WestJet Company Analysis: Problems and Solutions

Introduction

The business environment in today’s world demands a great change within the operational and management sectors of any business enterprise. It is necessary for the leaders in any business to focus on doing good business as well as maintaining excellent social environment. They should be capable of creating new business models for the solution on current human needs and economic turmoil. Right business plan and business models have got the ability to change the image of any company for the benefit of the entire world market environment. However, an individual needs some level of confidence and creativity to be able to attain to the expected financial stability for successful running of business entity (Mark 52-53).

WestJet is an airline Company having most of its operations in Canada’s hospitality industry. It was started in 1994 by a group of young entrepreneurs after realizing the need to offer consumers affordable air travel with excellent services. The idea was coupled by drafting of a detailed business plan and right financial models which made possible the availability of the required capital. The operations of the airline to different destinations within the western Canada markets brought to consumers affordable alternative means of travel. It faced competition from few airlines like the Canadian airlines which could not match with Westjet’s structure of offering rock-bottom fares (Mark 52-53).

The airline operates currently on over fifty aircrafts and offers their services to western and eastern regions within Canada. The management team comprises of those who initiated the operations of the Company. They started the Airline Company with three air-crafts based on the principles of lowering costs and offering affordable fee to travelers (Mark 52).

Problem definition/ issues

The structure of the airline Industry in Canada tends to offer high priced services to consumers. However, there is need to consider consumers from all walks of life by offering cost-effective, quality services to various destinations within the country. There is need for restructuring the airline industry to accommodate the viable market niches by expanding services beyond customer expectations. Low-fare structure, quality customer services are necessary for full satisfaction of consumer needs and desires (Mark 53). There is also need to venture into niche routes for the benefit of the whole population, high landing costs also need to be harmonized.

Critical analysis/ conceptualization

It has been discovered that the airline industry has suffered a lot due to its unfairness when it comes to dealing with consumer prices. Expansion and success of any airline business is basically based on comprehensive business plans and financial models. The success of an airline lies in its ability to spend big percentage of its operations on air which results in efficiency and profitability. Organizational structure is of prime importance since it allows the delegation and decentralization of authority that guarantees efficient employee interactions hence better performance. The success of Westjet Company is attributed to excellent management tactics based upon the principles of marketing. The growth was evident between the years 1996 to 2000 when the airline grew from two planes to twenty one despite operating at low-fare. The company also experiences increased earnings per share on an annual basis (Mark 54-56).

West jet shares adopted the strategy of sharing its profits amongst all the employees. This is an excellent means of motivating employees since cheques on salary increase, were given twice a year. Apart from sharing of profits, the Company allows their employees to buy shares from the company stock (Mark 54). This has ensured high level of satisfaction amongst employees who acknowledges the better firsthand job experiences. The culture created by the management team, whereby they reward employees’ creativity and innovation inputs, has proved conducive for delivery of quality services.

Competition and high costs of production are some of the barriers to success within the Canadian airline industry. The other challenge was the level of absenteeism experienced amongst the employees within the airline industry. However, West Jet ensured that their employees receive quality training to enable them understand the importance of diversifying decisions that are able to meet contemporary needs. Some of the employees such as pilots were considered to operate in the same level as managers. West jet devised a method of monitoring activities monthly in order to check out for overrides. The company is managed from the bottom up, where the employees perform their duties with minimum interference from the personnel department (Mark 55).

West jet management team ensures that all their employees possess some sense of humor. The spirit of management team offers good example to be followed by all workers. The spirit has enabled the company to focus on customer-oriented services creating a very productive environment. Their operations suggested the reduction on the numbers of workers per aircraft, which was a cost-cutting initiative. They also offered a single class of service within their flights and tickets sold via internet. Other measures to cut the costs included no link-ups and coordination with other airline companies, the maintenance costs are also reduced by sticking to one plane manufacturer and reduced the level of fuel consumption. West jet competes favorably within the market through the use of low prices, flying short distances and using flexible tickets (Mark 57).

The company stresses on good employee relationships as a replacement to unions. This ensures that lots of operation costs are saved. West jet recruit employees on the basis of their character, the employees should have teachable free spirit coupled with sense of humor. The management performs behavioral tests to ensure that employees are comfortable with the Company’s culture. The process of recruiting new employees are taken seriously since only those competent enough for the work are considered (Mark 58). They consider employees to form the crucial part of providing the necessary solutions for specific problems within their expertise areas. The presence of a culture that promoted mutual co-operation was one of the keys that maintained the company at high performance levels.

Competition became stiff after the merger of Air Canada and Canadian Airlines. West jet expanded its operations, this time not only covering west but also eastern parts of Canada. This made the company to avoid the emerging stiff competition from other airlines. The culture and operations of West jet attracted concern of other airlines leading to several mergers between airline operators for the purposes of counteracting West jet influence within the market. The whole idea was based on cutting costs and offering affordable services to consumers (Mark 59). The other strength lies in the ability of employees to be flexible on their jobs and not discriminate whenever need arises. The expansion of the company is also one of the main advantages it has over other airlines; these include addition of extra aircrafts. This was an improvement on the asset base and also encouraged continuous flights from one destination to another which is a very big boost to customer convenience.

Alternatives

  • Instead of unionized organization West jet management came up with communication team which acts as a link between management and other employees. The team was referred to as Pro-active Communication Team (Mark 58). This team assisted in the dealing with personnel management and setting of salary scales of workers.
  • There is need for diversified skills to enable management that leads to high performance. The managers ought to focus on how to lead people towards change and not controlling employees.
  • Other alternative to counteract economic downturn is to venture into merger with other discount airline that operates under similar programs.

Solution

The manger should learn the art of delegating duties according to an individual’s professional qualifications. Decentralization of authority helps in efficient management and running of the different production lines of the Company. The business requires increasingly modern and sophisticated control mechanisms like computerized tracking and control of all operations within the Company.

In order to counter economic downturn, West jet needs to merge with other airlines whose operations are closely similar to theirs. The problem of world fuel prices that continues to rise periodically can be addressed through hedging contracts from the suppliers. West jet also needs to focus on how to replace the old aircrafts by acquiring at least two new planes on a yearly basis. To maintain consistent growth and resistance from external pressure like economic crumbles, the airline need to put a lot of emphasis on rich internal culture (Mark 60).

Works cited

Mark, Ken. ‘West Jet Airlines (A): The culture that breeds a passion to succeed.’ Jupiter Communications, 2000. Web.