Based on the book when there are competitive markets such as airlines, a company certainly needs to look at costs and revenue very closely. (Brickley, Smith, & Zimmerman, 2009, p. 180) In this case I believe that the flights from San Francisco t Washington DC should be discontinued. Even though United Airlines is a large company and profitable if they continue these flights in the long run they will lose money. The other option that they would have would be to increase the fares to cover those costs, but since the airline industry is a competitive market people are more likely to go with a lower cost airline. The first thing the airline must do is look at the firm supply.
JetBlue has an economy of scale for cost on a seat per mile basis, even surpassing Southwest airlines. Southwest’s cost per seat/mile is 6.53 and JetBlue is now at 6.08. JetBlue has a cost advantage because its competitors cannot match their low costs of seats/mile basis. JetBlue prides them-self in keeping their flights on time and
In addition, airplanes re-orders were being rescheduled. Rising fuel prices consolidation - Cost pressure – resulted as there was a decline in the industry as a whole. Increasing competitive intensity – Airbus, Boeings competitor, offered the same airplanes at cheaper costs. 2. What is the e-Enabled Advantage?
TITLE OF ASSIGNMENT CRAFTING AND EXECUTING STRATEGY STUENT MOHAMMAD HOSSAIN INSTRUCTOR DR. RHONDA POLAK COURSE TITLE STRATEGIC MANAGEMENT –BUS 599 DATE: - OCTOBER 16, 2011 Discuss the trends in the U.S. airline industry and how these trends might impact a company’s strategy. Trends in the US airline industry have an impact the performance and strategies of the airlines. As a result, the Jet Blue has struggled to survive. The trends of U.S. airlines industries are discussed as follows: (1) Increased crude oil pricing: fluctuations crude oil price lead to passenger fees for revenue generation, This dramatic price increase caused airlines to struggle to offset the cost of fuel. Presently, gas prices have dropped.
EasyJet- Case Study 1 Q1. Analyse the structure of the industry in which easyJet competes. How attractive was the industry in the late 1990s? The core objective of easyJet was to establish a sustainable mode of air travel at a price that would be comparatively cheaper to its rivals. By using a framework by (Porter 1980) we can illustrate the compatibility of such a strategy in the existing aviation industry Potential Entrants Despite the high volume of new entrants during the period of easyjet’s inception, only a minority were actually able to survive.
Mature industry life cycle. The Bargaining Power of Buyers: Medium to High - Internet gives the power to the customers to search for the low fares. - Leisure travelers who are not sensitive with the price and most of them are loyalty to the particular industry that offer the best service and offer the best flying experience. - There are many airlines in the market that offers the same flying experience in the low-price. Bargaining Power of Suppliers: High - Boeing and Airbus are the only two suppliers of
Southwest clearly defines its existing purposes, which is to provide the lowest fares for business and leisure travelers traveling between states. Instead of competing with large-scale airlines to fly international routes, Southwest focuses on “point-to-point” interstate short trips, and more on maximizing the profitability than focusing on market share. This strong vision outweighs the allurement of international flight market, keeping Southwest airline concentrated on its own niche to gain profit. B. Cost-consciousness Since low fares have become its selling point, decreasing the cost becomes very important. Southwest Airlines tries to save money by simplifying its operating process.
Should Britain expand its airports to meet the needs of a Globalised World? In a globalised world, cross-cultural travel has become an apparent trend amongst individuals from all over the world whether for business purposes or for leisure. However, if there is one certainty it is that airplanes have become the number one transportation option for many who wish to travel from country to country. Nevertheless, in this essay it will be argued that Britain should not expand it’s airports to meet the needs of a globalised world because of the destruction it would cause to the environment; only corporations benefit from it; Finally, Britain’s main priority should be it’s citizens. The aircraft option for travelling is one of the most popular forms of transportation available in Britain, with cheap holiday packages indulging many locals, as well as Heathrow Airport being a stopping ground for over 32.8 million overseas visitors in 2007.
Has Southwest done a better job than competitors of meeting the needs of these air travelers? In what ways? Some values that airline travelers seek are leisure of arriving to their new destination, flexibility, being efficient, and being comfortable all for a fair and inexpensive price. Traditionally, Southwest was inexpensive and flexible because of their low costs and the mentality of just getting travelers from point A to point B. The remodeling of the airline has created a more pleasant atmosphere for the customers.
Southwest Airlines and Ikea are both considered cost-based focusers; “Ikea’s focus is based on the needs of a customer group, and Southwest is based on offering a particular service variety.” Southwest differentiates from its competitors by offering “short-haul, low cost, point-to-point service between midsize cities and secondary airports in large cities.” Southwest isn’t considered a full-service airline so they do not offer meals, assigned seats, interline baggage checking, or premium classes of service. With fast turnarounds at the gate, they’re also able to keep planes flying for longer hours than their rivals and provide frequent departures with fewer aircrafts. These various activities allow Southwest to compete fairly well with full-service airlines because a full-service airline, such as Continental airlines, could never be as convenient or as low cost. Ikea also focuses on customers who are searching for furniture at a low cost. Ikea does sacrifice service for cost, but this has been an advantage for them.