ExcelAire is a dynamic aviation organization located at Long Island MacArthur Airport. Aircraft Management and Charter department of ExcelAire is a large contributor to the organizations renowned success. Aircraft ownership is remarkably expensive and cost prohibitive endeavor. The aim of an air charter company is to balance the needs of owner with their expectations of charter activity.
There are innumerable management strategies and approaches used at ExcelAire. Clients will always choose offers and suits that best addresses their needs and suit their taste. ExcelAires reputation is that of a higher-priced operator - a negative aspect in air charter competitive market. The study of ExcelAire offers a unique opportunity to have an in-depth analysis of the various air charter options that are available for people that prefer private flying with great comfort and reliability. The current operational ExcelAire strategy also involves the use of additional aircraft, each of which has the capability to accommodate between seven to nine passengers.
Strategic business plans should be aligned on an in-depth understanding of metrics of deadheads and one-way air charter related jet trips. ExcelAire should adopt a hybrid strategy such as that of a niche low-cost air charter leader. Both international travels and the cross country travel businesses posses a lot of business opportunities to the air charter businesses activities being undertaken by ExcelAire and other companies in the industry. Based on the research undertaken, ExcelAire should implement the use of the continuous flight hour operational strategy. Various optimal operational methods of ExcelAire Company do exist. It is vital that like its competitors, ExcelAire should employ the use of one-way routing and floating fleets to offer significantly competitive quotes on similar charter requests.
Owners of the aircrafts need to have an influence on the operations to be undertaken by their hired aircrafts due to the need for empty legs. Most customers greatly prefer the use of a one-way routing because of the flexibility and reliability associated to this mode of operation. Implementation of one-way routing and a floating fleet significantly improve consumer demand due to the related flexibility, efficiency, and cost effectiveness. Consumers are never simply interested with having one-way routing services and a floating fleet from an air charter but rather are more interested with other related benefits they are likely to accrue from hiring an aircraft from an air charter company. ExcelAire does not operate at rates that are below the charter pricing index thus making it to be one of the most costly air charter companies in the world.
ExcelAire Company
ExcelAire is a dynamic aviation organization located at Long Island MacArthur Airport (ISP). The organization provides and focuses on several aviation services across various functions such as aviation maintenance, aircraft sales, and Fixed Based Operators (FBO) services. Of particular importance is the Aircraft Management and Charter department which is a large contributor to the organizations renowned success. Demand for air charter services has grown exponentially over the years and so have ExcelAires fleet and charter department. However, from this success and growth arises the duality of the charter industry. ExcelAires success creates vulnerability, which is a strong dependence on prevailing economic conditions. To understand the threat imposed on ExcelAires success as an aircraft management and charter organization, one must first understand the nature of the charter industry. Aircraft ownership is remarkably expensive and cost prohibitive endeavor. This aspect of aircraft business has been demonstrated below (ExcelAire Website 2010). A large investment is required in the pursuit of aircraft ownership. As such, a business jet represents a fixed-cost for the owner. Whether the aircraft is flying or not, it cost money to the owner in a number of ways and from this principle, the basic framework of charter arises.
The charter concept is a simple one offset the cost of aircraft ownership by utilizing the aircraft for revenue producing missions. When an aircraft would otherwise sit idle on a tarmac, it is instead normally transporting passengers or cargo at someone elses expense. This is the purpose of an aircraft management company to balance the needs of owner with their expectations of charter activity. It is important to understand that an aircraft management company such as ExcelAire does not own any of the aircraft within its fleet they are simply managing and operating someone elses, who can afford to purchase and own a business jet, highly valuable resource. Like any other industry, there are innumerable management strategies and approaches used at ExcelAire.
Because of the various approaches, each organization offers specific advantages by way of pricing, routing, and fleet mix among others. Brokers, individuals who link prospective charter customers with air charter operators, seek out these advantages and employ them to provide their client with high profile and costly clientele in the best possible. The wide-range of client preference can make best offer mean anything from most attractive or suitable aircraft to best pricing or company operating history. It is evident that clients will always choose offers and suits that best addresses their needs and suit their taste. Nudelman and Don (2009, pp. 311-403) argues that in most instances, brokers will primarily focus on one thing pricing. After the economic downturn of 2009, brokers have continued to be faced with appeasing frugal clients who must now justify their use of private aviation instead of commercial aviation. In an industry of wealth and luxury, now more than ever before, pricing is at the center of focus. Competition that is based on price could be unhealthy if not checked by the relevant authorities.
Compared to similar aircraft operators, though it has an efficient operational strategy, it is evident that ExcelAires reputation is that of a higher-priced operator. ExcelAires fleet is primarily comprised of heavy aircraft, large capacity luxury aircraft designed to travel moderate to large distances. Being based out of Islip, New York, any charter operation requires that the aircraft depart from and return to the home base in Islip at the charter clients expense. Meanwhile, various neighboring operators are employing one-way pricing, where the clients simply pay to move the aircraft from one point to another or the advantages of a floating fleet dispersed across the nation. Already considered an expensive operator, ExcelAire is seriously disadvantaged in comparison to its operators.
Why Charter Business
Charter business presents a very unique platform for the researcher to get a unique picture of the aviation and the air chartering industries. The unique business opportunities presented by the charter business comes with unique challenges, which if not addressed could result into unbearable looses being suffered. Growth factors such as internet communication, the effect of uniting the aviation industry, the use of very light and more flexible jets, the ever growing dissatisfaction in the airline industry, and the growing popularity of the charter business presents unique research opportunities that if well analyzed could help poorly performing charter companies to better their performance standards. The study of the ExcelAire also offers a unique opportunity to have an in-depth analysis of the various air charter options that are available for people that prefer private flying with great comfort and reliability.
The options such as the use of the on-demand charter, having jet membership in a company, and the use of shared ride through the private jet service would also be discussed through the analysis and study of the charter business (ExcelAire Website 2010). There are a number of loopholes in the charter business and this discussion would therefore offer the rare opportunity to address the loopholes and ensure that possible recommendations are made. The charter industry has continued to foresee new developments in technology such as engine design, airframe methods of manufacturing, and the use of better computer aided design and the continued increase of the ATC upgrade (Nudelman and Don 2009, pp. 351-401).
Why the Choice of ExcelAire
The uniqueness in the operational and business strategy of ExcelAire makes it to be an interesting company to base the research on. The company faces challenges that arise from the competition being witnessed in the industry. It is evident that competition that is strictly based on pricing could have very adverse effects on a companys performance. However, the focus on ExcelAire aims to identify other vital competitive edges which an air charter business or any other company could focus on in order to ensure that the current customers are retained and if possible ensure that the customer base is constantly increased. Loopholes that exist in the operation of ExcelAire would be focused on in order to address the various ways through which the air charter business challenges could best be addressed without necessarily resorting to the use of price reduction strategies.
Research Problem
RP1 ExcelAires current strategy does not use the hybrid operational strategy that is meant to give it a market niche as a low cost air charter.
There are a number of strategies that can be utilized to ensure the success of an airline charter company. An in-depth planning and organizational procedure meant to ensure that resources are adequately utilized and the human resource fully employed towards ensuring that success of the airline charter business is vital. Based on the analysis done by Cecile and Rossouw (2009) on the aspects of air charter management, strategic management, which is the planning, used to help an organization determine its mission and general direction or strategic intent is very fundamental for the operations of a charter airline. Strategy defines the issues and values that are both relevant and important to an organization and provides the basis for managerial decisions. In essence, Flouris and Oswald (2006) maintain that strategy provides the structural framework from which an organization is established and the business angle that would be used to ensure that the organization gains a strong competitive advantage over its competitors. Without it, an organization simply exists without a clearly defined vision, mission, and the goals that need to be achieved.
Lichtman (1972) believes that good strategies for an organization do not necessarily imply that success would be achieved. To the contrary, proper planning and implementation mechanisms need to be put into place in order to ensure that the laid down operational strategies are implemented to the latter and success achieved. Indeed, strategy may be considered as vital as the financial capital from which the organization operates. While finances surely bestow a relative competitive advantage, in the absence of strategy, they are simply a tool without a map. Organizations without strategies often follow a path of mediocrity, reacting to external forces rather than dominating the market by way of a competitive strategy (Flouris and Oswald 2006 Charter Industry Downturn 2010). As opposed to mediocre organizations that lack strategy, organizations with well defined competitive strategies have opted to differentiate themselves from the competition through a specific focus or activity. Quite simply, a competitive strategy enables an organization to be different and stand out from its neighboring companies only if its implementation is undertaken.
Hypothesis
The literature will show that ExcelAire should adopt a hybrid strategy such as that of a niche low-cost air charter leader.
ExcelAires Vision and Mission Statements and the Business
The essence of an organizations strategy is captured in its values, vision and mission each accounting for a unique portion of the overall strategy. Values describe how an organization should treat its employees, shareholders and customers. Vision quite simply describes where an organization is headed (Flouris and Oswald 2006). ExcelAire aims to ensure that it provides to the company air fleets that are of larger capacity, very heavy and which can accommodate larger numbers of people, very luxurious, and designed which are designed to constantly travel for both moderate and larger distances with ease. The company aim to ensure that it is ever ready to offer its air services whenever the customers are ready. Through the use of its expert team members that include pilots, flight attendants, dispatchers, and the maintenance crew among others, the companys vision is to ensure that it establishes the largest heavy fleet of jets and to ensure that high levels of flexibility in the airline that would lead to the constant aircraft availability based on the clients needs is enhanced. ExcelAire also aims to ensure that it indeed become a renown dynamic aviation firm all over the world with the major company services being restricted to aircraft management, aircraft, and jet and helicopter charters (Lichtman 1972). ExcelAires core value is to ensure that it offers high quality chartered plans when and where the customers want to. Furthermore, ExcelAire target to ensure that it works towards ensuring that flexibility and convenience of the customer is fully enhanced.
