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Airline Hopes to Cut Costs, Regain Market Share Patrick Brethour and Keith Mcarthur, Globe and Mail, 2002, April 20, Pp

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Airline Hopes to Cut Costs, Regain Market Share Patrick Brethour and Keith Mcarthur, Globe and Mail, 2002, April 20, Pp James Morris HR STRATEGY – CASE STUDY: ZIP-AIR Air Canada and Zip Air AIRLINE HOPES TO CUT COSTS, REGAIN MARKET SHARE PATRICK BRETHOUR AND KEITH MCARTHUR, GLOBE AND MAIL, 2002, APRIL 20, PP. B1, B6 Air Canada unveiled its long He said the full-service model They are hurting the very awaited discount carrier for short flights is ‘going the people who have worked so yesterday, but warned that way of the dinosaur.’ Zip is hard for them and for so customers shouldn’t expect aimed at meeting that long,’ she said. fares to immediately be lower challenge in the low end of than those already offered by the market, he said. Other cost-cutting measures at Air Canada. Steve Smith, Zip include offering snacks president and chief executive Zip’s costs will be at least 20 instead of meals, providing no officer of Zip Air Inc., said per cent lower than those at in-flight entertainment and the new airline is being Air Canada’s comparable operating only one kind of created to cut Air Canada’s mainline flights, in part plane. There will also be less costs – not to reduce fares. because Zip’s employees will room between seats – 32 ‘Right now, the price is be making less money than inches or 33 inches – although already low, particularly in their counterparts at Air the seats will still have more this market,’ he said, adding Canada. Mr. Smith said wages leg room than the smallest that prices could fall over will be competitive with Zip’s seats at WestJet. The time as the new airline competitors in the low-cost reduction, along with the reduced expenses. Observers market. ‘For the employees, elimination of business-class see the wholly owned they have to understand that seats, will allow Zip to add 17 subsidiary as a way for Air they will be working for zip,’ seats to the 100 seats in the Canada to lower labour costs he joked. Pamela Sachs, Boeing 737-200. (WestJet and win back market share it president of Air Canada has 120 seats in its Boeing has lost in recent years to component of the Canadian 737-200s). The company will Calgary-based WestJet Union of Public Employees, operate independently of Air Airlines Ltd. Mr Smith said a said the union will mount a Canada, although it will buy new business model is legal challenge to Air maintenance services from its emerging in the airline market Canada’s attempts to pay so- parent, as well as using the – as it has in retailing – where called B-scale wages to Zip larger company’s pilots. lower-cost, no-frills service employees. ‘Air Canada gives becomes the norm. zip by zapping its employees. James Morris HR STRATEGY – CASE STUDY: ZIP-AIR Air Canada and Zip Air 1. How would you describe Zip Air’s Competitive Strategy? 2. How would you describe Zip Air’s HR Strategy? 3. How well do you think Zip Air’s HR Strategy supports it’s business plans? 4. Do you think that Zip Air will be able to mobilise its employee’s competencies and commitment to achieve competitive advantage? Consider your own organisation… 5. Identify three key organisational objectives 6. How effectively (and in what ways) does your organisation’s HR Strategy support the attainment of those objectives? Please be prepared to feedback your views on the above to each other. .
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