and rates – the rent and rates will bring down the profit that the company will make
• Cabin Crew have created some bad press locally – if this carries on, the customers will stop using the company and use one of its rival companies
• Pilots are only qualified to fly particular aircraft – other pilots will need to be brought in that are trained to fly other aircraft, so more wages and training will need to be paid out that will reduce the profits
• There are no pilots who can fly all the different aircraft in the company fleet - other pilots will need to be brought in that are trained to fly other aircraft, so more wages and training will need to be paid out that will reduce the profits
• The airline employs its own ground crew and baggage handlers and finds it difficult to recruit enough people – this means that jobs will take longer to do so there will be a longer wait for departures and arrivals at the airports which will upset customers and may tempt them to use rival companies
• The capacity of each aircraft is different so it is ot possible to switch aircraft from route to route – if a problem occurs with one particular aircraft and makes it dangerous to fly, it will have to stop and passengers will have a big delay as they all won’t fit on any of the other aircraft available at that particular time. Customers will become unhappy with the company and may use rivals from then on
• Because half of the Airbus and Embraer fleet has been bought new in 2002, it has been a major expense – as it has been a big expense, there is a massive drop in the profits that the company are making so there is less money to spend on other things, although the money has been spent well

Opportunities

• The airline would like to expand operations from Heathrow – with more operations the company would bring in more money which will add to the profits.
• Considering becoming a member of Star Alliance Considering new measures including sponsorship and developing a relationship with educational establishments – these opportunities will increase the company’s reputation with the establishments and also bring in more money towards the profit that they are making
• Kestrel Air may decide to contract out ground crew and baggage handlers – this means the company will bring in more people that are capable of doing the job quicker to make sure arrival and departure times are kept
• Kestrel Air hope to consolidate the type of aircraft in the future to cut back operating costs and cut pilot training costs – this will save the company money which will add to the profits

Threats

• Germanic Air has substantial debts and likely to sell its shares (22%) – as 22% is owned by the Germanic’s there will be a massive whole in the shareholders which will cause disruption to the way the company is run. This may result in loss of money and disruptions in the way staff are paid. Staff could go on strike leaving the customers to use rival companies
• The turnover of Cabin Crew is high
• Training for the Cabin Crew is constant – if the training is constant, then oney is always being paid out to fund it which will keep profits down and will waste money as they keep bringing in new staff that need training
• Many airlines consolidate the type of aircraft in order to save on operating and engineering costs – as other companies are doing this, they will save money unlike Kestrel Airways, and they may become under threat with their finances and rival companies will take control of the percentage of people using airlines
• Profits are going down so costs are getting higher as they are making about the same amount each year – if this carries on then the company will start to lose money each year and the company will start to become unsuccessful Political Failed to gain permission to operate on the lucrative Heathrow/US routes because of a restriction arising from the Bermuda 2 treaty - the US are wanting the routes so therefore Britain are having to agree and not make the money from them
• Taxes on fuel etc – as taxes are going up, more money is being spent than what is coming in so therefore the company will end up losing money

Economical

• The World is currently in a recession – more people are not travelling abroad because they can’t afford it so instead they are taking holidays in Britain or not at all
• Germanic Air is an ailing airline with substantial debts and is likely to sell its shares (22%) – as the German company own a large percentage, there will be a massive hole in the shares, which will disrupt the way the company is run and may become bankrupt
• Taxes on fuel etc – as taxes are going up, more money is being spent than what is coming in so therefore the company will end up losing money Social The Euro is too high – as of this, people are avoiding flying to European destinations as it would be cheaper to go to long haul destinations such as the Caribbean because of the currency over there is cheaper
• People are choosing different destinations each year – as of this, Kestrel Air need to keep up on what are the most popular holiday destinations, whether they are long haul or short haul and get flights to the destinations so that customers don’t use other companies
• Cabin crew have recently created some bad press and exacerbated the problem of recruitment – as many people are not recruiting, the company aren’t getting in enough people as they need to do jobs so jobs will be running slower than normal which can cause disruption with the way the company is run which will affect departure times, therefore customers will become unhappy and start using rival airlines

Technological

• Half of the Airbus and Embraer fleet has been bought new in 2002 – all the new planes will have new, trusted technology in them that was better than the previous planes which will gain customer confidence and make them want to travel with the company
• Kestrel Air has its own website where customers are able to book online – this will be easier for customers that are wanting tickets as they don’t need to leave their homes in order to book a flight, it can be done quickly, easily and securely over the internet
• Full body scanners – these are all located at the airports to check people for weapons, bombs etc to stop terrorism. The scanners add safety and comfort to the passengers because they know that anybody will be caught that has suspicious items
• Self check in at airports – this means that as soon as customers arrive at the airports, they can check themselves in which will be quicker and easier for them, which will reduce queue’s and late departures

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