Business Management

Internal Assessment

Higher level

Research Project

Topic: Operations Management into the organizational structure of Avianca

Research question: ¿How will the change in Avianca's organizational

structure impact the satisfaction of the customer experience?

Session: May 2024

Students personal code: 050952-0078

Word account: 1756

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Table of Contents

Introduction............................................................................................................3

Findings.................................................................................................................4

Analysis of findings................................................................................................4

Comprehend Avianca's customer problems.......................................................5

Implement the solutions.....................................................................................5

Evaluate the effectiveness of solutions..............................................................6

Bibliographic references......................................................................................11

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 Introduction

The purpose of this research project is to find out the best strategies to solve the

poor service that Avianca provides that has been causing multiple problems for their

customers when they have traveled with the airline. Therefore, answer the question

¿How the change in Avianca's organizational structure will impact the

satisfaction of the customer experience?

Avianca Airlines is a company that operates from Latin America. The airline was

founded in 1919 located in the city of Bogotá, Colombia. Known for their extensive route

network, connecting Latin America, North America, and Europe. As well, Avianca has

been established as a prominent company in the aviation industry, offering extensive

connectivity and a customer-focused approach. Recent challenges have appeared in

customer service that must work to improve offerings and regain customer trust.

About Avianca Ecuador S.A. it is an Ecuadorian airline located in the capital of

Quito, but before becoming Avianca their name was Aerogal created in November 1985

by businessman Carlos Serrano Lusetti from Ecuador. It is crucial to note that providing

air transportation for people and freight between Ecuador and the Galapagos Islands

was the primary motivation for the airline's founding.

In 2013 the airline was acquired by Avianca Holdings and once the internal

reorganization was completed carrying out the technological homologation,

reconversion of its processes and its operational integration with the other airlines of

Avianca Holdings S.A. Aerogal took the name of Avianca.

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 Findings

For this document, several tools, theories, and techniques will be applied, such

as: Decision tree, Organizational charts, Human resources, and Operations

management. The decision tree will allow to visualize and evaluate the potential

alternatives or consequences of change the organizational structure of Avianca’s,

operations management will help to transform Avianca’s inputs into outputs that are

directly engaged with human resources because it involves changing the characteristics

or qualities of service and work to create something new or better for the airline

customers.

In relation to the supporting documents, there are three articles from journals

and forums that will be used for this research. In first place all the forums will be used

are “Avianca Reviews and Flights” from [Link] and “Avianca Reviews” from

[Link], also it is going to be used the articles “Avianca achieves confirmation of

its reorganization plan” (Avianca, 2021), “Avianca takes off after restructuring with a

new business vision” (República, 2021), “Avianca and Viva Air: this is the statement

that confirms the new holding” (Tiempo, 2022), all of them will provide information about

the organization and service of Avianca airlines.

Analysis of findings

In an effort to increase their effectiveness and profitability on the market, the

airline has announced a change in its organizational structure. An organization called

Avianca Group would be a member of the new holding company that will manage Viva

Air. Since both companies will operate independently but are required by the agreement

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to share a parent company and two brands, this shift will affect the airline's primary

organizational structure.

This is an ideal setting for the airline's growth and expansion strategy to continue,

preserving the banner of air inclusivity and developing the enterprise. (Tiempo, 2022).

Comprehend Avianca's customer problems

According to supporting document number 4, travelers from Avianca mention

“Chair comfort, in-flight entertainment, customer service, value for money, hygiene,

check-in, and boarding are all sources of dissatisfaction”. (Customer, 2023). Therefore,

in accordance with supporting document number three with Avianca's exit from Chapter

11, “the reorganization will enable the company to continue repositioning and

streamlining its operations”.

In line with this vision, “the airline will maintain its competitive and differentiating

advantages, such as one of the strongest networks in Latin America (…), the best

loyalty program, (…), special services for its customers, and one of the most affordable

cargo solutions in the region”. (Avianca, 2021)

Implement the solutions

The new organizational structure of Avianca may provide certain difficulties,

including the possibility of communication breakdowns or disputes between several

divisions or subsidiaries, particularly if those divisions or subsidiaries have divergent

agendas. Ten Latin American airlines that operate as a single entity make up Avianca

as well.

According to supporting document number two, the Avianca Group would be

integrated into a new holding company that would also have control of Viva Air. The

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same parent firm and two distinct brands would both preserve their operational

independence. (Tiempo, 2022).

Evaluate the effectiveness of solutions

Customers may become confused and unsatisfied if they are not aware of this

arrangement or receive inconsistent information because of the service from different

airlines, for that reason customers might think that Avianca Group would cease to exist

as an independent brand and Viva Air would be under the ownership of a new holding

company that would be formed.

The organizational chart offered in supporting document number two describes

the framework by which the shareholders form a new holding company that is split into

two firms, Viva Latinamerica and Avianca Group Internacional Ltd., each of which has

both voting and economic rights inside the holding company.

It should be emphasized that, due to their political and voting rights, the

independent administration of the trust holds the same autonomous patrimonies as Viva

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Latinamerica, with the exception that Viva Latinamerica's economic rights extend to the

autonomous patrimony of trust in Viva Peru and Viva Colombia.

Customers that place a high value on the reputation and image of the brand, as

well as the quality and service offered by the Avianca Group, may find that the merger

affects their perceptions and purchasing decisions. It is imperative to present an open

and accurate picture of the merger, emphasizing the advantages it brings to the clients,

staff, and investors of both businesses.

