Transportation Operators and Management: The Legacy and Low-cost Carriers issue

Literature Review

The transportation management and operation sector is one of the most significant elements that controls and determines the human social and economic activities (Stephen Taylor, Garver & Williams, 2010). Transportation sector therefore is a core pillar that facilitates the human activities in these basic endeavors of human day-to-day processes. The effective and efficient management of this sector therefore is very important to govern and control the numerous operations and activities that take place in the various transport system (Paulley et al., 2006; Romanow, 2016). According to the different scholars and researchers in this sector, there are various issues that exist in the modern transportation systems which are common in most of the different transportation methods (Parola, Risitano, Ferretti & Panetti, 2016). The rise in the level of competitiveness in this industry has been a major issue as with many other industries due to emergence of low market entry requirement as well as increased rate of globalization (Merkert, 2012; Romanow, 2016). Major competitive shifts were experienced in the air transportation with the recent introduction of the low-cost carriers which left most of the legacy carriers suffering major losses in both customers and finances (Forsyth, 2003).

According to Tyrinopoulos (2004), the transportation sector is very dynamic as there is increase in demand for quality, effectiveness, reliability and efficiency of the transportation methods. The management and operators in the air transport systems therefore adapt a dynamic model that facilitates the changes through constant monitoring of the emerging issues in the industry. Taylor, Garver & Williams (2010) identity’s that the major goal of the managements and operators in the transportation sector, for instance air transport, is to facilitate an environment that establishes the operations to be need-based approach in which the nature of transport activities is based on satisfaction of the demands of that transportation system (Stephen Taylor, Garver & Williams, 2010; Tyrinopoulos, 2004).

In their workshop assessment on the role of government and operators, Nash and Bray (2014) establishes that due to the dynamic nature of the transportation systems and the increased competitive rates (Paulley et al., 2006), it is equally significant to establish legal frameworks and models that is responsible to defining the necessary governing regulations for the management and operators in the air transportation industry (Forsyth, 2003). The changes in the air transport are among the major global trends in the transportation sector. The major issues that are under development involve how the various legacy carriers are reacting to the introduction of the low-cost carriers in the market (Forsyth, 2003).

                                                                       Analysis

As a core aspect of human activities (Spanjaard & Warburton, 2012; Stephen Taylor, Garver & Williams, 2010), the air transport sector has been as well affected by competitiveness. The introduction of low-cost carriers for the air transport sector has introduced mixed feelings from various practitioners in the New Zealand as well as other major global air transport operators and managements. The case of the legacy carriers and the low-cost carriers is an effective demonstration of the modern rivalry in competition.

The availability and introduction of the low-cost carriers came as a great challenge to the manner in which legacy carriers conduct their business, their performance as well as the profitability. For instance in New Zealand, the legacy carriers have been forced to reduce their prices which has really affected their overall revenue collection (Hazledine, 2011; Forsyth, 2003). This has also made many operators and management of the major legacy carriers to reduce their investments in the legacy carriers and instead ventured into introducing the low-cost carriers in their fleet and airlines (Forsyth, 2003). The legacy carriers are forced to develop new strategies such as partnerships as a means of responding to the challenge. The Air New Zealand has been forced to team up with its major rivals such as the Qantas, Virgin Australia, Jetstar,  Regional Express (Rex) and Tiger Air Australia in forming the Airlines for Australia and New Zealand (A4ANZ) (Read, 2017).

The NZ Transport Agency has been performing overall management operations in the transportation sector which provides an effective model for equity provisions to all stakeholders. This means that competition among various airline operators, either legacy carriers or low-cost carriers, is monitored to ensuring the environment is fair and efficient for every operator. For instance, as the legacy carriers are experiencing various challenges in competing with the low-cost carriers, the environment for this competition is conducive, fair and provides equal chances for either carrier (Hazledine, 2011). Through examination of various literature sources, this paper establishes that there has been constant development in the manner in which organizations conduct their processes and operations thus bridging the research-practice gap in transportation. This is associated with the dynamic nature of the industry and the availability of many industry entrants due to conduciveness of the environment (Tyrinopoulos, 2004).

Conclusion

The management and operators of the transportation sector determines the policies and strategies that facilitate effectiveness in the transport system. These strategies and policies by the management involves determining the most effective environment as well as means to provide effective, reliable, efficient and quality services to the customers (Tyrinopoulos, 2004). In the recent past, there have been increased issues in the transportation sector due to its dynamic nature. Emergence of high levels of competitiveness is one of the recent and developing issues in air transportation especially with the emergence of low-cost carriers which appears to be a major threat to the legacy carriers (Hazledine, 2011).

References

Forsyth, P. (2003). Low-cost carriers in Australia: experiences and impacts. Journal Of Air Transport Management, 9(5), 277-284. http://dx.doi.org/10.1016/s0969-6997(03)00035-8

Hazledine, T. (2011). Legacy carriers fight back: Pricing and product differentiation in modern airline marketing. Journal Of Air Transport Management, 17(2), 130-135. http://dx.doi.org/10.1016/j.jairtraman.2010.10.008

Parola, F., Risitano, M., Ferretti, M., & Panetti, E. (2016). The drivers of port competitiveness: a critical review. Transport Reviews, 37(1), 116-138. http://dx.doi.org/10.1080/01441647.2016.1231232

Paulley, N., Balcombe, R., Mackett, R., Titheridge, H., Preston, J., & Wardman, M. et al. (2006). The demand for public transport: The effects of fares, quality of service, income and car ownership. Transport Policy, 13(4), 295-306. http://dx.doi.org/10.1016/j.tranpol.2005.12.004

READ, E. (2017). Air New Zealand, Qantas, Jetstar and Virgin join forces. Stuff. Retrieved 7 October 2017, from http://www.stuff.co.nz/business/90210972/Air-New-Zealand-Qantas-Jetstar-and-Virgin-join-forces

Romanow, P. (2016). CHAPTER 5 ROLE OF TRANSPORT OPERATORS IN THE SUPPLY CHAIN. Logistics Management – Modern Development Trends, 165-175. http://dx.doi.org/10.17270/B.M.978-83-62285-25-9.2.5

Spanjaard, L., & Warburton, R. (2012). Supply chain innovation: New Zealand logistics and innovation (pp. 1-22). Deloitte: NZ Transport Agency. Retrieved from http://www.nzta.govt.nz/assets/resources/research/reports/494/docs/494.pdf

Stephen Taylor, G., Garver, M., & Williams, Z. (2010). Owner operators: employing a segmentation approach to improve retention. The International Journal Of Logistics Management, 21(2), 207-229. http://dx.doi.org/10.1108/09574091011071924

Tyrinopoulos, Y. (2004). A Complete Conceptual Model for the Integrated Management of the Transportation Work. Journal Of Public Transportation, 7(4), 101-121. Retrieved from https://www.nctr.usf.edu/jpt/pdf/JPT%207-4%20Tyrinopoulos.pdf