The Current Strategy Used by ExcelAire
According to Flouris and Oswald (2006), differentiation is a business strategy in which an organization provides a product or service that is unique in the industry thus offering a competitive advantage to the business organization within the competition. This uniqueness enhances a customers perceived value of the product or service and as such, customers are inclined to pay more for it. As witnessed in ExcelAires motto, the organization employs the heavy jet as its prime differentiator. Landau and Nathan (1985) states that indeed, ExcelAire purports itself to have one of the largest heavy-jet fleets in the northeast. ExcelAire boasts thirteen heavy jets and helicopters as part of its fleet and each can accommodate fleet at least twelve passengers at an instance (ExcelAire 2010). The current operational ExcelAire strategy also involves the use of additional aircraft, each of which has the capability to accommodate between seven to nine passengers. The purpose of hiring and ownership of the aircraft that accommodates between seven to nine passengers is to enable the air charter company to be able to attract clients that wants greater levels of flexibility and whose budget and needs may now allow them to hire bigger aircrafts and helicopters (Golob, et al 1981, pp. 213-375). Four additional aircraft, each being capable of accommodating between seven to nine passengers, complete ExcelAires fleet. This indicates a reliance on the large cabin aircraft as a primary means of fulfilling charter demand.
Literature Review
Technological advancement has been known to have a very great influence on the business strategies implemented by air charter companies. Certain unique business strategies that closely relate to technological advancement have constantly been used in ensuring that customers get satisfied and that high flexibility levels in the air charter business operations of a company are enhanced (USSKY Link 2008). For instance, other than offer minimal information that relates to the company operations and business activities that relate the air charter business, the International Air Charter Company provides very adequate information on its website thus ensuring the company clients to better understand its strategies and access more of its services through the company website. The International AirCharter Company distinguishes itself as a leading company that offer both small and larger sized luxury private jest that are highly desired by most executive travelers. To make the services more appealing to clients, the company reinforces the fact that clients do not need their own aircraft, flight department, payment of membership fee, monthly management fee, or acquisition costs in order to use the company private jets ( HYPERLINK httpwww.aircharternet.comair-charterair_charter.htm AirCharter 2009). Low pricing is also a key competitive strategy being employed by the International AirCharter Company.
According to the business jet traveler website, the issue of charter pricing is indeed not a simple business affair. Though assumed to be a direct forward process, the pricing of charter air services should be done based on an a detailed study of the business market and the environment within which the business organization operates in. the monetary unit for charter pricing is a very vital factor which can never be ignored when determining the pricing of the air charter services. The weather, the terrain of the physical environment, and the actual distance to be covered in traveling determine the cost that an air charter should impose of its jets and helicopters. Most air charter businesses have different prices based on whether the trip is a return trip or an outbound leg. The arrival of the turbojets introduced the use of hourly rate in determining the costs to be pegged in a hired plane (Charter Pricing and the Downturn. 2010 Doganis 1998, pp. 51-210). Though vital and very flexible, the hourly pricing strategy has a number of shortcomings that always need to be addressed before being implemented by a charter company.
On the other hand, some business models consider the use of the return leg costing strategy as an inappropriate mechanism in the air charter industry. IT has simplified the tracking of empty legs thus increasing efficiency and effectiveness in most air charter companies. In some instances, air charter companies such as Sentient Jet and CharterX employ the use of card information technology program in tracking the unused legs of a charter fleet (Avinode Website 2010). It is clear that air charter companies strategies employed in their operations should not greatly rely on the favorable dead heads that involve the use of a one-way-route- to determine the pricing and business planning strategies. Strategic business plans should be aligned on an in-depth understanding of metrics of deadheads and one-way air charter related jet trips (The Dead Head pricing 2010. The employed business strategies in most air charter companies lay emphasis on efficiency, accessibility, flexibility, and effectiveness in getting assurance of the flights availability. Aircraft owners ought not to expect the charter to offset all their expenses rather than to always rely on flexibility to achieve flight availability. As it is indicated by Leeds Michael of the FlightStar Company, availability of the aircraft to the customers is crucial of the charter owner wants to maximize revenues.
Research Method
Non experimental data collection method was used in collecting the data that was employed in the discussion and subsequent analysis in this chapter. Literature review process was conducted and used in ensuring that relevant information that relates to the air charter industry is reviewed and compared to ExcelAires air charter information available in published journals, books written, company website, and its annual reports. Through the study of information available on the ExcelAire website and other related online and published journals, the strategic approach of ExcelAire and that of its competitors in the aviation charter market was analyzed and adequately discussed before the findings could be arrived at.
Findings
ExcelAire should adopt a hybrid strategy such as that of a niche low-cost air charter leader. This argument is based on the following discussed literature. The research undertaken has revealed that there is a dire need for the fleet review of the ExcelAire to be undertaken with the aim of ensuring that the cost of its services and the costing methods used to determine the cost of the company charter services are reviewed and the necessary alterations made to the current strategy being used. The research has indeed, revealed that ExcelAire is a dynamic business organization though with a number of challenges and inadequacies that hinder the companys top managements efforts to make it have a competitive advantage in the market in which it operates (G and L 2006). It is evident that competitive advantages in the air charter business mainly relates to the level of flexibility, affordability, airplane availability, and the extent of cost effectiveness of hiring and operating the airplanes.
Both international travels and the cross country travel businesses posses a lot of business opportunities to the air charter businesses activities being undertaken by ExcelAire and other companies in the industry. The need for the company to adopt a hybrid operational strategy is also based on the threats it faces in the current market. Currently, the company has faces the challenge of operating in an ever shrinking business company budget in comparison to the ever increasing demand of more flexible air charter offers from customers (Don 1997, pp. 12-27). Telecommunications also continue to pose great challenges in the aviation industry due to the high telecommunications costs being incurred in an attempt conduct business activities.
Conclusion and Recommendations
Based on the companys strategy being used, the future of the company adopting a hybrid strategy would imply that it benefit from its well organized operational structures and the advantages associated with the ownership of large and medium size airplanes. The implementation should be undertaken through the utilization of its fleets and ensuring that it becomes a low cost heavy operator. The implementation of the findings should be done by using the fleet operations already in place and integrating discounting practices in its cost determination strategies. The company should also maintain current pricing so as not to entirely discourage short-hop flights and to discount bulky offers. ExcelAire should therefore implement the use of the continuous flight hour operational strategy.
RP2 What are the optimal operational methods of ExcelAire
Understanding the manner in which ExcelAire conducts its air charter business activities provides a very good background for understanding the various challenges or competitive advantages, which the company may be having. When the operational method being employed by the company is a one-way routing or not greatly influence the cost of the air charter company thus making it either more competitive or weakening its strategic position within its competition.
Literature Review
ExcelAires primary competitors employ the use of one-way routing and floating fleets to offer significantly competitive quotes on similar charter requests. By not implementing these strategies, ExcelAire may be losing business and otherwise loyal clientele to cheaper operators. Air charter operations are normally determined by the levels of competition in the market and the needs of the clients within a given business environment. One way aircraft operations and the use of dead ends in the charter industry, according to Stevenson (2008), are not common phenomenon and only happen due to the very substantial reasons that are normally determined by the air charter company. Owners of the aircrafts may also have an influence on the operations to be undertaken by their hired aircrafts. Operations such as in-flight-services, business development operations, and customer service need adequate streamlined operations meant to ensure that the needs of both the clients and the shareholders are kept into consideration.
Empty legs in the air charter industry are normally created whenever there is need for the aircraft to move from one location to another for diverse reasons. The reasons for this include moving from one location to another to pick its owner, returning to the station of the air charter company after undergoing a charter servicing, or when returning back home ones it has dropped off a charter passenger. The existence of an empty leg, though not a mandatory consequence, could results in a decrease in pricing from one point to another. According to the information found on the Altitude-Aviation (2010), empty legs point-to-point pricing operational mechanism normally offer very good prices for the private jet charters that are offered by the air charter companies.
Air charter multi-leg operations normally target to fulfill the existing demand that exist in an air charter market. On the other hand, ExcelAire charter operates in various parts of the world based on the needs of the clients who hire the aircrafts though it does not offer one-way routing services in its operations. According to the argument of the NewFlight Charters who mainly focuses on one-way routing of their charter services, most customers greatly prefer the use of a one-way routing due to the flexibility and reliability associated to this mode of operation (NewFlight Company Charters 2010). The existence of the deadhead aircraft operations is highly discouraged due to its lack of profitability as the aircrafts fly when empty hence no income is generated by the air charter company that hire out the planes (Stevenson 2008). This is a contrast to the one ways operations in which little operational costs are incurred due to the low operational costs since the aircrafts do not necessarily need to return to their initial base.
To the customers, one-ways operations are preferred since no daily minimum charges are applied. The core identifier of a one way charter is the departing and the arrival points that mark the end or the beginning of the aircraft journey. One way charters such as those operated by V1 Private Jets, CharterX, Avinode, among other related charter companies are normally non-cancellable due to the great price advantage attached to them and their common urgency to arrive at a given destination within a predetermined period of time. In most operations of the air charter industry, one-way charters are normally booked way in advance thus ensuring limiting the level of flexibility meant to be enjoyed by customers (Altitude-Aviation 2010). In the application by an air charter to undertake the chartering business, one of the key requirements that need to be provided by the applying company is a general description that elaborates on the operations of the company for which the authority being sort for. Though the above discussed methods is in one way or another optimal in the nature of an air charter company, Golob, Beckman, and Zahavi (1981, pp. 213-375) insist that an in-depth understanding and analysis of the environment in which the company operates in is very fundamental.
Rizzy Wayne, the president of the AirRoyal, argues that due to the prevailing downturn in the world economy, executives and corporations have strived to eliminate pricey jet related card memberships and fractional share jet programs due to the evidence of their costly operational expense. Air brokers find clients and then work towards influencing the clients in the best way possible through which to choose their air charter alternatives. The operations of an air charter business ought to be guided by high level standards and business ethics. Air charter operators should always adhere to the strict administration rules of the federal aviation. Whether or not brokers are used, high level transparency in the business operations should always be enhanced. Segmentation of aircraft availability is normally done based on the aircrafts number of seats, the validity period, and the book-class. In the operation, Kossowski (2003, pp. 7-14) elaborates on the fact that routing in the air charter industry is normally considered based on the departure and arrival of the aircrafts chartered at their airports and the return time or the period of arrival at the destination for the one-way flights. Poorly performing air charter companies have the operations mainly laying great emphasis on none one-way routing that does not involve floating of fleets thus denying customers the desired flexibility and cost effective operational advantages desired to have a competitive advantage in the market.
