Domestic Business Environment
The US Airways Group is an airline investment corporation that operates as US Airways and has subsidiary companies like Piedmont Airlines and PSA airlines Incorporated. The companies are wholly owned by the group but are marketed under the mother company’s name. The company came to existence in 2005 after a merger between two companies, US Airways Express and America West Holdings Corporation. Before the merger, US Airways operated in the county of Arlington in Virginia.
The company was incorporated in 1937 under the name All American Aviation. It has been in operation ever since. The company has an employee base of about forty-one thousand people and it is a public company enrolled in the New York Stock Exchange. Richard du Pont was the American pilot behind the inception of the company. The company later grew in 1939 to delivering mail in the Pennsylvanian mountains and all around West Virginia. Later that year the company started transporting passengers in a small-scale operating venture that served only the remote parts of the Alleghenies (Ben-Yôsēf, 2005).
The company sustained a healthy growth for the whole period in which it had the name Allegheny airlines between the fifties and the early sixties. The company was assigned a feeder job by the government where it was supposed to carry the less busy routes and routes that were serving remote areas. It however subcontracted the routes to other smaller companies. The company started problems in 1967 when the passengers lost faith in it. This was due to its poor on-time record, poor customer service and frequent flight cancellations, all these attributed to its monopoly status in many states.
The air travel industry is a large and ever growing industry that acts as a major facilitator of not only economic growth but also trade, investments and tourism the world over. The travel industry has been growing by over ten percent per year in the past fifteen years (Hoover’s Incorporated, 2000). Over a billion passengers are carried by scheduled airlines per year. The leisure part of the industry serves more customers due to the availability of large aircrafts making the service affordable and convenient for people to travel to new and further destinations. On the business side of the industry, travel has grown with companies increasingly aiming to invest internationally. Business travel also owes its growth to the rapid growth of the international trade in goods and services. The industry however has suffered greatly due to the current recession hitting the world of trade.
Government regulations have also contributed greatly to the encouragement and development of the travel industry. This is because the policies it creates such as deregulation endorse competition among the airlines hence promoting growth. The Deregulation policy was formulated by the US government in the late seventies. It allowed airlines from different states to ply routes that are within other states’ domestic markets. Other policies like the ‘open skies’ policy, opened up the routing regulations and introduced freedom and competition to the market (David, 2002).
The US Airways Group is least admired for its management policies. These are evidently poor since they can be seen from their current state of losses. In 2002, the company filed a bankruptcy protection and the Texas Pacific Group, another airline company, bailed them out. Its options to enable it emerge from its state of bankruptcy was to order a mass labor cut worth 900 million which affected very many people. This affected very little in its operation since soon after the move, one of its major parents, UAL Corporation, was also declared bankrupt. All the problems faced by the company were attributed to the poor management of the firm since the financial decisions they made led to the fall of the company (Hoover’s Incorporated, 2000).
Though the company is still in operation, it has posted reduction in profits and the turnover in its listed stocks is doing very poorly. The company is also a constant lender with its capital structure way above a company that is performing that poorly. The management should restructure their operation policies and consult other better performing airline companies to find out where the problem lies in its management approach. A company of such stature and one that has operated to nearly almost a century should perform better than the US airways group is performing.
Ben-Yôsēf, E. (2005). The evolution of the US airline industry: Theory, strategy and policy. New York. NY: Springer.
David, F. R. (2002). Strategic Management: Cases. Roans Prairie, TX: Prentice Hall.
Hoover’s Incorporated. (2000). Hoover‘s Handbook of American Business. New York. NY: Hoovers incorporated.