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A topic around my dinner table this week encompasses the issue of a $25 checked bag fee for airlines including WestJet and Air Canada (Evans). This issue intrigues me, as my family usually purchases the lowest-fee ticket option, which is the only class that the Air Canada baggage fee applies to. As learned through the business model canvas, Air Canada is altering its value propositions, and providing some of its customers with the choice of only paying for services they require. However, the company continues to provide the service of higher classes to fulfill the preferences of people with higher expectations and incomes.

On one side of the issue, Air Canada could be making more of a profit through ancillary revenues. Like Spirit Airlines, ancillary revenues account for around 40% of their revenue (Pittis). This change in parts of the company’s value propositions can attract more customers, since now commuters who regularly travel with no checked bags can take advantage of not paying the extra fee. However, customers of the economy-class may find it excessive for Air Canada to be charging extra fees, when these expenses should already be included in the ticket.

Through the analyses, as companies are finding news ways to cope with the rising costs of expenses, charging checked baggage fees may just be another strategy that will either bring Air Canada with increased profit, or even a decrease in the number of loyal customers.

Works Cited

Evans, Pete. “Air Canada adds $25 checked bag fee for economy travel.” CBCnews.           CBC/Radio Canada, 18 Sept. 2014. Web. 22 Sept. 2014.

Pittis, Don. “Airfare discounts and the price you pay: Don Pittis.” CBCnews. CBC/Radio Canada, 16 Sept. 2014. Web. 22 Sept. 2014.

CVS Caremark is a drugstore chain that bases most of its sales on tobacco products, but has recently decided to terminate the sales of cigarettes and any related products. By eliminating the cigarettes sales, CVS Caremark will lose $2 billion a year (Strom).

This issue directly relates to the topic of how businesses may have social responsibilities and should make ethical decisions. As Milton Friedman outlines, if corporate executives base their decisions on their “social responsibilities”, then the amount of profit that the companies’ stakeholders can achieve will be reduced (Zimmerli). On the other hand, if the decisions made are unethical or does not take into account any of the company’s social responsibilities, then the sales may also decrease, as a bad reputation will be established. Finding a balance between the two extremes is essential. Like Freeman suggests, businesses can only be successful if all stakeholders, including consumers and shareholders, are taken into consideration (“What”). 

I believe that by no longer selling cigarettes, CVS is sending out messages to other companies and potentially influencing them to diminish the number of available stores for smokers to purchase their cigarettes. This decision has the potential to cause a ripple effect and enable many people to quit smoking. Being socially responsible and ethical may mean that the company is not maximizing profit. But ethical business decisions made can trigger benefits and new opportunities in the market, and add value to the company.

Works Cited 

Strom, Stephanie. “CVS Vows to Quit Selling Tobacco Products.” The New York Times. The New York Times, 5 Feb. 2014. Web. 9 Sept. 2014.

What Is Stakeholder Theory? – R. Edward Freeman. Perf. R. Edward Freeman. 2009.

Zimmerli, Walther, Holzinger, Markus, and Richter, Klaus, eds. Corporate Ethics and Corporate Governance. Berlin/Heidelberg, DEU: Springer, 2007. ProQuest ebrary. Web. 9 September 2014.

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