Operations of the air charter companies have mainly been aligned on the needs of the people rather than the laid down standards that guide in the operations of the companies. American Air Charter operations, for instance, have greatly been built on the basis of serving people that have to be in specific destinations in a fast, comfortable, and safe way without necessarily paying attention to the cost of the charter flights being offered (American Air Charter 2010). High level of dynamisms and flexibility is a priority to the services offered by V1 Private Jets Air Charter Company which offers large jets, super midsize jets, medium jets, light jets, and the turbo prop jets to its customers with great emphasis being paid to the customers safety. Technology is a key factor in determining the level the efficiency and effectiveness of services offered to the high profile and luxury minded clientele served by the air charter business operators. With flight operations such as Boeing 767-300 and Boeing 757-300 fleets, charter destinations for ExcelAire tends to ensure that it ventures into operations that would provide a faster return on investment to the company without necessarily paying attention to the customer needs and industry challenges in enhancing efficiency and effectiveness in the air charter business operations (G and L 2006).
Research Method
In arriving at the above data, non experimental data collection was used through the use of literature reviews and the study of existing surveys that relate to the research topic of air charter operations. In-depth analysis of the information collected was done in order to ensure that proper understanding of the air charter operations is done before any appropriate recommendations are made relative to ExcelAire. Based on the research problem and the directional hypothesis stated. Air charter company websites, published and non published journals on the websites with literature that pertains to the air charter operations was study in order to establish the various operational methods currently being used by most air charter companies in order to realize high profit margins based on their investments made. The literature review process had the major focus being put on establishing what the major optimal operational methods for the charter companies are, the methods of operations being employed, and the strategic operational decisions being arrived at in order to ensure that the companies adequately meet the standards and operational targets that had been set.
Additionally, the research method employed involved the secondary sources of data being analyzed in order to adequately understand the value and advantages related to the one-way routing and floating fleet operations. Secondary sources of data such as online journals, published books that relates to air charter operations, the aviation industry, written magazines, thesis already done by students in the aviation industry, and other sources of secondary data were reviewed with the aim of ensuring that a lot of data that related to the air charter industry was collected. Furthermore, diverse optimal operational methods of ExcelAire were also studied.
Research Findings
The literature has shown that implementation of one-way routing and a floating fleet will significantly improve consumer demand.
Literature That Supports the Hypothesis
The research conducted had a number of revelations that relate to the ExcelAire operations and other air charter companies operations. Efficiency and cost effectiveness in the operations of an air charter highly depends on the level of strategic organization and operations laid down by an air charter. The fact that V1 Private Jets Air Charter Company offers large jets, super midsize jets, medium jets, light jets, and the turbo prop jets to its customers with great emphasis being paid to the customers safety and that such operations has continued to make it be an outstanding air charter company is a clear revelation of the fact that implementation of one-way routing and a float fleet would greatly improve the standards of operations and hence boost the companys rate of return on investment (Private Aircraft and Aviation Charter 2009). To the customers, V1 Private Jets Air Charter Company clearly reveals that most customers prefer the use of one-way routing operational mechanisms that would in return result into higher customer base to the air charter company. Based on the literature collected and analyzed from the International AirCharter Company, it is evident that it distinguishes itself as a leading company that offers both small and larger sized luxury private jet that is highly desired by most executive travelers. To make the services more appealing to clients, AirCharter reinforces the fact that clients do not need their own aircraft, flight department, payment of membership fee, monthly management fee, or acquisition costs in order to use the company private jets. Fleets are thus scheduled based on the customers demand and no clients that hire the aircrafts are forced to pay or literally use the hired planes for a two way journey. The fact that most executive customers of the air charter companys prefer greater efficiency and cost effectiveness rather than merely being offered cheap offers with numerous unbearable fleet conditions that otherwise restrict their traveling freedom.
Literature That Is Neutral
Dedication to private charters by an air charter company is vital step in enhancing efficiency and effectiveness though it does not have a direct impact on the levels of consumer demand. Consumer needs mainly revolve around ensuring that their own self interests of having comfort and timely arrivals at their desired destinations is achieved by the air charter company that rent to them the private jets (Stevenson 2008). CharterX Corporation reveals the fact that the utilization in the information systems such as the ShedAero system neither improves nor hinders the operations of a company regardless of whether or not a one-way routing and a floating fleet is implemented (Avinode 2010).
Literature That Rejects the Hypothesis
According to the conducted study through the review of the literature, the fact that implementation of one-way routing and a floating fleet significantly improve consumer demand does not stand as the ultimate solution to the operational problems in the air charter industry and ExcelAire in particular. There are a number of factors which greatly contribute to the decrease or increase of the consumer demand of the services rendered by an air charter company. The literature has revealed that consumers are never simply interested with having one-way routing services and a floating fleet from an air charter but rather are more interested with other related benefits they are likely to accrue from hiring a jet or a helicopter. Rather than simply offering the customers one-way routing options, the company needs to also concentrate on other aspects of consumer satisfaction. One way pricing only offers an air charter companies the highly desired competitive advantage against its competitor even though it necessarily does not transform to consumer demand improvement. Rather than allocate a lot of efforts and resources to offer a one-way routing services, investments could be made by the company in technology and the telecommunications company departments to ensure that adequate communication infrastructure regulate the pricing being offered for the two-way routing aircraft hiring services being offered (Dellinger 2005 The Dead Head pricing. (2010). Based on the reviewed literature, it is evident that implementation of one-way routing and a floating fleet will do not necessarily improve the level of consumer demand to a companys air charter services.
Recommendations
Based on the in-depth analysis of the study conducted, ExcelAire need to adopt a number of changes or basic alterations to its current operation strategies in order to ensure that it gains a strong competitive advantage in the market within which it operates. For a start, the company ought to begin introducing one-way routing services in its current operations that would mainly involve eliminating the two-way routing services that indeed, have proved not to be very appealing to most customers. The introduction of the one-way routing and a floating fleet air charter services should be conducted in a procedural manner while at the same time maintaining the current two-way routing and the current pricing standards in order not to discourage the existing short hop flights that are the company is widely renowned for. The new operational strategies to be introduced should then slowly involve discounting of customers that request for bulk air charter services and whose flights also involve continuous flight hours by the hired aircrafts. Through the introduction of more dynamic and collaborative operation mechanism, it is evident that floating fleet will significantly improve consumer demand (Stevenson 2008). There is need for the implementation of a standard cancellation policy which should be communicated to the company clients in time to avoid customer disappointment that could in return result into a sudden decrease in the customer base. Additionally, good pricing mechanisms should be integrated into the operations of the ExcelAire operations with the aim of ensuring that the company capitalized on both one-way routing operations and higher levels of efficiency and effectiveness in its business air charter services.
Research Problem
RP3 ExcelAire does not operate at rates that are below the charter pricing index thus making it to be one of the most costly air charter companies in the world.
Economic analysis of air charter business and the specific information that relates to the research topic is fundamental as it offers a strong background on which to predict the profitability of the air charter company and the diverse factors that may in a number of ways affect the operation of an air chartering company such as ExcelAire. Through the analysis of the research problem, the benefits of an air chartering company operating within an agreeable charter pricing index are emphasized. This is of great importance as in establishes an in-depth understanding of the diverse issues that relate to economic analysis and the extent to which adherence to the laid down economic operational standards and pricing indices could influence the success of failure of an air chartering company (The Dead Head Pricing 2010).
Literature Review
The Avinode charter pricing index examines charter pricing on a specific aircraft across several operators. The Avinode charter pricing index is used for conducting comparison points of the venders in the air chartering industry and other related fields. This index is used as a comparison point for vendors. There is a concern that certain operators, in desperate attempts to lure clientele, will operate at rates lower than the charter pricing index indicates, further suppressing the index (Avinode Website 2010). Other than being an unethical business practice, desperate efforts made by any business form in luring customers through lowering the prices of the goods and services offered normally depict the company in questions either as a loss making organization that is in desperate need to revamp its operations or a company that has an unfair competitive advantage against its competitors within the competition (Goodwin 1981, pp. 61-108). Drastic price reductions normally affect an air charter operators profitability since they must strive to remain within a relevant margin of the index. ExcelAire is considered one of the most expensive operators, perhaps further hampering its relevance as an advantageous operator for brokers to work with (Kingsbury 2007). Though not directly affected by the air charter business, IATA and its related aviation related operations plays a pivotal role in enhancing efficiency and effectiveness in the air charter industry. Every year, US 3.6 billion are contributed to the global economic by the air charter industry together with other aviation businesses (Altitude-Aviation 2010).
Increased levels of fuel consumption by aircrafts increase the cost of operation and hence the services rendered by the air charter companies become even more costly. Modern aircrafts such as A380 and B777 allow for gains to be made in the long haul market. Investment into much faster jet engines by the air charter operators leads to a more generalized cost of hiring and operating a plane decreasing and hence making the demand of customers for the air charter services to increase. However, the economic value of an air charter company also revolves around its level of fuel consumption. The hire the level of fuel consumption the more costly will the cost of hiring an aircraft in an air charter company. Information systems and software applications that help enhancing accurate online pricing of the aircrafts do exist. Real time costing and determination of the cost of aircraft hiring is a vital tool for enhancing customer confidentially and trust which are also strengthened through provision of accurate trip pricing that is evidently provided by intelligent Avinode.
Very light jets, also simply referred to as VLJ, are more economical to maintain and are normally perceived to be much cheaper and faster jets that enable point-to-point private charter business. In most instances, introduction of new and smaller aircrafts to a charter company does not necessarily guarantee better returns on investment. VLJ, an aircraft manufacturing company, normally insist on the fact the need to create smaller, much faster, cost effective, and reliable aircrafts that would facilitate the point to point movement by the private charter jets thus creating a new better industry. Williams emphasize that development and invention of new aircrafts has the effect of lowing the existing barriers to the actual ownership that would in the end enable the very rich persons to acquire personal aircrafts (2001, pp. 271-276). This will however not result into the wider adoption of the common commercial applications. Consumers of air charter business conducts comparison of at least two alternatives based on the prices being offered before settling on a specific charter services.
