Operating cash flow before pension contributions more than doubled to $3.5 billion. 4. 2013 Core EPS guidance increased to between $6.20 and $6.40; GAAP EPA to between $5.10 and 5.30 b. Strategic Posture ii. Mission: People working together as a global enterprise for aerospace leadership.
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.
Their service strategy is based on short-haul, point-to-point direct flights that are accomplished with amazingly short turnaround times. With their strategy, Southwest has a strong majority of the market share in the point-to-point market. Southwest’s goal is to make air travel affordable to all, both the time-sensitive business traveler and the price-sensitive leisure traveler. They are able to offer their low ticket fare because of good management-labor relations, fast turnaround time at the gate, faster speed of operations offered with smaller airports, and lower maintenance costs due to flying only one model of airplane. The strong leadership, strategy and culture that were built and are supported by Herb Kelleher, the former CEO of Southwest, support all these items that keep ticket fares low.
Max Nisen (2013) states that Southwest’s success comes from its founder and the emphasis that is put on culture and customer satisfaction. When Southwest started it focuses on short-haul flights at less congested airports. They didn’t offer any meals but did offer a snack of peanuts. With their short flights they didn’t require as many planes or gate facilities. All this boiled down to a low cost air travel that was able to compete with ground transportation services.
I would characterize their business model as keeping operations simple and consistent. Gary Kelly, the CEO of Southwest Airlines (SWA) is quoted as saying, “Our people are our single greatest strength and most enduring long-term competitive advantage”. The employees of SWA are just one example of how SWA business policy differs from other airlines. SWA has a best in the industry employee to ratio, the only hire 3% of those interviewed. They also offer profit sharing which encourages the employees to help make SWA successful.
Case Recap South West Airlines, in existence since 1971, has slowly grown its business by focusing on cheaper fares, excellent customer service and employee engagement. In 1994 it was declared eighth largest airline based on Revenue Passenger Miles (RPM) flown. In same year it recorded net income of $179.3 million with total operating revenue of $2.6 billion. It’s excellent low cost operations became model for Airline Industry. Other Airlines, such as United and Continental started copying Southwest’s operations model and competing directly with Southwest by introducing a concept called Airline-Within-an-Airline.
• Product Positioning: Operating under an intensely competitive environment, Southwest Airlines carefully projects its image so customers can differentiate its product from its competitors. Southwest positions itself in all its marketing communications as THE only low-fare, short-haul, high-frequency, point-to-point carrier in America that is fun to fly. Its low-priced fares are a brand equity which it "owns" in the mathematical sense of being the only major airline with a strong score on this attribute based on consumer research (Barlow, 2002). Southwest’s brand exudes an element of fun: a down-home attitude which it leverages to present the consequences of low fares in a positive light. "Dignify" might not be the first word one would think of to describe how Southwest treats passengers: no first class; no food other than peanuts; no assigned seats; no transfers of luggage to other airlines (Teitelbaum, 1992).
Those steps are truly deserved to be taken a shot with an aim of improving and maintaining Southwest’s unique core values and customer-attracted image. Question 1: Is there anything that you find particularly impressive about Southwest Airlines? Southwest is a lousy airline in domestic air travel in the United States, displaying the low fare for the vast majority of travelers. So as to retain the
Jet Blue took a unique approach to the solution of this problem and centered even more upon their customers. They now offer customer compensation for canceled or delayed flights. So because of their tendencies to focus on the happiness of their customers, they relished from their problem generally unscathed. 1) Cost leadership Jet Blue Airline’s targeted customer is someone who seeks low-cost flights and or is a frequent flyer. Either type of customer saves a great deal of money because they take advantage of Jet Blue’s cheap ticket prices to fifty-one destinations.
Running head: JET BLUE CASE STUDY Jet Blue Case Study Strayer University Debra P. Bolger January 27, 2012 BUS 599 Dr. Russell Jet Blue Case Study The United States airline industry includes roughly 600 companies with combined annual revenue of approximately 170 billion dollars (bts.gov). The major companies include American, Delta, and United Continental (bts.gov). There are air operations of express delivery companies such as FedEx and UPS. This industry is highly concentrated with the 10 largest companies accounting for more than 75 percent of industry revenue (bts.gov). The global airline industry generates about $500 billion annually (tbs.gov).