Answer to subject 1
1.1) Nowadays European Union is facing the biggest – ever recession of it’s history. It’s easily understandable that among other areas this crisis affected the aviation industry and threatened them by a number of different challenges. Aviation plays a crucial role in the economy of Europe as it’s an important tool for economic grow, trades and jobs. (European Commission, 2015). Except from making distances shorter aviation also brings people together and manages economic, social and cultural exchanges (http://www.sba.uconn.edu/users/jgolec/aviation.pdf).
Airline business environment is meeting many challenges with the most important of them to be safety, convenience and sustainability. Flying today is the safest way to get from one place to another. All the governments and the industry’s stakeholders ,together worked on that purpose and agreed that safety wasn’t a competitive issue. Accidents do happen but the challenge that the airline business environment are up to is how to reduce them constantly. It’s also very important to make the lives of the passengers easier and make them feel more comfortable and safer. To build on all these but also to plan for the future the aviation industry must be sustainable. The sustainability can be imprinted on two directions the environmental sustainability and the financial sustainability. The aviation industry has put some goals about reducing their emissions. This can be achieved via technology as new engines are more eco-friendly and by the use of sustainable biofuels. Improving the infrastructure is also very critical and will help in this scope. On the other hand airlines must be economically viable something that it’s not very easy as there is much competition in the industry but observing that the number of travelers keeps growing and the thirst for connectivity is expanding airlines can be confident that this goal will be achieved. (Iata.org,. “IATA”. N.p., 2016. Web. 12 Jan. 2016).
Deutsche Lufthansa AG is the largest airline in Europe. It’s primary strategy is to increase it’s market value, to have a profitable growth while having a key role in shaping the aviation industry and keep having the customers satisfied (COMKOM° GmbH, Germany. “Home – Lufthansa Group”. Lufthansagroup.com. N.p., 2016. Web. 12 Jan. 2016).
Human resource planning policies aims at organizational growth and productivity. In an unstable business environment Deutsche Lufthansa AG customized it’s human resource planning policies to manage it’s strategies and goals. Trying to achieve the challenges in the airline business environment we mentioned before and be more competitive Deutsche Lufthansa AG reduced it’s operational costs .This helped the company to be profitable again leaving back the period when it counted losses, at the start of the economic recession at 2010. (https://en.wikipedia.org/wiki/Lufthansa).As a result of this continuous strikes from the staff of the Deutsche Lufthansa AG airline company took place (European Commission, 2015).In contrast with the staff the reduction of the operational cost ,attracted more customers as they had better prices because the company was again competitive. The costs can also be reduced by making alliances with other airline companies. Deutsche Lufthansa AG founded Star Alliance in cooperation with four other airlines. Except from the economic part, alliances provides customers better services which is very important as the companies reputations grows (COMKOM° GmbH, Germany. “Home – Lufthansa Group”. Lufthansagroup.com. N.p., 2016. Web. 12 Jan. 2016).
1.2) One very important factor that organizations take into consideration is theirs compensation strategy which is related to the overall financial strategy. Compensations are one of the biggest expenses of the organizations so they must be managed appropriately and effectively. It is a reward system which shows the employees how much their work is appreciated and makes them feel vital parts of the company while in the same time attracts new ones. A very crucial factor which determines the compensations strategy is the financial condition of the organization. A healthier organization in cash flows can offer good wages and salaries or even above the market standards while a company that has economic problems will have to reduce the compensation expenses. Conditions like the last one mentioned had to be managed by Deutsche Lufthansa AG after the losses counted at the start of the economic recession at 2010.
The air industry except from the losses that counted after the recent economic recession it had also been affected by the rising oil prices. The biggest aviation company in Europe Deutsche Lufthansa AG started an effort of restructuring and shrinkage of their costs. More specific Deutsche Lufthansa AG counted a loss of 381 million euros in the first quarter of 2010. Additionally in 2011 13 more million euros counted as a loss which led the aviation company to cut 20 percent of its total administrative positions .As a result of this effort continuous strikes have been made counting many cancelation of flights (https://en.wikipedia.org/wiki/Lufthansa).The demands of the strike pointed two issues the salaries and the retirements issue. In this way Deutsche Lufthansa AG remodeled its strategic plans and goals trying to compete with the low budget airlines like Easy jet and Ryanair. For this scope Germanwings and Eurowings have been taken as subsidiaries, to create low-cost flights to Germany and Europe respectively.
Deutsche Lufthansa AG not only survived from this economic recession but managed to increase it is benefits and increase its results (Academia.edu,. “Lufthansa Finished Essay”. N.p., 2016. Web. 12 Jan. 2016).The organization has plans to grow its mainline fleet from the current 313 aircraft to 340 by 2020. In this way 500 jobs for pilots and 1,300 for cabin crew will be created (Flottau,. “Lufthansa Proposes Legacy Growth Plan In Return For Staff Concessions”. Aviationweek.com. N.p., 2016. Web. 12 Jan. 2016).
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• European Commission. (2015). Public consultation on the EU Aviation Package: Background information. Retrieved December 26, 2015, from http://ec.europa.eu/transport/modes/air/consultations/doc/2015-aviation-package/background.pdf
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