According to the Transportation Systems Analysis Model (TSAM 2000), both business and non business trips charters attracts different rates though the rates are within a standardized value based on the charter pricing index. An air charter always ought to carry out a revenue forecast before deciding on the charter costs to be used. Other than the need for exclusive chartering services, flexible, convenient, and comfortable services, wide ranges of air charter process varied from one charter product to another which includes exclusive charter, exclusive travel, business jet, and the private jet charters. According to the AirCharter Company, the hourly rate ranges from 2,000 to 13,000 hourly rate (AirCharter 2009). These prices are adequately within the charter pricing index. The prices are also in line with the flight sizes of between 5 to 23 persons per flight based on varied aircraft speeds (USSKY Link 2008). An estimator for the flight charter flights establishes the diverse trends and mechanisms through which prices should be determined with the aim of ensuring that charter operators do not offer extremely high or low charter service prices that would earn the company an unfair competitive advantage or result in making super high profits. This economic trend involves both the freight air and the passenger air charters (ExcelAire Website 2010 Altitude-Aviation 2010).
In ensuring that its charter services are in strict adherence to the charter pricing index, the EA Elite Aviation Company works towards ensuring that it minimizes its operating expenses by implementing cost effective charter operating mechanisms. The company uses fuel programs that involve the use of better negotiated costs structures that mainly have better negotiated structured costs, fixed base domestic operators, and manageable fuel credit cards (EA Elite Aviation 2010 Lee and Mckenzie 2006). Such strategic economic analysis and expense saving mechanisms are vital in enhancing cost effective air charter operations (Accounting management and the goals of chapter 2010). According to the Altitude Aircraft (2010), most aircraft chartering companies in the US operates between 300 and 600 for every flight hour and this does not always include the related chartering expenses. On the other hand, the twin piston chartering aircrafts rates prices ranges from 600 to 1200 for every hour the aircraft is used plus other expenses while the Turboprop chartered aircrafts goes for 130o to 3000 based on the similar above stipulated chartering conditions. Air charter prices in most chartering companies, as is indicated above, greatly depends on the flexibility and reliability that needs to be offered to the consumers rather than the ultimate profits which the company intends to make (USSKY Link 2008 The Dead Head pricing 2010). ExcelAires pricing factors tend to be different as is commonly reflected from the chartering company.
Research Method
Due to the nature of this research, non experimental data collection strategies were employed with the aim of ensuring that the process of analyzing economic factors that relate to the air charter company and particularly the Excelaire was collected and then discussed in order to arrive at the various conclusions that form the research findings that answers the research problem. Data collection on the economic analysis was conducted through the use of literature reviews and an in-depth study of other secondary sources of data. The analysis of the information collected was done in order to ensure that proper understanding of the air charter economic issues such as price and costing factors are adequately analyzed and fully understood before the determination of whether or not the economic status of the Excelaire pricing strategies fully adhere to the air charter pricing index (The National Pricing Index Archives 1983, pp. 417-999).
Air charter company websites, published and non published journals on the websites with literature that pertains to the air charter economic issues and pricing methodologies and standards adopted were studied in order to establish the various pricing strategies and trends of strategies currently being employed by most air charter companies in order to realize high profit margins based on the various investments made in the air charter companies (Lee and Mckenzie 2006). The literature review process had its major focus being put on establishing whether or not the existing air charter companies adhere to the aviation pricing index and other factors that determine the pricing levels implemented by the companies. Furthermore, secondary sources of data such as online journals, published books that relates to air charter operations, the aviation industry, written magazines, thesis already done by students in the aviation industry, and other sources of secondary data were also reviewed. The secondary sources of data analyzed aimed at establishing the various possible better pricing mechanisms that could be employed by the air chartering companies in order to reliable better profits through ethically correct competitive advantages without any undue influence to the market.
Findings
The literature research has shown that ExcelAire does not operate at rates that are below the charter pricing index thus making it to be one of the most costly air charter companies in the world.
Literature that Supports the Hypothesis
Excelaire Company does not adhere to the charter pricing index but rather uses its own pricing mechanisms with the aim of ensuring that it maximizes its profits. The research has indeed, revealed that competition is a vital factor that influences consumers purchasing patterns. The literature reviewed reveals that Excelaire has in most occasions hampered the efforts of air charter brokers to sell its services due to its costly pricing within the competition. The company does not adhere to the charter pricing index due to the fact that it mainly targets the expensive corporate customers that mainly concern themselves with conform and convenience rather than the cost of the air charter services offered (Williams 2001, pp. 261-273). Under its building itinerary section that has the one-way, roundtrip, and the multi-leg services being outlined, the cost of the one-way trip, which are also scarce, are highly exaggerated in order to discourage customers from using such charter services. Other company services such as provision of fully equipped maintenance departments, aircraft hangarage and parking, concierge services, rental crew, computer flight and weather related services, wireless internet access services, and the after hour fuel and the emergency services are some of the economic analysis issues Excelaire capitalizes on in justifying its lack of adherence to the charter pricing index (Accounting management and the goals of chapter 2010).
Neutral Literature
According to Lichtman (1972), the charter pricing index is mainly controlled by other environmental business factors such as the jet fuel index of pricing, consumer patterns, and related services offered by a charter company to its clients. The charter pricing index mainly stipulate the preferred market prices of air charter businesses but hardly puts into consideration other environmental factors needed to ensure that economic market of the air charter industry is normalized (Liu,et al 1988).
Literature That Does Not Support the Hypothesis
Other than proclaiming that the Excelaire is ready to offer charter services whenever they need arise to all parts of the world and that it handles corporate road shows, family gateways, ground transportation, gourmet catering, special chartering requests, and concert tours the company hardly communicates its pricing index to the public or through its website (EA Elite Aviation 2010 The National Pricing Index Archives (1983, pp. 532-782). It would be hard to substantiate the claim that Excelaire does not adhere to the charter pricing index with paying adequate attention to its core services and the vision and mission of its existence and its business strategies. In fact, based on the argument of Douglas and Shappell (2003), an air charter always ought to carry out a revenue forecast before deciding on the charter costs to be used.
Recommendations
Other than the need for exclusive chartering services, flexible, convenient, and comfortable services, wide ranges of air charter process varied from one charter product to another, which includes exclusive charter, exclusive travel, business jet, and the private jet charters, should be offered by an air charter company. Based on the above economic analysis, it is evident that various adjustments ought to be undertaken by Excelaire if it has to remain relevant and competitive in the market. To begin with, the company needs to adjust its air chartering prices to ensure that the prices offered adhere to the air charter pricing index (Cecile and Rossouw 2009 Charter Pricing and the Downturn 2010). Secondly, in its implementation of one-way charter services, services that only increases the operating costs and introduce undesired luxury while at the same time increasing the aircraft hiring costs should be eliminated. ExcelAire should conduct a thorough salary and expenditure survey and an analysis of the air charter trends and statistics in order to make guided decisions on the extent to which to adjust its pricing index with the aim of remaining competitive, relevant in the market, and cost effective in its air charter operations.
Pricing
To better the performance of ExcelAire and enhance its market relevance through strategic corrective measures, there are a number of issues that needs to be addressed. In line with the conducted in-depth analysis of the business aviation relative to ExcelAire, it is clear that in order for ExcelAire to maintain and keep its operations profitable and viable in todays economy, other than regulating its operations and introduction of unique air charter services, great attention should be accorded to the cost of fuel which has proved to be a continuing concern for many air charter operators. Since the price of oil in the modern shaky economy is likely to continue influencing the pricing indices of air charter services, adequate attention should be accorded to the operations of Excelaire to ensure that only cost effective operations are tolerated and the constant analysis and survey of the air charter market be done in order to review the company pricing index (Douglas and Shappell 2003). Mechanisms to cut on the fixed costs of operating aircrafts and the overall process of hiring them should be re-analyzed with the aim of ensuring that streamlined mechanisms are employed to fully minimize on the fixed costs. These mechanisms include Excelaire renting out unused aircrafts and where possible venturing into the aviation industry that would ensure that other services such as parcel transportation is done. Discounting of customers that request bulky air charter services and whose flights also involve continuous flight hours by the hired aircrafts should frequently be done. Such strategies would greatly reduce the burden that results from the fixed costs air charter operations.
Cost, Comfort, and Flexibility
Douglas and Shappell (2003) believe that it is always vital that the needs and concerns of air charter customers be given higher priority in planning for the company operations. It is important that Excelaire ensure that the ever increasing needs of customers to travel at will and with great comfort and flexibility be delivered to them. However, to achieve this, Excelaire should employ the use of small flights that would in return ensure that the charter company attracts more clients based on the improved levels of flexibility and alertness and sensitivity to the consumer needs. Additionally, Excelaire need to pay great emphasis on the quality of services, flexibility of their operations, and offer greater attention to the needs of the customers through more personalized services. This would involve sticking to the operational standards while ensuring that there are provisions to address possible unique customer needs that may arise from time to time. This also revolves around the fact that, as a strategic mechanism, Excelaire should use a one way pricing strategy in an attempt to enhance greater levels of flexibility and hence make ExcelAire to become more flexible. One-way routing and a floating fleet air charter services should fully be introduced in Excelaire operations though in a procedural manner in order for it to maintain the current two-way routing and pricing standards and hence avoid discouraging and disorienting the existing short hop aircraft customers. Public relations strategies should be undertaken to eliminate the common perception that ExcelAire is a very costly air charter company.
Information Technology and Global Alliances
It is evident from the research undertaken through the review of literature and surveys on the business operations of ExcelAire that the company has integrated information communication technologies in its air charter services. However, the company should invest more resources in more intelligent technologies and information systems that would strengthen its bond with customers and enhance high level transparency and openness. This is crucial since it is only after a company wins the customer loyalty that it can gain a greater competitive advantage within the competition through other competition operations and strategic mechanisms implemented. To ensure that it better its global presence, ExcelAire need to establish more global alliances in order for it to find exploit new markets. It should therefore be able all learn and improve the load factor, efficiency in scheduling efficiency, and reduce their air chartering costs and maintenance costs. To attract more clients, the company ought to enter in alliances and partnerships with corporate organizations and other air charter companies in order to gain a global view and increase its rate of return on investments made.
