After two straight years of financial losses in 1994, CEO Ron Allen rolled out a new strategy called “Leadership 7.5.” Allen targeted to reduce Delta’s cost per each available seat mile from more than 10 cents to 7.5 cents, which would match that of major competitor Southwest Airlines (Bryant, 1997). Along with a new company strategy a change followed with Delta’s human resource strategy. This changing policy devastated employee morale and resulted in a decline of customer service, efforts to unionize, and dissatisfaction among personnel. Delta couldn’t keep the past primary policy about human resources so there were several significant changes in Delta’s organization and corporate culture. There are many programs that Delta has built after passing through the cost-cutting reformation in 1997 for getting back its capabilities on customer relationships like rewards and recognition program above and beyond and more.
It has also deferred the delivery of the last eight A380 super jumbos it has on order, as well as the last three of 14 new 787 Dreamliners due for Jetstar. It will also shelve growth plans for Singaporean budget offshoot Jetstar Asia amid intense competition with other budget airlines in the region. Qantas shares fell sharply Thursday, down about 6.5 per cent at $1.1875. Qantas declared a statutory loss of $235 million for the six months to December, compared with a $109 million profit in the same period a year earlier. Revenue fell 4 per cent to $7.9 billion.
The major networking airlines in the industry are united, Northwest, American Continental, and Delta. Their combined revenue in 2005 made up of about 82 percent of the total $25.3 billion revenue generated by the 10 largest airlines. Low-cost carriers operate at a low-cost business model, they use the point-to-point flight system. the largest carrires in the model are Southwest and JetBlue. Regional carriers specialized in short-haul flights that caters to small towns and communities using small jets.
The A380 made its first commercial flight in 2007. Capable of flying over 8000 nautical miles without refuelling, the A380 would be ideal for long-haul passengers and freight applications. By 2009, A380 production was several years behind its contracted delivery schedule and some airlines cancelled their orders. The survival and future success of Airbus, including the employment of 52,000 people at 16 sites in France, Germany, UK and Spain, depended critically on A380 meeting its sales targets over the medium and longer term. Airbus and Boeing focus on medium and long-haul jet aircraft with 100+ seats.
In 1990 the company suffered a £20 million loss and was forced to completely restructure and a new management team was brought in headed by Michael O’Leary who made major changes to the airline. Ryanair restructured itself and became a low-fares, no –frills carrier. After the next few years Ryan air significantly slashed its fares further and managed to open up many new routes. Today, Ryan Air has destinations in 26 countries with 950 routes. Also the headquartered in Dublin, employs about 4,200 people, operates with a fleet size of 120 Boeing 737-800, carries approximately 35 Mio passengers a year and had a turnover of 1,692.5 Mio in 2006 with a net profitability of about 10% (Mayor, 2007).
[pic] Colorado Technical University Southwest Airlines: Porter’s Five Forces Term Project - Final Professor Hanji Wu Submitted in Partial Fulfillment of the Requirements for ECON 616 Applied Managerial Economics By Larry Rodgers, Brent Packard, Leanne Marks, James Ladwig Colorado Springs, Colorado September 2012 Southwest Airlines: Porter’s Five Forces Analysis Southwest Airlines continues to show their strength in this tough industry. With the company’s main focus in keeping costs down, they are in a much better position than the rest of the airline industry in continuing to make profits during this current recession with customers being careful with their money. In fact, while most airlines strongly compete for their fair share of the market which has an impact on their ability to make a profit, Southwest’s focus has been on discovering new ways of increasing their profit. (Bundgaard, et al, 2006) Rivalry Among Existing Firms The threat of rivalry is high. Price competition has been the primary focus of the rivalry among airline companies.
Case Analysis: Captiva Conglomerate I. Major Facts Captiva Conglomerate and its employees are unsatisfied with a subsidiary contractor S.O. Software (SOS). SOS’s inventory management system has caused excessive delays in Captiva’s distribution of goods and services by four month. This in turn further delayed the implementation of their regional and centralized inventory management system delay by ten months.
(3 ( Established in 1998 and started service in 2000 ( Goal has been to establish itself as a leading low-fare, low-cost passenger airline by offering customers high-quality customer service and differentiated products. ( Focus on underserved markets. ( 108 flights in 2002 and 316 in 2005 serving 32 destinations. ( By mid 2005, fleet of 77 new Airbus A320 Aircraft ( Stock price $20 in 2002 and peaked at $26.4 in 2005. • 4.
The senior leadership at BAE failed to calculate the total risk of taking on a project of this scope. Although, BAE had 90% of the market share in this industry the scope was unattainable. When DIA made the decision to approach BAE about expanding the baggage system they were already halfway complete with many of the terminals and concourse and were just two years away from the original open date in October 1993. This meant that BAE would have to tear up certain sections of the airport and redesign around the new integrated system. This alone cost millions in delays and rework.
As of August 2012, Southwest Airlines operates scheduled service to 77 destinations in 40 states. Southwest airlines started with one simple notion: If you get your passengers to their destinations when they want to get there, on time, at the lowest possible fares, and make darn sure they have a good time doing it, people will fly your airline. The Mission of airlines is to “is the dedication to the highest quality of Customer Service delivered with the sense of warmth, friendliness, individual pride and Company Spirit. 7P’s of Marketing Mix 1) PRODUCT-Southwest Airlines is carrier for passengers,travelling to different places. 2) PRICE- Southwest Airlines is known for its low cost offerings.