America West Airlines Essays - Airline Tickets, OpenTravel Alliance

America West Airlines America West Airlines has influenced their customers' buyer behavior with a not so pleasant track record. The airline industry is a service that satisfies customer needs for traveling. Whether for business or leisure the airline industry is an increasingly growing business. If companies are not able to compete with their rivals in an already overly competitive market, then they will not benefit financially. The market segments that we will be discussing are the business traveler and the vacation traveler. The benefits between the markets are similar between the two segments. I will discuss some recommendations that could benefit the company. Most importantly, delivering the view of the consumer and what a consumer should expect from an airline. Determining a result depends on these components. This paper will discuss some of these problems and resolutions. The airline industry started out as a luxury item. Business travel has changed this industry to a necessity. As we become a global economy and communication between international companies is a key tool, travel has increased dramatically. The vacation traveler has always had the need for the airline industry. Satisfying the customer needs today involves competitive rates along with convenience of booking flights and benefits with those flights. America West Airlines has not able to provide a quality service lately. The business travelers need competitive rates for travel. The marketing mix for business people consists of the actual flights, pricing, where and how it is promoted, and finally its distribution. America West has low-fares marketed to meet the business and travelers' needs. This full-service airline is a coast-to-coast route system and includes most major destinations across the US, with additional destinations in Mexico and Canada. America West utilizes its Phoenix and Las Vegas connections as gateways for travel throughout its destinations. America West has a code-sharing agreement with Continental, which was the first extensive alliance of its kind between two carriers. The company also has a code-sharing agreement with Mesa Airlines and Air Midwest. Some of the marketing strategy involves sponsorship with sports teams. Between these different affiliations, America West uses this in part for distribution and marketing. Some of the problems with this industry are personally experienced. The airline has a difficult time being punctual. This is lately a norm in the industry, although, it is avoided by other companies. The airline industry historically fluctuates in response to general economic conditions that are present. The airline industry is sensitive to changes in economic conditions that affect business and leisure travel. The industry is highly susceptible to situations that result in declines in air travel, such as political instability, regional hostilities, recession, fuel price escalation, inflation, adverse weather conditions, consumer preferences, labor instability or regulatory oversight. The Company's results of operations for interim periods are not necessarily indicative of those for the entire year, because the travel business is subject to seasonal fluctuations. Due to the greater demand for business and leisure travel during the summer months, revenues in the airline industry for b usiness and leisure travel in the second and third quarters is typically greater than revenues in the first and fourth quarters of the year. This has an overall impact on the industry. The next phase is making recommendations for the company. The recommendation is to gain the customer's confidence back by informing them of the changes made with their timeliness. The general experience with the company has been rescheduled departures and delays, which attributes to their failure. They have also had some maintenance issues they need to be addressed. Customers for the business travel market segment need to have reliability, punctual flights, ease of booking flights, and frequent flyer miles for needs of traveling. The needs of the market segment for leisure travel consists of all of the business segment and the company could do promos for flying to certain destinations that the airlines receives great deals on. If the company can provide the benefits and satisfactions associated with good business practice, the consumers resolve their traveling requirements with America West Airlines. The company could use a marketing strategy that would involve informing the customer how they gave the company a facelift. The company could address the fact that they have had punctual issues and resolved the