There are innumerable management strategies and approaches used at ExcelAire. Clients will always choose offers and suits that best addresses their needs and suit their taste. ExcelAires reputation is that of a higher-priced operator - a negative aspect in air charter competitive market. The study of ExcelAire offers a unique opportunity to have an in-depth analysis of the various air charter options that are available for people that prefer private flying with great comfort and reliability. The current operational ExcelAire strategy also involves the use of additional aircraft, each of which has the capability to accommodate between seven to nine passengers.
Strategic business plans should be aligned on an in-depth understanding of metrics of deadheads and one-way air charter related jet trips. ExcelAire should adopt a hybrid strategy such as that of a niche low-cost air charter leader. Both international travels and the cross country travel businesses posses a lot of business opportunities to the air charter businesses activities being undertaken by ExcelAire and other companies in the industry. Based on the research undertaken, ExcelAire should implement the use of the continuous flight hour operational strategy. Various optimal operational methods of ExcelAire Company do exist. It is vital that like its competitors, ExcelAire should employ the use of one-way routing and floating fleets to offer significantly competitive quotes on similar charter requests.
Owners of the aircrafts need to have an influence on the operations to be undertaken by their hired aircrafts due to the need for empty legs. Most customers greatly prefer the use of a one-way routing because of the flexibility and reliability associated to this mode of operation. Implementation of one-way routing and a floating fleet significantly improve consumer demand due to the related flexibility, efficiency, and cost effectiveness. Consumers are never simply interested with having one-way routing services and a floating fleet from an air charter but rather are more interested with other related benefits they are likely to accrue from hiring an aircraft from an air charter company. ExcelAire does not operate at rates that are below the charter pricing index thus making it to be one of the most costly air charter companies in the world.
ExcelAire Company
ExcelAire is a dynamic aviation organization located at Long Island MacArthur Airport (ISP). The organization provides and focuses on several aviation services across various functions such as aviation maintenance, aircraft sales, and Fixed Based Operators (FBO) services. Of particular importance is the Aircraft Management and Charter department which is a large contributor to the organizations renowned success. Demand for air charter services has grown exponentially over the years and so have ExcelAires fleet and charter department. However, from this success and growth arises the duality of the charter industry. ExcelAires success creates vulnerability, which is a strong dependence on prevailing economic conditions. To understand the threat imposed on ExcelAires success as an aircraft management and charter organization, one must first understand the nature of the charter industry. Aircraft ownership is remarkably expensive and cost prohibitive endeavor. This aspect of aircraft business has been demonstrated below (ExcelAire Website 2010). A large investment is required in the pursuit of aircraft ownership. As such, a business jet represents a fixed-cost for the owner. Whether the aircraft is flying or not, it cost money to the owner in a number of ways and from this principle, the basic framework of charter arises.
The charter concept is a simple one offset the cost of aircraft ownership by utilizing the aircraft for revenue producing missions. When an aircraft would otherwise sit idle on a tarmac, it is instead normally transporting passengers or cargo at someone elses expense. This is the purpose of an aircraft management company to balance the needs of owner with their expectations of charter activity. It is important to understand that an aircraft management company such as ExcelAire does not own any of the aircraft within its fleet they are simply managing and operating someone elses, who can afford to purchase and own a business jet, highly valuable resource. Like any other industry, there are innumerable management strategies and approaches used at ExcelAire.
Because of the various approaches, each organization offers specific advantages by way of pricing, routing, and fleet mix among others. Brokers, individuals who link prospective charter customers with air charter operators, seek out these advantages and employ them to provide their client with high profile and costly clientele in the best possible. The wide-range of client preference can make best offer mean anything from most attractive or suitable aircraft to best pricing or company operating history. It is evident that clients will always choose offers and suits that best addresses their needs and suit their taste. Nudelman and Don (2009, pp. 311-403) argues that in most instances, brokers will primarily focus on one thing pricing. After the economic downturn of 2009, brokers have continued to be faced with appeasing frugal clients who must now justify their use of private aviation instead of commercial aviation. In an industry of wealth and luxury, now more than ever before, pricing is at the center of focus. Competition that is based on price could be unhealthy if not checked by the relevant authorities.
Compared to similar aircraft operators, though it has an efficient operational strategy, it is evident that ExcelAires reputation is that of a higher-priced operator. ExcelAires fleet is primarily comprised of heavy aircraft, large capacity luxury aircraft designed to travel moderate to large distances. Being based out of Islip, New York, any charter operation requires that the aircraft depart from and return to the home base in Islip at the charter clients expense. Meanwhile, various neighboring operators are employing one-way pricing, where the clients simply pay to move the aircraft from one point to another or the advantages of a floating fleet dispersed across the nation. Already considered an expensive operator, ExcelAire is seriously disadvantaged in comparison to its operators.
Why Charter Business
Charter business presents a very unique platform for the researcher to get a unique picture of the aviation and the air chartering industries. The unique business opportunities presented by the charter business comes with unique challenges, which if not addressed could result into unbearable looses being suffered. Growth factors such as internet communication, the effect of uniting the aviation industry, the use of very light and more flexible jets, the ever growing dissatisfaction in the airline industry, and the growing popularity of the charter business presents unique research opportunities that if well analyzed could help poorly performing charter companies to better their performance standards. The study of the ExcelAire also offers a unique opportunity to have an in-depth analysis of the various air charter options that are available for people that prefer private flying with great comfort and reliability.
The options such as the use of the on-demand charter, having jet membership in a company, and the use of shared ride through the private jet service would also be discussed through the analysis and study of the charter business (ExcelAire Website 2010). There are a number of loopholes in the charter business and this discussion would therefore offer the rare opportunity to address the loopholes and ensure that possible recommendations are made. The charter industry has continued to foresee new developments in technology such as engine design, airframe methods of manufacturing, and the use of better computer aided design and the continued increase of the ATC upgrade (Nudelman and Don 2009, pp. 351-401).
Why the Choice of ExcelAire
The uniqueness in the operational and business strategy of ExcelAire makes it to be an interesting company to base the research on. The company faces challenges that arise from the competition being witnessed in the industry. It is evident that competition that is strictly based on pricing could have very adverse effects on a companys performance. However, the focus on ExcelAire aims to identify other vital competitive edges which an air charter business or any other company could focus on in order to ensure that the current customers are retained and if possible ensure that the customer base is constantly increased. Loopholes that exist in the operation of ExcelAire would be focused on in order to address the various ways through which the air charter business challenges could best be addressed without necessarily resorting to the use of price reduction strategies.
Research Problem
RP1 ExcelAires current strategy does not use the hybrid operational strategy that is meant to give it a market niche as a low cost air charter.
There are a number of strategies that can be utilized to ensure the success of an airline charter company. An in-depth planning and organizational procedure meant to ensure that resources are adequately utilized and the human resource fully employed towards ensuring that success of the airline charter business is vital. Based on the analysis done by Cecile and Rossouw (2009) on the aspects of air charter management, strategic management, which is the planning, used to help an organization determine its mission and general direction or strategic intent is very fundamental for the operations of a charter airline. Strategy defines the issues and values that are both relevant and important to an organization and provides the basis for managerial decisions. In essence, Flouris and Oswald (2006) maintain that strategy provides the structural framework from which an organization is established and the business angle that would be used to ensure that the organization gains a strong competitive advantage over its competitors. Without it, an organization simply exists without a clearly defined vision, mission, and the goals that need to be achieved.
Lichtman (1972) believes that good strategies for an organization do not necessarily imply that success would be achieved. To the contrary, proper planning and implementation mechanisms need to be put into place in order to ensure that the laid down operational strategies are implemented to the latter and success achieved. Indeed, strategy may be considered as vital as the financial capital from which the organization operates. While finances surely bestow a relative competitive advantage, in the absence of strategy, they are simply a tool without a map. Organizations without strategies often follow a path of mediocrity, reacting to external forces rather than dominating the market by way of a competitive strategy (Flouris and Oswald 2006 Charter Industry Downturn 2010). As opposed to mediocre organizations that lack strategy, organizations with well defined competitive strategies have opted to differentiate themselves from the competition through a specific focus or activity. Quite simply, a competitive strategy enables an organization to be different and stand out from its neighboring companies only if its implementation is undertaken.
Hypothesis
The literature will show that ExcelAire should adopt a hybrid strategy such as that of a niche low-cost air charter leader.
ExcelAires Vision and Mission Statements and the Business
The essence of an organizations strategy is captured in its values, vision and mission each accounting for a unique portion of the overall strategy. Values describe how an organization should treat its employees, shareholders and customers. Vision quite simply describes where an organization is headed (Flouris and Oswald 2006). ExcelAire aims to ensure that it provides to the company air fleets that are of larger capacity, very heavy and which can accommodate larger numbers of people, very luxurious, and designed which are designed to constantly travel for both moderate and larger distances with ease. The company aim to ensure that it is ever ready to offer its air services whenever the customers are ready. Through the use of its expert team members that include pilots, flight attendants, dispatchers, and the maintenance crew among others, the companys vision is to ensure that it establishes the largest heavy fleet of jets and to ensure that high levels of flexibility in the airline that would lead to the constant aircraft availability based on the clients needs is enhanced. ExcelAire also aims to ensure that it indeed become a renown dynamic aviation firm all over the world with the major company services being restricted to aircraft management, aircraft, and jet and helicopter charters (Lichtman 1972). ExcelAires core value is to ensure that it offers high quality chartered plans when and where the customers want to. Furthermore, ExcelAire target to ensure that it works towards ensuring that flexibility and convenience of the customer is fully enhanced.
