Who are some of the major competitors? Southwest competes against many low-cost carriers or low-cost subsidiaries of larger carriers. Southwest's main low-cost carrier competitors are AirTran and JetBlue Airways. Its other competitors include American Airline, United and Delta. Because of its efficient cost-saving strategies, Southwest's 37-year streak of profitability is unmatched in the airline industry.
(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.
These facilities and software systems enabled both companies to reach a 99% arrive-on-time rate in their famous overnight/morning deliveries. However, this became an advantage for Airborne. The top management of Airborne understood clearly that they could not be everything to all the people. As a result, the company has positioned themselves differently from the big two, and to put more attention in its afternoon/second-day deliveries. This strategy has helped Airborne to reduce a large sum of costs because the afternoon/second-day deliveries could be transported using trucks, subsequently to save two-thirds the costs of owning and operating an aircraft capacity.
So he created an airline that had luxury for passengers at a low price with friendly employees who would treat customers like family. Strategic Analysis: JetBlue has many strengths but I think the main one is that they are based out of New York City which is the largest city in the U.S. This gives them access to a large number customer base which they can attract to use their product. They also provide luxury that the other airlines do not offer like leather seating with longer leg room, live TV and music at every seat for free at the same low price as their competitors. JetBlue has newer fleets of aircrafts compared to others airline companies.
An economy of scale is the reduction in long-run average and marginal costs arising from an increase in size of an operating unit. It can be external or internal; external will increase the productivity of the industry and will result in a reduction of costs and internal is related to the shift in average production costs for a business as it boosts its overall product output and the average cost per unit falls until maximum efficiency is attained. Albatross could save money if they bought items in bulk but since they make items as orders are received, the items would sit in the warehouse and take up space that would be used quicker. It is very expensive to store raw materials because
Section 1: Identify the Firm’s Core Strategy The Southwest Airline Company is famous for its low pricing, short- distance airlines. And also this strategy helps them to be the most profitable airline company in United States. Different than other airlines, Southwest Airline put the effort on how to lower the cost, and be more efficient, instead of providing luxury airline, and compliment. Thus, Southwest Airline use the low price as a competitive advantage to gain a huge percentage of domestic short- distance flight. However, Southwest Airline also expand their business to long- distance domestic airline and international fight in recent years, and they successfully enter the new area with the low- price advantage.
All this boiled down to a low cost air travel that was able to compete with ground transportation services. During May of 2011 Southwest Airlines purchased all of AirTrans outstanding common stock increasing Southwest’s fleet by 140 aircraft and the ability to spread
As stated in the report itself JetBlue, "provides high-quality customer service at low fares, primarily on point-to-point routes" (JetBlue, 2005). Further evidence of the company’s success is their efforts to offer low-cost alternatives to customers by serving "underserved and large metropolitan areas that have had high average fares" (JetBlue, 2005). Due to reasonable and fair customer service measures like this, JetBlue has aircrafts with the highest number of seats occupied in any given period. What business risks does JetBlue face that may threaten the company’s ability to satisfy stockholder expectations? What are some examples of control activities that the company could use to reduce these risks?
JetBlue is a low-cost domestic airline in the United States that utilizes a combination of low-cost and value-added differentiation as its market strategy. From its launch in February 2000 to the time of the case, the airline grew to become the 11th largest player in the airline industry in a short span of 4 years. Moving into the growth phase, JetBlue transitions from launch mode to an established product stage where it needs to focus on growth of scale. Executive leadership has determined that JetBlue must increase its existing route network by adding service to mid-sized markets. Vincent Stabile, Vice President of People for JetBlue Airways has a challenge: How must the organization understand the current organizational structure’s successes and evolve these learnings to support this growth?
Cost a) Cost of Production: Albatross Anchor should look at lowering production costs in order to realize greater profit margins. By increasing production, Albatross Anchor will be able to decrease fixed costs. They would be able to spread the costs across more units which would decrease the price per unit they need to pay. Production costs decrease with increases in production levels. This will help to recapture profit margins lost to inefficiency and make them better competitors in their chosen market, (Russell & Taylor, 2011).