Executive summary
The airline industry is one of the industries that face many challenges and problems in operations. In most cases these problems are as a result poor management, poor marketing strategies that involve pricing, labor difficulties, political and governmental interferences and pressures among others. Alitalia which is a national airline in Italy has faced many of challenges in its operations and as result it has suffered great loses. This is just one among many airlines that have undergone such difficulties. However though there are great challenges and problems that the Alitalia airline has faced there is still hope of recovering from these problems and losses. The airline needs to adopt strategies that will enable it to build its image as well as create efficiency in operations, through adoption of such strategies it will be possible for the customers to build their trust again with the airline.
Introduction
Alitalia airline is the national airline in Italy and it was established in 1946 but started out its operations in 1947. Though the airline started its operations in 1947 the only year the airline has ever reported profits was in 1998, all the other years the airlines has been recording looses. The airline carries out operations in more than twenty four destinations domestically and more than sixty international destinations. Airlines allover the worlds are faced with certain challenges that inmost cases tend to affect the operations of the airlines to great extends. The Alitalia airline is one of the airlines that have faced great challenges in its operations. (Tony 2004).
Discussion
The airline since it was started it has experienced great challenges and problems to the point of nearly being closed from the airlines industry. The airline has incurred high amounts of losses especially in terms of money; the high loss of finances is what has resulted to the great problems that the airline has experienced. The problem of money loss is associated with the kind of staff the airline has, the pilots and the crew members are said to have to have contributed a lot in the problems associated with the airline financially. This is because there was no trust with them hence there were high financial losses that were recorded by the airline.
There are other factors that are associated with the failure and financial problems of the airline apart from the pilots and the crew members. The airline experienced labor difficulties this was as a result of high labor turnover rates whereby the labor force was not maintained well. This affected the operations of the airline to great extends hence contributing to the major problems in the airline.
The other major contributing factor was the government and political interferences to its operations. The government tried to intervene to solve some of the problems but instead of solving the problems it only brought more problems to the airline. Also it faced political interference and pressure in making of decisions hence the political pressure contributed a lot to the failure of the airline. The final major contributing factor to the failure is the kind of a pricing strategy used by the airline, the pricing strategy is in such a way that the amounts obtained in most cases is not enough to cater for major operations in the airline. This translates to high losses given that the amount invested in airline is a lot.
The situation of the Alitalia airline summarizes major problems that are faced by airline industry in the world. This is because the organizations are big meaning that the management system in the airline may be a great challenge because it involves many independent parties that may have different interests hence causing division and failure. In efforts to rescue the problem Italian government has invested a lot in its operations but for some time it did not seem to give back what the government and other organizations had invested in it. For the last ten years the government and other organizations have invested more than 4.9 billion pounds. These are high amounts of funds but the airline does not seem to improve its operations. (Tony 2004).
Also there are many attempts that have been made by the government and other bodies of merging the airline with other airlines be4cause of its performance problems. This has not yielded fruits and because of this the Italian government withdrew all the support they were providing for the airline, this was as a result of the intervention of the European Union organization that prevented the government from providing the airline with any more financial support. The reason was that the performance of the airline was not improving even after many efforts by the government and other organizations that were willing to help the organization. It seemed as a wastage of capital and resources that could be used in other areas to generate income.
Because of such actions the airline has undergone much of financial stress and other related problems since it still needs financial support but there is no where to get the support. The problems of the airline attracted much attention not only from the government but also other organizations and bodies, for instance the Italy’s stock market regulator Consob. These bodies observed the problems of the airline and decided to monitor its operations; the airline is required by the stock market regulator to report monthly regarding its debts and cash positions. All this is being to see whether the airlines financial positions will improve. (Tony 2004).
The situation in the airline in one way or another it can be compared to the one of the Fiat Company. The two organization experienced labor difficulties this is due to employee’s strikes that drew the attention of all people and organizations in the society. The Fiat Auto plants experienced a severe strike of the employees that resulted to stand still of the company’s operations for more than three days. At the same time also the Alitalia airline counted high loses because of the abolition of operations that were set to take place, for instance it had to cancel many flights because of the severe strike by the employees in the organization.
The two organizations in the midst of the strikes by their employees and failure to accomplish set operations, they also faced further problems as a result of pressure from labor union leaders and political parties. This worsened the situation and the two companies continued to count losses as a result of the interference since it did not allow the organizations and their employees to negotiate properly. Also this led to loss of many of the employees hence worsening the situation because operations could not continue appropriately due to labor problems experienced.
In order to avoid the major labor problems experienced in the Fiat organization the organization planned to review the employees working conditions and their salaries and this helped much in minimizing the high loses experienced in the organization. The Alitalia airline can still adopt such a strategy in order to minimize the labor difficulties experienced in the organization hence minimizing the huge losses experienced. (Fred 2004).
Though Fiat underwent many challenges it adopted strategies that have enabled it to stand in the market. One of the strategies is the network expansion strategy that has enabled the organization to build good networks with all the people they work with as well as the ones affected by their operations. The Alitalia airline can adopt such a strategy and it can help much in establishing a good relationship such that can help much to minimize some the major problems experienced. This is because if the organization had good network connection the current financial problems being experienced could not be there since it could receive support from the partners.
Since the company has faced great challenges and problems in its operations it should consider adapting other strategies. For instance the airline can merger with other organizations that have good reputation in the industry. Through the merger the organization will build it images and brand name in the industry, this will put the airline in a better position of improving its performance and regaining back kits market share. Also great costs of running its operations will be reduced since they will be shared with the other organization.
Also it will be possible for some of the challenges of management of the airline to be minimized, this is because the major issues of the organizations will be handled not only by the management but efforts will be combined between the two organizations. Through this the organization will survive some of the great problems and challenges met. (Stephen 2008).
The airline can adapt a strategy that will enable maximum maximization of the labor force. This is because most of the problems experienced were as a result of labor force difficulties. When recruiting labor force the management should be keen since the work done by the labor force will determine a lot the position of that organization. Pilots and crafts crew should be accountable for all what happens in the organization as a result of the actions.
Also since the airline has a pricing strategy that seems to be to low the organization has continued to suffer losses and the customers have lost trust with the airline. Because of this the airline can adapt a revolutionary pricing strategy that will help it recover losses and regain its image in the industry. Adoption of these strategies will help the company build brand name and improve its profitability.
Conclusion
The airline industry faces great challenges and the Alitalia airline is one of the victims of great challenges met. The challenges met were as a result of poor management, labor difficulties and political and governmental pressures. Though the company has faced many problems and challenges in its operations it can still recover from this and rebuild its image, this means that the airline will have to adapt the alternative strategies and it will recover.
Works cited
Fred Kapner, Fiat and Alitalia rocked by strikes, Financial times. 2008. Web.
Stephen Briers, Fiat plans growth with own dealers and sponsored sites. 2008. Web.
Tony Barber, Alitalia Financial woes. 2008. Web.