The Current Strategy Used by ExcelAire
According to Flouris and Oswald (2006), differentiation is a business strategy in which an organization provides a product or service that is unique in the industry thus offering a competitive advantage to the business organization within the competition. This uniqueness enhances a customers perceived value of the product or service and as such, customers are inclined to pay more for it. As witnessed in ExcelAires motto, the organization employs the heavy jet as its prime differentiator. Landau and Nathan (1985) states that indeed, ExcelAire purports itself to have one of the largest heavy-jet fleets in the northeast. ExcelAire boasts thirteen heavy jets and helicopters as part of its fleet and each can accommodate fleet at least twelve passengers at an instance (ExcelAire 2010). The current operational ExcelAire strategy also involves the use of additional aircraft, each of which has the capability to accommodate between seven to nine passengers. The purpose of hiring and ownership of the aircraft that accommodates between seven to nine passengers is to enable the air charter company to be able to attract clients that wants greater levels of flexibility and whose budget and needs may now allow them to hire bigger aircrafts and helicopters (Golob, et al 1981, pp. 213-375). Four additional aircraft, each being capable of accommodating between seven to nine passengers, complete ExcelAires fleet. This indicates a reliance on the large cabin aircraft as a primary means of fulfilling charter demand.
Literature Review
Technological advancement has been known to have a very great influence on the business strategies implemented by air charter companies. Certain unique business strategies that closely relate to technological advancement have constantly been used in ensuring that customers get satisfied and that high flexibility levels in the air charter business operations of a company are enhanced (USSKY Link 2008). For instance, other than offer minimal information that relates to the company operations and business activities that relate the air charter business, the International Air Charter Company provides very adequate information on its website thus ensuring the company clients to better understand its strategies and access more of its services through the company website. The International AirCharter Company distinguishes itself as a leading company that offer both small and larger sized luxury private jest that are highly desired by most executive travelers. To make the services more appealing to clients, the company reinforces the fact that clients do not need their own aircraft, flight department, payment of membership fee, monthly management fee, or acquisition costs in order to use the company private jets ( HYPERLINK httpwww.aircharternet.comair-charterair_charter.htm AirCharter 2009). Low pricing is also a key competitive strategy being employed by the International AirCharter Company.
According to the business jet traveler website, the issue of charter pricing is indeed not a simple business affair. Though assumed to be a direct forward process, the pricing of charter air services should be done based on an a detailed study of the business market and the environment within which the business organization operates in. the monetary unit for charter pricing is a very vital factor which can never be ignored when determining the pricing of the air charter services. The weather, the terrain of the physical environment, and the actual distance to be covered in traveling determine the cost that an air charter should impose of its jets and helicopters. Most air charter businesses have different prices based on whether the trip is a return trip or an outbound leg. The arrival of the turbojets introduced the use of hourly rate in determining the costs to be pegged in a hired plane (Charter Pricing and the Downturn. 2010 Doganis 1998, pp. 51-210). Though vital and very flexible, the hourly pricing strategy has a number of shortcomings that always need to be addressed before being implemented by a charter company.
On the other hand, some business models consider the use of the return leg costing strategy as an inappropriate mechanism in the air charter industry. IT has simplified the tracking of empty legs thus increasing efficiency and effectiveness in most air charter companies. In some instances, air charter companies such as Sentient Jet and CharterX employ the use of card information technology program in tracking the unused legs of a charter fleet (Avinode Website 2010). It is clear that air charter companies strategies employed in their operations should not greatly rely on the favorable dead heads that involve the use of a one-way-route- to determine the pricing and business planning strategies. Strategic business plans should be aligned on an in-depth understanding of metrics of deadheads and one-way air charter related jet trips (The Dead Head pricing 2010. The employed business strategies in most air charter companies lay emphasis on efficiency, accessibility, flexibility, and effectiveness in getting assurance of the flights availability. Aircraft owners ought not to expect the charter to offset all their expenses rather than to always rely on flexibility to achieve flight availability. As it is indicated by Leeds Michael of the FlightStar Company, availability of the aircraft to the customers is crucial of the charter owner wants to maximize revenues.
Research Method
Non experimental data collection method was used in collecting the data that was employed in the discussion and subsequent analysis in this chapter. Literature review process was conducted and used in ensuring that relevant information that relates to the air charter industry is reviewed and compared to ExcelAires air charter information available in published journals, books written, company website, and its annual reports. Through the study of information available on the ExcelAire website and other related online and published journals, the strategic approach of ExcelAire and that of its competitors in the aviation charter market was analyzed and adequately discussed before the findings could be arrived at.
Findings
ExcelAire should adopt a hybrid strategy such as that of a niche low-cost air charter leader. This argument is based on the following discussed literature. The research undertaken has revealed that there is a dire need for the fleet review of the ExcelAire to be undertaken with the aim of ensuring that the cost of its services and the costing methods used to determine the cost of the company charter services are reviewed and the necessary alterations made to the current strategy being used. The research has indeed, revealed that ExcelAire is a dynamic business organization though with a number of challenges and inadequacies that hinder the companys top managements efforts to make it have a competitive advantage in the market in which it operates (G and L 2006). It is evident that competitive advantages in the air charter business mainly relates to the level of flexibility, affordability, airplane availability, and the extent of cost effectiveness of hiring and operating the airplanes.
Both international travels and the cross country travel businesses posses a lot of business opportunities to the air charter businesses activities being undertaken by ExcelAire and other companies in the industry. The need for the company to adopt a hybrid operational strategy is also based on the threats it faces in the current market. Currently, the company has faces the challenge of operating in an ever shrinking business company budget in comparison to the ever increasing demand of more flexible air charter offers from customers (Don 1997, pp. 12-27). Telecommunications also continue to pose great challenges in the aviation industry due to the high telecommunications costs being incurred in an attempt conduct business activities.
Conclusion and Recommendations
Based on the companys strategy being used, the future of the company adopting a hybrid strategy would imply that it benefit from its well organized operational structures and the advantages associated with the ownership of large and medium size airplanes. The implementation should be undertaken through the utilization of its fleets and ensuring that it becomes a low cost heavy operator. The implementation of the findings should be done by using the fleet operations already in place and integrating discounting practices in its cost determination strategies. The company should also maintain current pricing so as not to entirely discourage short-hop flights and to discount bulky offers. ExcelAire should therefore implement the use of the continuous flight hour operational strategy.
RP2 What are the optimal operational methods of ExcelAire
Understanding the manner in which ExcelAire conducts its air charter business activities provides a very good background for understanding the various challenges or competitive advantages, which the company may be having. When the operational method being employed by the company is a one-way routing or not greatly influence the cost of the air charter company thus making it either more competitive or weakening its strategic position within its competition.
Literature Review
ExcelAires primary competitors employ the use of one-way routing and floating fleets to offer significantly competitive quotes on similar charter requests. By not implementing these strategies, ExcelAire may be losing business and otherwise loyal clientele to cheaper operators. Air charter operations are normally determined by the levels of competition in the market and the needs of the clients within a given business environment. One way aircraft operations and the use of dead ends in the charter industry, according to Stevenson (2008), are not common phenomenon and only happen due to the very substantial reasons that are normally determined by the air charter company. Owners of the aircrafts may also have an influence on the operations to be undertaken by their hired aircrafts. Operations such as in-flight-services, business development operations, and customer service need adequate streamlined operations meant to ensure that the needs of both the clients and the shareholders are kept into consideration.
Empty legs in the air charter industry are normally created whenever there is need for the aircraft to move from one location to another for diverse reasons. The reasons for this include moving from one location to another to pick its owner, returning to the station of the air charter company after undergoing a charter servicing, or when returning back home ones it has dropped off a charter passenger. The existence of an empty leg, though not a mandatory consequence, could results in a decrease in pricing from one point to another. According to the information found on the Altitude-Aviation (2010), empty legs point-to-point pricing operational mechanism normally offer very good prices for the private jet charters that are offered by the air charter companies.
Air charter multi-leg operations normally target to fulfill the existing demand that exist in an air charter market. On the other hand, ExcelAire charter operates in various parts of the world based on the needs of the clients who hire the aircrafts though it does not offer one-way routing services in its operations. According to the argument of the NewFlight Charters who mainly focuses on one-way routing of their charter services, most customers greatly prefer the use of a one-way routing due to the flexibility and reliability associated to this mode of operation (NewFlight Company Charters 2010). The existence of the deadhead aircraft operations is highly discouraged due to its lack of profitability as the aircrafts fly when empty hence no income is generated by the air charter company that hire out the planes (Stevenson 2008). This is a contrast to the one ways operations in which little operational costs are incurred due to the low operational costs since the aircrafts do not necessarily need to return to their initial base.
To the customers, one-ways operations are preferred since no daily minimum charges are applied. The core identifier of a one way charter is the departing and the arrival points that mark the end or the beginning of the aircraft journey. One way charters such as those operated by V1 Private Jets, CharterX, Avinode, among other related charter companies are normally non-cancellable due to the great price advantage attached to them and their common urgency to arrive at a given destination within a predetermined period of time. In most operations of the air charter industry, one-way charters are normally booked way in advance thus ensuring limiting the level of flexibility meant to be enjoyed by customers (Altitude-Aviation 2010). In the application by an air charter to undertake the chartering business, one of the key requirements that need to be provided by the applying company is a general description that elaborates on the operations of the company for which the authority being sort for. Though the above discussed methods is in one way or another optimal in the nature of an air charter company, Golob, Beckman, and Zahavi (1981, pp. 213-375) insist that an in-depth understanding and analysis of the environment in which the company operates in is very fundamental.
Rizzy Wayne, the president of the AirRoyal, argues that due to the prevailing downturn in the world economy, executives and corporations have strived to eliminate pricey jet related card memberships and fractional share jet programs due to the evidence of their costly operational expense. Air brokers find clients and then work towards influencing the clients in the best way possible through which to choose their air charter alternatives. The operations of an air charter business ought to be guided by high level standards and business ethics. Air charter operators should always adhere to the strict administration rules of the federal aviation. Whether or not brokers are used, high level transparency in the business operations should always be enhanced. Segmentation of aircraft availability is normally done based on the aircrafts number of seats, the validity period, and the book-class. In the operation, Kossowski (2003, pp. 7-14) elaborates on the fact that routing in the air charter industry is normally considered based on the departure and arrival of the aircrafts chartered at their airports and the return time or the period of arrival at the destination for the one-way flights. Poorly performing air charter companies have the operations mainly laying great emphasis on none one-way routing that does not involve floating of fleets thus denying customers the desired flexibility and cost effective operational advantages desired to have a competitive advantage in the market.
