Spirit Airlines hit with lawsuit over fees – Business – MiamiHerald.com by Kane Minks

English: Spirit Airlines N587NK (an A321-231) ... Kane Minks

Spirit Airlines hit with lawsuit over fees – Business – MiamiHerald.com.

Kane Minks

Interesting story. Spirit is an Ultra Low Cost Carrier that makes their profits from exorbitant fees. The only thing included in their basic ticket price is the seat and the ability to carry on one personal item (like a purse or backpack). Everything else incurs a fee. This lawsuit is in reference to a certain fee they have been charging their customers for years. Their passengers love to hate them for their fare structure, but in the end they always come back. They simply offer the cheapest fares to some of the most popular destinations in the U.S., Central America, and South America. A Spirit Airlines Case Study will follow shortly……

 

Kane Minks

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Airline Industry in a Quandary Over Fuel Surcharges and the Search for More Efficient Planes by Kane Minks

Aircraft leaves a contrail in sky. Kane Minks

by Kane Minks

The airline industry has been adding fuel surcharges to the tickets of passengers for some years, and increasing them as fuel costs jump. Yet, there have been no reduction in charges since 2009 despite decreases in fuel costs.

A study by Carlson Wagonlit Travel found these facts and more, demonstrating that the airline industry has been profiting off their customers through unreasonable fuel surcharge fees. The study found that fuel surcharges have risen 53 percent since 2011, a stark contrast to the 24 percent increase in airline fuel costs in the same study time frame. Clearly the airlines are using the fuel fees as a way to increase profits. They may find it more difficult to justify the exorbitant charges going forward.

A new law requires all airlines based in the U.S. advertise the full fare, which includes all of the components that make up the ticket price. The fuel surcharges must be disclosed, making it more difficult for airlines to justify the exorbitant charges. The new transparency rules may turn passengers off to the idea of taking vacations that require air travel.

Airlines are using hidden fuel fees as a way to stay competitive in tighter markets, and lowering fares in order to lure in more passengers. However, the fuel fees can make up to half of a ticket price for international flights, which may lead to a reduction in the amount of passengers for those flights.

The airline industry is also facing pressure in areas related to the use of jet fuel in the form of carbon taxes from the European Union. The European Union is requiring all flights taking off or landing in Europe pay for carbon dioxide (CO2) generated by aircraft. The program begins next year, and initially provides 85 percent of the cost of required permits for free. The rest can be traded off with less polluting airliners. Countries around the world are balking at the requirement by the EU, and the issue is still not settled. It’s a sure bet the extra charges are going to be passed onto passengers.

Volatility in the cost of fuel and threats of carbon taxes is causing the airline industry to purchase new, more fuel efficient planes. The goal is to reduce the amount of inefficient, older planes that are in the current fleets, and move to planes that get better fuel mileage. Some of the redesigns are expected to get anywhere between 13 to 15 percent improvement in efficiency, reducing the amount of fuel used.

The current state of the airline industry is a tenuous one; especially with the cost of fuel cutting sharply into already low profit margins. The amount of flights initiated around the world is increasing on an annual basis, but it only takes a small action to dramatically affect success and passenger satisfaction.

Article By: Kane Minks

Are Businesses Making a Move Out of China? The Future of International Manufacturing by Kane Minks

by Kane Minks

Business has been around ever since one person provided something another was willing to pay for.  As basic as this is, it is to the core of what happens around the globe even to this day.  Not only are businesses providing goods and services to others wanting or needing them, but there is a lot of research and theory to build stronger, more streamlined, businesses.  Businesses are sprawling around the world to reach the needs of as many individuals as possible.  The decision to move around the world may not only be to cut costs but also to tap into new markets.  This globalization requires international managers capable of assessing their political, economic, legal, and technological environments.

hands around the world manufacturing nations globe support kane minks

There is a lot to consider when planning to reduce manufacturing costs and increase profits by moving manufacturing offshore.  It’s usually always safe to stay put as long as the business is profitable and there are no other large hindrances of doing business in the home country.  The strategy to move manufacturing offshore makes sense when businesses can greatly increase profits while maintaining a high quality product without any delays.

After reviewing some of the top countries for business around the world it may be worthwhile for businesses to look further into an international move.  China, the United States, India, Brazil, Germany, Mexico, and Canada are all top countries to consider.  A few countries stand out in manufacturing more than others.  China, the United States, and Mexico are the best options for U.S. companies.

CHINA

It is hard to buy anything that doesn’t have a “Made in China” sticker or stamp on the back of it.  For many years China has been the number one choice for many manufacturing companies.  They rate highest in foreign direct investment in a 2010 Kearney study.

China will continue drop as a favorite manufacturing locale since their emerging economy is outgrowing their long-lasting manufacturing identity.  The disadvantages of manufacturing in China include language and cultural differences, work-in-progress commercial laws, high intellectual property protection costs, long start-up times, quality issues, long supply chains, increasing labor costs, and delays.  Taking into consideration the high cost of fuel and transportation, shipping from China to outside markets can be significant and may climb even higher.

2 solid and emerging manufacturing countries are the United States and Mexico.  I know it sounds odd, but research suggests these countries have the highest potential to excel.

UNITED STATES

Rated second highest on an A.T. Kearney survey, the United States is definitely a top contender for manufacturing companies wanting to make a sound investment.  As far as “Reshoring”, there may be many reasons for businesses to return to the U.S.

Some advantages of manufacturing in the United States include more control over quality and intellectual property, shorter supply chains, and lower costs of shipping goods.  Some of the disadvantages are high corporate taxes, tough environmental and safety laws, and high labor rates.

MEXICO

Possibly developing as the world’s premier power player, Mexico has a lot of potential.  Many large corporations are already manufacturing here with great success. A foreign company can do business with Mexico in order to minimize tax and regulatory consequences of doing business in their home country.  According to North American Product Sharing Incorporated in 2011, the advantages of manufacturing in Mexico include a growing population that is young, highly educated and motivated, an affordable workforce with hourly wages starting at $2.10, proximity to the United States to expedite shipment time to offer advantages for companies looking to sell to the United States, intellectual property protection, excellent infrastructure, world-class facilities, and multiple Free-Trade Agreements.  The North American Free Trade Agreement (NAFTA) has also lifted many of the complications of setting up and conducting business in Mexico.

New manufacturing markets are opening around the world.  Manufacturing trends are on the move and should allow companies to seize more control over their operations.

Further reading:

Manufacturing Trends in the U.S.

…………………..more in the U.S.

Kane Minks

Airline Regulation or Deregulation…the Great Debate?! A Quick Good, Bad, and Ugly by Kane Minks

A Boeing 747 of Pan Am at Zurich Airport regulation Kane Minksby Kane Minks

Regulated or not, the airline industry has many intense and relentless pressures always bearing down on it.  Deregulation was a success by many calculations, including increased efficiency, lower prices, and increased service.  The evolution of the airline industry is what some experts point to as the best proof of why deregulation, for all its troubles, ultimately is better than a regulated environment.  While more regulation may have increased stability to an extent, the industry would have never grown as much as it did if the tight regulations of the past remained.

Back before 1978, the CAB had control (to a large extent) of the winners and the losers, as far as who could compete and how they competed.  After deregulation, just as in any other free-market industry or company, winners and losers are based on the decisions they make and how they run their businesses.  The airline industry and airlines figure themselves out based on what customers demand and what customers are willing to pay for.  Despite the era of airline deregulation, the U.S. federal government still regulates safety and the air traffic control system, and steps in whenever either seems threatened.

Further Reading: Did ending regulation help fliers?

Kane Minks