Canadian airlines

1
Canadian Airlines
By Yudhana Chanvarasuth
2
Canadian airlines

• No.2 in the nation
• Government Subsidies
• Only carried 2 of the passenger worldwide in
  1993
• Rank the 23rd amongst the worlds airline in1990
• Only small amount of destination profit

3
More Facts

• Lack of Cabotage right in the United State
• Unique Bilingual Market
• Canada encourages fair competition

4
Case study background

• What is it about?
• The story of Canadian airline struggles to
  survive from financial insolvency
• Why do this happen?
• Worldwide recession from Gulf war
• Overcapacity in airline business
• Bankruptcy on international operation
• Customer aversion

5
Background

• How can they do to survive in this industry?
• Take advantage of the electronic commerce.
• In this case is the reservation system(RES).
• Strategies to survive
• Find partnership to settle the system
• Merger with Air Canada

6
Background

• Trend
• - By the 1980s, AAs SABRE and Uniteds APOLLO
  had become the dominant platform for booking
  airplane, hotel and travel reservation
• The other airline have to be the system co-host
  in order to use the system
• - PWA had 18 consecutive years of profit but the
  following 3 years

7
Key Player

• PWA
• Air Canada
• Covia
• AMP corp.
• Gemini
• NTA(the National Transportation Agency)
• The Federal Competition Tribunal

8
Core Issues

• Deregulation in the United State
• - Cabotage right makes the Canadian carriers to
  make profit from the US destination
• Slow in the beginning the CRS
• - In 1986, SABRE system was introduced in Canada
• - Two year later, 20 from total reservation
  made from SABRE
• A huge start-up money to create the system

9
Advice to top management

• Doing right
• - putting their rivalry aside and joint Covia to
  build a RES for Canadian market
• - convince the Federal government to buy airbus
  A310
• - suspension of interest payments
• - seek to cut cost and find cash injection
  (employee union, loan)

10
Advice to top management

• Doing wrong
• - underestimate the power of the technology
• - failure to realize the consequence of lack of
  Cabotage right
• - airline representatives try to declare Gemini
  bankrupt

11
Major challenges

• After merger with Air Canada
• - eliminate 6,000 jobs
• - eliminate the duplicate of services
• - each company have their own management
• Try to break the contract with Gemini group
• - facing with lawsuit against Canadian Airline
  from their business partners

12
Action Plan

• Put pressure on the government to negotiate with
  the US about deregulation
• Create strategies combining with new technologies
• Try to maintain the old customer and create the
  new one
• Create a good plan to handle the bankruptcy
  situations
• Prepare the merger between AC and CND

13
Benefits

• The cabotage right open the opportunity for
  airline to gain profit
• The custom reservation system of bilingual market
  is for Canada only
• The merger of two airline can help one from
  bankruptcy and give another one a power over
  alien competition

14
Risks

• After merger, one airline will take care a debt
  of another
• In process of negotiation, the more you gain, the
  more you loss
• For every step forward, airlines should look back
  their own drawback to fix it

15
Summary

• Find the right partner
• - During Covia handle hotel and car reservation,
  Canadian system capable to access seat available
  only
• - AMR is the final choice for Canadian airline
  to do partnership, even though they face many
  lawsuits from the old partners
• From SABRE lesson, Canadian market need more than
  one language

16
Questions

• What is Canadas position in the airline
  industry?
• What are the core IT issue facing the two
  airline?
• How importance is a good reservation system?
• Do you agree with the Ottawa court?