Banking Risk Management

Banking Risk Management Credit Risk Models The Black-Scholes-Merton Model There are various credit risk models, which have been proposed by researchers in order to reduce the risks associated with future transactions. One of these models is the BSM framework structured models. This model was proposed by Merton in 1974. He derived the value of an option from a company, which could default loan repayment (Merton, 1974).Advertising We will write a custom essay sample on Banking Risk Management specifically for you for only $16.05 $11/page Learn More The Black-Scholes-Merton model assumes that there is a latent firm asset value, which is determined by the company’s future cash flows. This model is used to determine the firm’s debt and equity value. This model includes components, such as risk free interest rates, asset payment ratio, and asset risk premium. Merton (1974) argues that the asset return rate and the risk free interest rates are the constants which are non-sto chastic. The model also assumes that the company’s capital structure relates to a pure equity and a single zero coupon debt, which matures within a given time. Incase of a default experienced by a company, the stock price of the defaulting firm is expected to go to zero. According to this model, the debtor is assumed to be a seller in the European put option. On the other hand, the equity holder is assumed to be a buyer of European call option (Merton, 1974). The model uses the Black –Scholes option pricing in order to determine the relationship between the equity market value and the bond market value. Shibita and Yamada (2009) proposed the BSM structural model to a bank, which was just this side of bankruptcy. This helped the bank in its recovery processes. According to Shibata and Yamada (2009), the banks choice to continue operating or be liquidated plays a vital role on the losses of the loan. They assumed that this decision should be made severally at a certain t ime after the bankruptcy. Individual-level reduced-form models This refers to the models which are not of the class of structural models. At the individual level, a reduced form model can also be described as the credit scoring one. This model was developed by Altman (1968). The credit scoring model uses linear and binomial models to regress the defaults among companies.Advertising Looking for essay on business economics? Let's see if we can help you! Get your first paper with 15% OFF Learn More It identifies various accounting components, which have statistical explanatory capability, in order to differentiate between the defaulting and non defaulting firms. After estimating the coefficients of the model, the loan applicants are given a Z-score in order to classify them as good or bad. Several decades after its proposal, the credit scoring model got a significant development. Altaman and Saunders (1998) discussed the wide spread of the individual level mode l and its major developments over the years. Altman and Narayanan (1997) evaluated the historical accounting variables used in the credit scoring models across the world. According to them, most of the studies proposed the use of financial ratios, which determine profitability, and liquidity. These financial ratios may include market value equity/debt, (EBIT)/sales as well as working capital/debt. Altman (2005) proposed a scoring system known as Emerging Market Score Model to use to define the emerging corporate bonds. Portfolio reduced form models These models were proposed by Jarrow and Turnbull (1992). According to them, the idea of these models is related to the concept of risk neutral. Risk neutral is a common technique used to predict the probability of the future cash flow. It helps in computing the asset prices by using risk neutral default probabilities. Jarrow and Turnbull (1992) used the idea of risk neutral to develop the credit risk premium which is also known as the cr edit spread. They decomposed the credit risk premium into two components. Poisson /Cox process model This is a subclass of the portfolio reduced form models. It was developed by Jarrow and Turnbull (1995), and it can be described as the simplest model of the portfolio reduced form model. In this approach, the default process is assumed to be a Poisson process with a constant intensity where the default time is exponentially distributed. Markov chain model This is a credit risk model, which was originally proposed by Jarrow et al. (1997). This model considers the default event as the absorbing state and the default period as the first period when the Markov chain hits the absorbing state.Advertising We will write a custom essay sample on Banking Risk Management specifically for you for only $16.05 $11/page Learn More Factor model This is a credit risk model, which puts into consideration two vectors of explanation variables. The first vector is a set of macr o economic variables, such as interest rate, inflation rate, money supply growth as well as GDP growth. This vector explains the systematic risk, which causes default events. The second vector involves a set of firm-specific variables, which determine individual risk. According to Pederzoli and Torricelli (2005), the variables are considered simultaneously. Conclusion The credit risk models have various shortcomings. For instance, the BSM framework structural model consists of several simplified assumption in its derivation. The simplified assumptions restrict the applied value of the model. This has made the subsequent researchers focus on reducing these assumptions. The individual level reduced form models may not pick up fast moving developments in borrowers conditions. This is because the model uses explanatory variables, which are based on accounting data. According to Agarwal and Taffler’s (2008), credit scoring models, such as Altman’s Z-score, may not be used t o forecast distress as compared to the structural models. References Altman, E 2005, An emerging market credit scoring system for corporate bonds,  Journal of Emerging Markets Review, vol. 6, no. 4, pp. 311-323. Altman, E, Saunders, A 1998, Credit risk measurement: Developments over the last 20 years, Journal of Banking and Finance, vol. 21, pp. 1721-1742. Gordy, MB, 2000, A comparative anatomy of credit risk models, Journal of Banking  and Finance, pp.119-149.Advertising Looking for essay on business economics? Let's see if we can help you! Get your first paper with 15% OFF Learn More Jarrow, R, Turnbull, S 1997 A Markov model for the term structure of credit risk spreads, Review of Financial Studies, vol. 10, no. 2, pp. 481–523. Merton, C 1974. On the pricing of corporate debt: The risk structure of interest rates.  The Journal of Finance, vol. 29, no. 2, pp. 449–470. Saunders, A Allen, L 2002, Credit risk measurement: New Approaches to Value at  Risk and Other Paradigms. John Wiley Sons, New York.