Operations of the air charter companies have mainly been aligned on the needs of the people rather than the laid down standards that guide in the operations of the companies. American Air Charter operations, for instance, have greatly been built on the basis of serving people that have to be in specific destinations in a fast, comfortable, and safe way without necessarily paying attention to the cost of the charter flights being offered (American Air Charter 2010). High level of dynamisms and flexibility is a priority to the services offered by V1 Private Jets Air Charter Company which offers large jets, super midsize jets, medium jets, light jets, and the turbo prop jets to its customers with great emphasis being paid to the customers safety. Technology is a key factor in determining the level the efficiency and effectiveness of services offered to the high profile and luxury minded clientele served by the air charter business operators. With flight operations such as Boeing 767-300 and Boeing 757-300 fleets, charter destinations for ExcelAire tends to ensure that it ventures into operations that would provide a faster return on investment to the company without necessarily paying attention to the customer needs and industry challenges in enhancing efficiency and effectiveness in the air charter business operations (G and L 2006).
Research Method
In arriving at the above data, non experimental data collection was used through the use of literature reviews and the study of existing surveys that relate to the research topic of air charter operations. In-depth analysis of the information collected was done in order to ensure that proper understanding of the air charter operations is done before any appropriate recommendations are made relative to ExcelAire. Based on the research problem and the directional hypothesis stated. Air charter company websites, published and non published journals on the websites with literature that pertains to the air charter operations was study in order to establish the various operational methods currently being used by most air charter companies in order to realize high profit margins based on their investments made. The literature review process had the major focus being put on establishing what the major optimal operational methods for the charter companies are, the methods of operations being employed, and the strategic operational decisions being arrived at in order to ensure that the companies adequately meet the standards and operational targets that had been set.
Additionally, the research method employed involved the secondary sources of data being analyzed in order to adequately understand the value and advantages related to the one-way routing and floating fleet operations. Secondary sources of data such as online journals, published books that relates to air charter operations, the aviation industry, written magazines, thesis already done by students in the aviation industry, and other sources of secondary data were reviewed with the aim of ensuring that a lot of data that related to the air charter industry was collected. Furthermore, diverse optimal operational methods of ExcelAire were also studied.
Research Findings
The literature has shown that implementation of one-way routing and a floating fleet will significantly improve consumer demand.
Literature That Supports the Hypothesis
The research conducted had a number of revelations that relate to the ExcelAire operations and other air charter companies operations. Efficiency and cost effectiveness in the operations of an air charter highly depends on the level of strategic organization and operations laid down by an air charter. The fact that V1 Private Jets Air Charter Company offers large jets, super midsize jets, medium jets, light jets, and the turbo prop jets to its customers with great emphasis being paid to the customers safety and that such operations has continued to make it be an outstanding air charter company is a clear revelation of the fact that implementation of one-way routing and a float fleet would greatly improve the standards of operations and hence boost the companys rate of return on investment (Private Aircraft and Aviation Charter 2009). To the customers, V1 Private Jets Air Charter Company clearly reveals that most customers prefer the use of one-way routing operational mechanisms that would in return result into higher customer base to the air charter company. Based on the literature collected and analyzed from the International AirCharter Company, it is evident that it distinguishes itself as a leading company that offers both small and larger sized luxury private jet that is highly desired by most executive travelers. To make the services more appealing to clients, AirCharter reinforces the fact that clients do not need their own aircraft, flight department, payment of membership fee, monthly management fee, or acquisition costs in order to use the company private jets. Fleets are thus scheduled based on the customers demand and no clients that hire the aircrafts are forced to pay or literally use the hired planes for a two way journey. The fact that most executive customers of the air charter companys prefer greater efficiency and cost effectiveness rather than merely being offered cheap offers with numerous unbearable fleet conditions that otherwise restrict their traveling freedom.
Literature That Is Neutral
Dedication to private charters by an air charter company is vital step in enhancing efficiency and effectiveness though it does not have a direct impact on the levels of consumer demand. Consumer needs mainly revolve around ensuring that their own self interests of having comfort and timely arrivals at their desired destinations is achieved by the air charter company that rent to them the private jets (Stevenson 2008). CharterX Corporation reveals the fact that the utilization in the information systems such as the ShedAero system neither improves nor hinders the operations of a company regardless of whether or not a one-way routing and a floating fleet is implemented (Avinode 2010).
Literature That Rejects the Hypothesis
According to the conducted study through the review of the literature, the fact that implementation of one-way routing and a floating fleet significantly improve consumer demand does not stand as the ultimate solution to the operational problems in the air charter industry and ExcelAire in particular. There are a number of factors which greatly contribute to the decrease or increase of the consumer demand of the services rendered by an air charter company. The literature has revealed that consumers are never simply interested with having one-way routing services and a floating fleet from an air charter but rather are more interested with other related benefits they are likely to accrue from hiring a jet or a helicopter. Rather than simply offering the customers one-way routing options, the company needs to also concentrate on other aspects of consumer satisfaction. One way pricing only offers an air charter companies the highly desired competitive advantage against its competitor even though it necessarily does not transform to consumer demand improvement. Rather than allocate a lot of efforts and resources to offer a one-way routing services, investments could be made by the company in technology and the telecommunications company departments to ensure that adequate communication infrastructure regulate the pricing being offered for the two-way routing aircraft hiring services being offered (Dellinger 2005 The Dead Head pricing. (2010). Based on the reviewed literature, it is evident that implementation of one-way routing and a floating fleet will do not necessarily improve the level of consumer demand to a companys air charter services.
Recommendations
Based on the in-depth analysis of the study conducted, ExcelAire need to adopt a number of changes or basic alterations to its current operation strategies in order to ensure that it gains a strong competitive advantage in the market within which it operates. For a start, the company ought to begin introducing one-way routing services in its current operations that would mainly involve eliminating the two-way routing services that indeed, have proved not to be very appealing to most customers. The introduction of the one-way routing and a floating fleet air charter services should be conducted in a procedural manner while at the same time maintaining the current two-way routing and the current pricing standards in order not to discourage the existing short hop flights that are the company is widely renowned for. The new operational strategies to be introduced should then slowly involve discounting of customers that request for bulk air charter services and whose flights also involve continuous flight hours by the hired aircrafts. Through the introduction of more dynamic and collaborative operation mechanism, it is evident that floating fleet will significantly improve consumer demand (Stevenson 2008). There is need for the implementation of a standard cancellation policy which should be communicated to the company clients in time to avoid customer disappointment that could in return result into a sudden decrease in the customer base. Additionally, good pricing mechanisms should be integrated into the operations of the ExcelAire operations with the aim of ensuring that the company capitalized on both one-way routing operations and higher levels of efficiency and effectiveness in its business air charter services.
Research Problem
RP3 ExcelAire does not operate at rates that are below the charter pricing index thus making it to be one of the most costly air charter companies in the world.
Economic analysis of air charter business and the specific information that relates to the research topic is fundamental as it offers a strong background on which to predict the profitability of the air charter company and the diverse factors that may in a number of ways affect the operation of an air chartering company such as ExcelAire. Through the analysis of the research problem, the benefits of an air chartering company operating within an agreeable charter pricing index are emphasized. This is of great importance as in establishes an in-depth understanding of the diverse issues that relate to economic analysis and the extent to which adherence to the laid down economic operational standards and pricing indices could influence the success of failure of an air chartering company (The Dead Head Pricing 2010).
Literature Review
The Avinode charter pricing index examines charter pricing on a specific aircraft across several operators. The Avinode charter pricing index is used for conducting comparison points of the venders in the air chartering industry and other related fields. This index is used as a comparison point for vendors. There is a concern that certain operators, in desperate attempts to lure clientele, will operate at rates lower than the charter pricing index indicates, further suppressing the index (Avinode Website 2010). Other than being an unethical business practice, desperate efforts made by any business form in luring customers through lowering the prices of the goods and services offered normally depict the company in questions either as a loss making organization that is in desperate need to revamp its operations or a company that has an unfair competitive advantage against its competitors within the competition (Goodwin 1981, pp. 61-108). Drastic price reductions normally affect an air charter operators profitability since they must strive to remain within a relevant margin of the index. ExcelAire is considered one of the most expensive operators, perhaps further hampering its relevance as an advantageous operator for brokers to work with (Kingsbury 2007). Though not directly affected by the air charter business, IATA and its related aviation related operations plays a pivotal role in enhancing efficiency and effectiveness in the air charter industry. Every year, US 3.6 billion are contributed to the global economic by the air charter industry together with other aviation businesses (Altitude-Aviation 2010).
Increased levels of fuel consumption by aircrafts increase the cost of operation and hence the services rendered by the air charter companies become even more costly. Modern aircrafts such as A380 and B777 allow for gains to be made in the long haul market. Investment into much faster jet engines by the air charter operators leads to a more generalized cost of hiring and operating a plane decreasing and hence making the demand of customers for the air charter services to increase. However, the economic value of an air charter company also revolves around its level of fuel consumption. The hire the level of fuel consumption the more costly will the cost of hiring an aircraft in an air charter company. Information systems and software applications that help enhancing accurate online pricing of the aircrafts do exist. Real time costing and determination of the cost of aircraft hiring is a vital tool for enhancing customer confidentially and trust which are also strengthened through provision of accurate trip pricing that is evidently provided by intelligent Avinode.
Very light jets, also simply referred to as VLJ, are more economical to maintain and are normally perceived to be much cheaper and faster jets that enable point-to-point private charter business. In most instances, introduction of new and smaller aircrafts to a charter company does not necessarily guarantee better returns on investment. VLJ, an aircraft manufacturing company, normally insist on the fact the need to create smaller, much faster, cost effective, and reliable aircrafts that would facilitate the point to point movement by the private charter jets thus creating a new better industry. Williams emphasize that development and invention of new aircrafts has the effect of lowing the existing barriers to the actual ownership that would in the end enable the very rich persons to acquire personal aircrafts (2001, pp. 271-276). This will however not result into the wider adoption of the common commercial applications. Consumers of air charter business conducts comparison of at least two alternatives based on the prices being offered before settling on a specific charter services.
