Airline Asset Usage American Airlines utilizes a hub-and-spoke system to better serve the small communities. Many flights that are offered through American would require a connection through one of their hubs. American has placed it footprint in 5 great locations, John F. Kennedy, Chicago O’Hare, Dallas/Fort Worth, Los Angeles, and Miami International, to offer the best viable solution to any one traveler’s needs (Horton, 2013). By using the hub-and-spoke system, American can offer an exponential amount of locations to travel to for a reduce cost (Combs, 2003). Although this may save time and money for the consumer as well as the business, the negative aspect would be the extended duration in travel for the customer. For an airline to continue to operate efficiently to a multitude of locations there has to be a quality scheduling system in place. There are many considerations that need to be taken into account before this can be done. Traffic flow, salability, schedule adjustments, time zones, chain reaction effect, and load-factor leverage are of the primary to ponder when m...
On January 25, 2011, Egypt dissolved into protests--a revolution thirty years in the making. The quasi-middle class (not comparable to the American standard of a middle class) of college educated youths and the working class united based on the culmination of years of corruption and abuse and the sparks that the Tunisian Jasmine Revolution and the 2011 Alexandria New Year’s Day bombings represented. The “Five Stages of Revolution” model can be applied to Egypt’s revolution, as well as some aspects of the J. Brown Paradigm of National Development, such as the Identifiable People Group, presented themselves throughout Egypt’s conflict.
Southwest Airlines strategy of focusing on short haul passenger and providing rates as low as one third of their competitors, they have seen tremendous growth in the last decade. Market share for top city pairs on Southwest's schedule has reached 80% to 85%. Maintaining the largest fleet of 737's in the world and utilizing point-to-point versus the hub-and-spoke method of connection philosophy allowed Southwest to provide their service to more people at a lower cost. By putting the employee first, Southwest has found the key to success in the airline business. A happy worker is a more productive one as well as a better service provider. Southwest will continue to reserve their growth in the future by entering select markets only after careful market research.
On the surface, the players in the U.S. Airline Industry appear to be in an enviable industry filled with glamorous perks and a solid business model. However, analysis paints a different story. Digging deeper reveals significant issues with little possibility for industry wide solutions, therefore making the industry unattractive.
These cheap, no frills carriers have revolutionized the airline industry, making European and worldwide travel affordable for all and forcing the established brands to take a long hard look at their operations. There is no doubt that this low-cost model has been a resounding success. However, some airlines have experienced considerably more success than others.
More than 37 years ago, Rollin King and Herb Kelleher got together and decided to start a different kind of airline. They began 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. And you know what? They were right. What began as a small Texas airline has grown to become one of the largest airlines in America. Today, Southwest Airlines flies over 104 million passengers a year to 64 great cities all across the country, and we do it more than 3,400 times a day.
The airline industry is fragile and especially vulnerable due to increase security demands, the cost of fuel with limited resources, highly expensive industry, very highly regulated industry, and labor intensive industry. Despite the vulnerability of this industry Southwest Airlines has managed to survive despite the odds, when larger airlines were forced to merge, have huge lay-offs of employees and some even when under. It is interesting to review just how Southwest Airlines survived the rapid changes, while presently recognizing a growth spurt.
flexibility with geographical area and time. In order to sell that flexibility and time, airlines have
The airline industry as a whole has a long list of services required for overall economic market success. Alaska Air has endeavored to lead the way in both service and maintenance. They unwillingness to settle on the lowest acceptable form of service has allowed them to build a loyal customer base. By adapting to a unique market and learning to balance cargo and air passenger travel, they have learned not only to survive, but thrive in what is considered a “limited” operating area.