For this reason, Avianca Airlines needs to put in place efficient operations

management if it hopes to maintain providing top-notch customer service, maximize

resource utilization, and meet strategic objectives. The planning, arranging, supervising,

and improving of procedures and actions that transform inputs such as aircraft, fuel,

passengers, and cargo into outputs is the scope of operations management.

Through the use of operations management concepts and strategies, Avianca

Airlines may increase customer satisfaction and loyalty as well as operational

effectiveness, productivity, and profitability.

The change in Avianca’s structure would improve the service quality of each

business unit, as they will have more autonomy and accountability. By using decision

trees to succeed after restructuring with a new business vision because according to

supporting document number three, the “Colombian airline Avianca began its takeoff

after emerging from Chapter 11 of the US bankruptcy law as a "revitalized" company,

with better financial health and a new business vision”. (República, 2021).

The passenger unit may be able to offer more flexible fares and schedules for the

customers, the cargo unit would optimize its logistics and delivery times, also the loyalty

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unit will enhance its rewards program and partnerships, and the digital unit may be

capable of providing more innovative solutions for the users.

As a result of these adjustments, each business unit will have more authority

over its own resources and procedures, which could gradually increase Avianca's

operational reliability. The human resources department would be better equipped to

handle client complaints and requests, prevent penalties, and guarantee the safety and

security of shipments. All of these things could help to lessen delays and cancellations.

As an illustration, consider Avianca's business plan, which is a thorough

approach meant to raise the airline's long-term sustainability, profitability, and

competitiveness. Everything from the destinations Avianca will offer, the aircraft it will

use, and the way it will serve its customers, to the expansion of its complementary

cargo and loyalty businesses, is covered in the plan.

The plan builds on Avianca's leadership and experience in the Latin American

market, and aims to ensure its future success in an increasingly dynamic and

competitive environment. (Avianca, 2021)

There may be a drawback to the move in terms of Avianca's competitive edge

and market positioning, though. By making this adjustment, Avianca might be able to

better concentrate on its core skills and set itself apart from other airlines that provide

more homogenized and commodity-type services.

Additionally, it can make Avianca more vulnerable to disruption and competition

from upstarts and innovators who can use digital platforms and technologies to provide

clients with more individualized, convenient, and integrated services.

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 This, in order to preserve customer loyalty and satisfaction as well as operational

effectiveness and profitability, Avianca will need to weigh the advantages and

disadvantages of the change.

Because “Avianca has recovered 73% of its global operation and currently

operates 116 routes in the Americas and Europe, the company carried more than 12

million passengers and operated more than 100,000 flights, a sign that it has begun to

recover after the pandemic and the approval of the reorganization plan”. (República,

2021).

Conclusion

In order to better understand how changes in the organizational structure of the

company might affect customer satisfaction, this study project concentrated on

developing methods to address the problems of undistinguished service faced by

Avianca Airlines current customers. By this investigation it was discovered that

Avianca's recent restructuring has important ramifications for both the business and

their customers after a extensive examination using tools like decision trees,

organizational charts, human resources, and operations management methodologies.

The strategic move to maintain operational independence while promoting

development and expansion potential is reflected in the change to a new holding

company structure that incorporates Viva Air. But this change also has the potential to

cause misunderstandings and communication problems for customers, especially when

it comes to maintaining brand identity and service quality.

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 The findings underscore the importance of transparent communication regarding

the merger's benefits for customers, employees, and shareholders. Operational

efficiency, productivity, and customer satisfaction must remain focal points for Avianca

as it navigates this transition. By leveraging operations management principles and

focusing on improving service quality across business units, Avianca can optimize

resources, enhance customer experiences, and maintain competitiveness in the

dynamic aviation market.

Avianca has the opportunity to improve their market position and set itself apart

from other airlines thanks to the restructuring, but it also brings with it new difficulties

including heightened competition and possible interruptions. Long-term success for

Avianca will depend on finding a balance between using core competencies and

changing with the market.

In summary, the study highlights the significance of strategic planning, efficient

communication, and operational excellence for managing organizational transformation

and guaranteeing sustained consumer contentment. As Avianca moves forward with

this innovative reorganization plan, it needs to be careful to address customer concerns

and demands, provide value, and maintain development in the highly competitive airline

business.

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 Bibliographic references

Supporting documents

Avianca. (2 de Noviembre de 2021). [Link]. Obtenido de

[Link]

avianca-logra-la-confirmacion-de-su-plan-de-reorganizacion/

Customer. (Septembre de 2023). [Link]. Obtenido de

[Link]

[Link]?m=19905

República, L. (10 de Diciembre de 2021). [Link]. Obtenido de

[Link]

reestructuracion-con-una-nueva-vision-de-negocio/

Tiempo, E. (29 de Abril de 2022). [Link]. Obtenido de

[Link]

negocio-y-perteneceran-a-nueva-holding-668594

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Quito DM, April 10, 2024

Statement of Authorship

I, Joaquin Francisco Ponce Castillo, student of the 2nd year of the Diploma, Session

May 2024, declare that the present academic work is of own authorship and that all the

sources used in search of information have been cited in the bibliographic references. I

acknowledge and assume full responsibility for the results obtained.

Student Name: Joaquin Ponce

Course: Third year of high school IB “D”

Identity Card: 1751251602

Signature: ………………………..

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