According to the Transportation Systems Analysis Model (TSAM 2000), both business and non business trips charters attracts different rates though the rates are within a standardized value based on the charter pricing index. An air charter always ought to carry out a revenue forecast before deciding on the charter costs to be used. Other than the need for exclusive chartering services, flexible, convenient, and comfortable services, wide ranges of air charter process varied from one charter product to another which includes exclusive charter, exclusive travel, business jet, and the private jet charters. According to the AirCharter Company, the hourly rate ranges from 2,000 to 13,000 hourly rate (AirCharter 2009). These prices are adequately within the charter pricing index. The prices are also in line with the flight sizes of between 5 to 23 persons per flight based on varied aircraft speeds (USSKY Link 2008). An estimator for the flight charter flights establishes the diverse trends and mechanisms through which prices should be determined with the aim of ensuring that charter operators do not offer extremely high or low charter service prices that would earn the company an unfair competitive advantage or result in making super high profits. This economic trend involves both the freight air and the passenger air charters (ExcelAire Website 2010 Altitude-Aviation 2010).
In ensuring that its charter services are in strict adherence to the charter pricing index, the EA Elite Aviation Company works towards ensuring that it minimizes its operating expenses by implementing cost effective charter operating mechanisms. The company uses fuel programs that involve the use of better negotiated costs structures that mainly have better negotiated structured costs, fixed base domestic operators, and manageable fuel credit cards (EA Elite Aviation 2010 Lee and Mckenzie 2006). Such strategic economic analysis and expense saving mechanisms are vital in enhancing cost effective air charter operations (Accounting management and the goals of chapter 2010). According to the Altitude Aircraft (2010), most aircraft chartering companies in the US operates between 300 and 600 for every flight hour and this does not always include the related chartering expenses. On the other hand, the twin piston chartering aircrafts rates prices ranges from 600 to 1200 for every hour the aircraft is used plus other expenses while the Turboprop chartered aircrafts goes for 130o to 3000 based on the similar above stipulated chartering conditions. Air charter prices in most chartering companies, as is indicated above, greatly depends on the flexibility and reliability that needs to be offered to the consumers rather than the ultimate profits which the company intends to make (USSKY Link 2008 The Dead Head pricing 2010). ExcelAires pricing factors tend to be different as is commonly reflected from the chartering company.
Research Method
Due to the nature of this research, non experimental data collection strategies were employed with the aim of ensuring that the process of analyzing economic factors that relate to the air charter company and particularly the Excelaire was collected and then discussed in order to arrive at the various conclusions that form the research findings that answers the research problem. Data collection on the economic analysis was conducted through the use of literature reviews and an in-depth study of other secondary sources of data. The analysis of the information collected was done in order to ensure that proper understanding of the air charter economic issues such as price and costing factors are adequately analyzed and fully understood before the determination of whether or not the economic status of the Excelaire pricing strategies fully adhere to the air charter pricing index (The National Pricing Index Archives 1983, pp. 417-999).
Air charter company websites, published and non published journals on the websites with literature that pertains to the air charter economic issues and pricing methodologies and standards adopted were studied in order to establish the various pricing strategies and trends of strategies currently being employed by most air charter companies in order to realize high profit margins based on the various investments made in the air charter companies (Lee and Mckenzie 2006). The literature review process had its major focus being put on establishing whether or not the existing air charter companies adhere to the aviation pricing index and other factors that determine the pricing levels implemented by the companies. Furthermore, secondary sources of data such as online journals, published books that relates to air charter operations, the aviation industry, written magazines, thesis already done by students in the aviation industry, and other sources of secondary data were also reviewed. The secondary sources of data analyzed aimed at establishing the various possible better pricing mechanisms that could be employed by the air chartering companies in order to reliable better profits through ethically correct competitive advantages without any undue influence to the market.
Findings
The literature research has shown that ExcelAire does not operate at rates that are below the charter pricing index thus making it to be one of the most costly air charter companies in the world.
Literature that Supports the Hypothesis
Excelaire Company does not adhere to the charter pricing index but rather uses its own pricing mechanisms with the aim of ensuring that it maximizes its profits. The research has indeed, revealed that competition is a vital factor that influences consumers purchasing patterns. The literature reviewed reveals that Excelaire has in most occasions hampered the efforts of air charter brokers to sell its services due to its costly pricing within the competition. The company does not adhere to the charter pricing index due to the fact that it mainly targets the expensive corporate customers that mainly concern themselves with conform and convenience rather than the cost of the air charter services offered (Williams 2001, pp. 261-273). Under its building itinerary section that has the one-way, roundtrip, and the multi-leg services being outlined, the cost of the one-way trip, which are also scarce, are highly exaggerated in order to discourage customers from using such charter services. Other company services such as provision of fully equipped maintenance departments, aircraft hangarage and parking, concierge services, rental crew, computer flight and weather related services, wireless internet access services, and the after hour fuel and the emergency services are some of the economic analysis issues Excelaire capitalizes on in justifying its lack of adherence to the charter pricing index (Accounting management and the goals of chapter 2010).
Neutral Literature
According to Lichtman (1972), the charter pricing index is mainly controlled by other environmental business factors such as the jet fuel index of pricing, consumer patterns, and related services offered by a charter company to its clients. The charter pricing index mainly stipulate the preferred market prices of air charter businesses but hardly puts into consideration other environmental factors needed to ensure that economic market of the air charter industry is normalized (Liu,et al 1988).
Literature That Does Not Support the Hypothesis
Other than proclaiming that the Excelaire is ready to offer charter services whenever they need arise to all parts of the world and that it handles corporate road shows, family gateways, ground transportation, gourmet catering, special chartering requests, and concert tours the company hardly communicates its pricing index to the public or through its website (EA Elite Aviation 2010 The National Pricing Index Archives (1983, pp. 532-782). It would be hard to substantiate the claim that Excelaire does not adhere to the charter pricing index with paying adequate attention to its core services and the vision and mission of its existence and its business strategies. In fact, based on the argument of Douglas and Shappell (2003), an air charter always ought to carry out a revenue forecast before deciding on the charter costs to be used.
Recommendations
Other than the need for exclusive chartering services, flexible, convenient, and comfortable services, wide ranges of air charter process varied from one charter product to another, which includes exclusive charter, exclusive travel, business jet, and the private jet charters, should be offered by an air charter company. Based on the above economic analysis, it is evident that various adjustments ought to be undertaken by Excelaire if it has to remain relevant and competitive in the market. To begin with, the company needs to adjust its air chartering prices to ensure that the prices offered adhere to the air charter pricing index (Cecile and Rossouw 2009 Charter Pricing and the Downturn 2010). Secondly, in its implementation of one-way charter services, services that only increases the operating costs and introduce undesired luxury while at the same time increasing the aircraft hiring costs should be eliminated. ExcelAire should conduct a thorough salary and expenditure survey and an analysis of the air charter trends and statistics in order to make guided decisions on the extent to which to adjust its pricing index with the aim of remaining competitive, relevant in the market, and cost effective in its air charter operations.
Pricing
To better the performance of ExcelAire and enhance its market relevance through strategic corrective measures, there are a number of issues that needs to be addressed. In line with the conducted in-depth analysis of the business aviation relative to ExcelAire, it is clear that in order for ExcelAire to maintain and keep its operations profitable and viable in todays economy, other than regulating its operations and introduction of unique air charter services, great attention should be accorded to the cost of fuel which has proved to be a continuing concern for many air charter operators. Since the price of oil in the modern shaky economy is likely to continue influencing the pricing indices of air charter services, adequate attention should be accorded to the operations of Excelaire to ensure that only cost effective operations are tolerated and the constant analysis and survey of the air charter market be done in order to review the company pricing index (Douglas and Shappell 2003). Mechanisms to cut on the fixed costs of operating aircrafts and the overall process of hiring them should be re-analyzed with the aim of ensuring that streamlined mechanisms are employed to fully minimize on the fixed costs. These mechanisms include Excelaire renting out unused aircrafts and where possible venturing into the aviation industry that would ensure that other services such as parcel transportation is done. Discounting of customers that request bulky air charter services and whose flights also involve continuous flight hours by the hired aircrafts should frequently be done. Such strategies would greatly reduce the burden that results from the fixed costs air charter operations.
Cost, Comfort, and Flexibility
Douglas and Shappell (2003) believe that it is always vital that the needs and concerns of air charter customers be given higher priority in planning for the company operations. It is important that Excelaire ensure that the ever increasing needs of customers to travel at will and with great comfort and flexibility be delivered to them. However, to achieve this, Excelaire should employ the use of small flights that would in return ensure that the charter company attracts more clients based on the improved levels of flexibility and alertness and sensitivity to the consumer needs. Additionally, Excelaire need to pay great emphasis on the quality of services, flexibility of their operations, and offer greater attention to the needs of the customers through more personalized services. This would involve sticking to the operational standards while ensuring that there are provisions to address possible unique customer needs that may arise from time to time. This also revolves around the fact that, as a strategic mechanism, Excelaire should use a one way pricing strategy in an attempt to enhance greater levels of flexibility and hence make ExcelAire to become more flexible. One-way routing and a floating fleet air charter services should fully be introduced in Excelaire operations though in a procedural manner in order for it to maintain the current two-way routing and pricing standards and hence avoid discouraging and disorienting the existing short hop aircraft customers. Public relations strategies should be undertaken to eliminate the common perception that ExcelAire is a very costly air charter company.
Information Technology and Global Alliances
It is evident from the research undertaken through the review of literature and surveys on the business operations of ExcelAire that the company has integrated information communication technologies in its air charter services. However, the company should invest more resources in more intelligent technologies and information systems that would strengthen its bond with customers and enhance high level transparency and openness. This is crucial since it is only after a company wins the customer loyalty that it can gain a greater competitive advantage within the competition through other competition operations and strategic mechanisms implemented. To ensure that it better its global presence, ExcelAire need to establish more global alliances in order for it to find exploit new markets. It should therefore be able all learn and improve the load factor, efficiency in scheduling efficiency, and reduce their air chartering costs and maintenance costs. To attract more clients, the company ought to enter in alliances and partnerships with corporate organizations and other air charter companies in order to gain a global view and increase its rate of return on investments made.