Before to select the proper alternative, three alternatives were analysed and evaluated under four decisions criteria: customer experience, cost, growth rate / market penetration and ease to implementation (See Exhibit 2: Factor Analysis). Between all the alternatives, it was suggested that Southwest Airlines enters to New York City by bidding the slots and gates at the LGA (See Exhibit 3: Alternatives Analysis). This alternative sustains the challenge of changing the customer experience which means adding more flights from and to the East; furthermore, entering to new markets will reinforce “the power of the network” through LGA. At the same time, this decision will allow signing more code-sharing agreements with other airlines flying to international destinations and offer new products and services to LUV customers as loyalty rewards, in-flight internet, onboard duty-free purchases, etc.; as a result of this, it will increase passenger’s insights and experiences by flying with Southwest Airlines. Nevertheless, there is potential risk by selecting this alternative, in the recent years the energy prices has had a huge increase affecting costs, fares and even capacity needed, however Southwest Airlines has been able to hedge fuel for decad...
In order for revenue management to be successful, four fundamental conditions must be met. The first requires a permanent amount of supply available for sale. Meaning, a fixed amount of seats per aircraft should be available per route. Second, resources sold must be perishable. Seats are a perishable items, if not sold they terminate without value. Third, the most vital portion of r...
Gittell, J. H. (2003). The Southwest Airlines Way: Using the Power of Relationships to Achieve High Performance. New York: McGraw-Hill.
The basis for Value Creation of a classical hub-organised airline consists of its operating hub and spoke strategy. This system implies that all flights move along spokes connected to a hub placed at the centre. In fact all long-haul flights depart from the hub, to which all passengers are flown in the first place. Therefor it is necessary to own a heterogeneous fleet to secure an outstanding efficiency of the long distance flights. To have an attractive and used to capacity hub at one’s disposal is the linchpin of the entire operation. For this purpose it is extremely important for the airline to possess a high percentage of the airport’s available slots and gates which represent a distinctive key resource in this dynamic industry. Some of the major flag carriers own their capacities for decades through the protection by the grandfather rule which signifies a competitive advantage in this infrastructure restricted industry. Besides this, human capital can be seen as another crucial resource. This relates on the one hand to a capable and motivated workforce and on the other hand on the management. Foremost to cope with the extensive scheduling of a hub demands a high degree of management skill which decides of the success or failure of the operations. In addition the fact that hub-organised airlines control such a significant number of slots leads to a high negotiation power with this airport. Furthermore customer retention and loyalty is of great importance for a flag carrier, because their passengers are normally less price sensitive than low-cost carriers’ customers and are consequently able to fly more often. This goal can be achieved for instance by excellent customer service, frequent flyer programs and strong brand reputation. The mentioned capabilities apply best to long-haul traffic and business travel. The reasons therefor are that business passengers are willing to pay higher prices for more convenience and service on board which is also true for long distance flights where entertainment, food and service in general get more important. Accordingly this leads to higher yields for the airline. This does not fit for price-conscious customers, because they prefer cheaper flights.
The complex nature of commercial aviation creates immense gaps and obstacles for organizations, like United Airlines, to address. Given that demands for lower travel cost have caused “since the 1950s, airline yields (defined as the average fare paid by a passenger per kilometer) [to] consistently [drop]” companies have had to search out alternatives to continue to operations (Clayton, 2014). Thus, creating throughout the industry a growing pressure to reduce costs and improve
The following report provides an understanding concerning the Airline Passenger Reservation System. It will briefly discuss the advantages associated with integrating the system across the airline industry and what and where are the potential gains.
The aviation industry has witnessed key structural changes over the past few decades (Dennis, 2007). Notably, the changes have seen the rise of low cost carriers otherwise known as budget carriers. The low cost airlines have significantly won the support of many startup airlines leading to their spread all over the world into both the long-and short-haul markets. This phenomenon has resulted in a change in the competitiveness of major airlines in the industry (Dennis, 2007). Since the budget airlines charge low on ticket prices, the lost revenue is recovered through food, seat allocation and priority boarding. A good example of low cost carriers is the Southwest Airlines that operates in the United States.