Essay PreviewMore ↓
Innovative people dedicated to delivering the best flying experience to smart travelers. Every day.
Suggested Mission Statement:
Innovative, vital, impervious, and customer oriented firm striving to service smart travelers. Every day.
Our mission is to maintain our profitability in face of rising competition and fuel cost.
“AirTran Airways, a subsidiary of AirTran Holdings (NYSE: AAI), is a low-fare airline designed for business travelers, offering Business class, new planes with XM Satellite Radio and EasyFit Overhead Bins, assigned seats, and our accommodating frequent flier program A+ Rewards. AirTran Airways' mix of low fares and an affordable Business Class with excellent customer service and one of the world's youngest all-Boeing fleets has continued to strike a chord with the public.” (www.airtran.com)
Internal Factor Evaluation Matrix
Weight Rating Weighted Score
1. Remaining Profitable .18 4 .72
2. High Service Quality .14 4 .56
3. High Plane Utilization .11 4 .44
4. Large Airport Presence .07 3 .21
5. Young Airline Fleet .03 3 .09
1. High Operating Cost per ASM .18 1 .18
2. Concentrated to East US .10 2 .20
4. Low Ratings in Select AQR Categories .04 2 .08
5. Highly Dependent on Fuel .06 2 .12
• AirTran needs to remain profitable, both to survive but more importantly to keep investor interest and confidence.
• High service quality is key for AirTran to keep a recurring customer-base healthy.
• Especially important in AirTran’s low-cost strategy, utilizing planes to their fullest potential is key.
• AirTran has a high airport presence throughout eastern United States.
• AirTran benefits from a young airplane fleet through cost savings, quality and marketing efforts.
• A major weakness of AirTran is its high operating cost per available seat mile compared to other low-cost providers like Southwest and JetBlue.
• Through increased competition, especially Southwest, AirTran is only available mainly in the eastern United States. Customers needing to travel to the western US probably will choose another airline that could create brand loyalty for another airline.
• Even though AirTran received a high position in airline quality rating (AQR) there are still areas that AirTran lags in, like on-time performance and denied boardings performance.
• Although mainly out of AirTran’s control, their income and costs are highly associated to the cost of fuel.
AirTran is doing fine overall with respect to its internal strengths and weakness. Key areas to improve are its high operating cost per available seat mile (ASM), domestic and internal presences and other minor areas.
External Factor Evaluation Matrix
Weight Rating Weighted Score
1. Decrease Operating Cost per ASM .18 2 .36
2. Increase US Presence .15 3 .45
3. Increase International Presence .11 1 .11
4. Increase Select AQR Ratings .05 2 .10
5. Add Consumer Technologies to Fleet .03 2 .06
1. Increased Competition .2 3 .6
2. High Fuel Costs .14 3 .42
3. Increasing Labor Costs .06 2 .12
4. Political Policies .04 4 .16
5. Labor Strikes .04 4 .16
1. A major opportunity for AirTran to drastically increase income would be to decrease their operating cost per available seat mile (ASM).
How to Cite this Page
"AirTran Airways." 123HelpMe.com. 20 Mar 2019
Need Writing Help?
Get feedback on grammar, clarity, concision and logic instantly.Check your paper »
- In 1971 Southwest Airlines started their operations with a vision of being a low cost/low fare carrier for passengers traveling between San Antonio, Dallas and Houston. After early legal battles and struggles gaining market share, their fighting spirit, integrity and will to succeed paid off. Over the course of the next 40+ years, Southwest has become the world’s largest low-cost carrier, while carrying more domestic passengers that any other U.S. airline (“Southwest Corporate,” 2015). Their culture, values and operating practices are what have driven this company to its current success and will continue to do so for the foreseeable future.... [tags: Airline, Southwest Airlines, AirTran Airways]
1512 words (4.3 pages)
- JetBlue Airways IPO In April 2000, JetBlue first started in New York City’s John F. Kennedy Airport. Even after the 2001 terrorist attacks, company remained profitable and was growing aggressively. To support their growth and offset portfolio losses by their venture capital investors, management was ready to raise additional capital through a public equity offering.... [tags: Business Analysis ]
1133 words (3.2 pages)
- TABLE OF CONTENTS PAGE 1. British Airways: Overview 4 2. Key stakeholders 4 3. Mission and objectives 5 4. Market structure 6 5. Managing diverse cultures 7 6. Economic changes, fiscal and monetary policy 8 7. Regulation 11 8. Conclusion and Recommendations 12 9. References 14 Executive Summary British Airways has focused its mission and objectives towards satisfying its key stakeholders that include employees, customers, Government and the British public. The company has been successful in dealing with cultural differences that arise between the UK and foreign countries, adopting a geocentric approach to hiring workers.... [tags: British Airways Case Study]
3318 words (9.5 pages)
- 6.0 EXTERNAL ANALYSIS The industry for Qantas Airways Limited is a company that guides a long distance in airline, which is in international and domestic location. Qantas Airways Limited is a company that established as a world airline that comes from Australia. 6.1.0 GENERAL ENVIRONMENT ANALYSIS General environment was the most environment need to cover up and adapt to doing business, which is the business is stable or not. To determine the general business environment for Qantas Airways Limited company, there need to know a several factor which is the economy, social cultural, global, technological, political-legal and demographic factors.... [tags: Airline, Qantas, British Airways, Oneworld]
1587 words (4.5 pages)
- Objectives of the Report The focus of the report is on the various strategies adopted by the two airlines viz. Emirates & British Airways in the various markets they operate and provide their service and are looking for growth opportunities across globe. o Intercepting various strategies adopted by the airlines with regards to marketing in different countries o Regional differences and Cultural factors o SWOT analysis for each airlines o Porters Five Forces acting upon each airline EMIRATES Emirates is a Dubai, United Arab Emirates, based airline and is one of the subsidiaries of the Emirates Group which is owned by the Government of Dubai’s Investment Corporation.... [tags: Analysis of British Airways]
1741 words (5 pages)
- Introduction In recent years, many corporations have noticed the importance of the environmental responsibility apart from gaining the profit. Quazi et al. (2001) list out some points the corporations would tend to adopt Environmental Management System such as the concern on the board management, saving the cost, attaining the international environmental fulfillment, meeting customer expectations, etc. Therefore, they would invest a portion of resources to manage and improve the environmental performance with different methods.... [tags: Cathay Pacific Airways]
1858 words (5.3 pages)
- I. Introduction Southwest Airlines has come from an underdog to being one of the best airlines in the industry. This reputation translates from its strategic management of resources. The Co-founder and former CEO, Herb Kelleher, established a unique corporate culture that leads to high customer satisfaction, employees’ morale, and one of the most profitable airlines in the industry (Jackson et al., 2012). The corporate culture concentrates on empowerment the workforce. It shows through Southwest Airlines core values that “happy employees lead to happy customers, which create happy shareholders” (Jackson et al., 2012).... [tags: Case Study]
1448 words (4.1 pages)
- British Airways PLC British Airways British Airway’s PLC is the largest international airline in the world. It is based at Heathrow airport in London, the busiest international airport in the world, and has a global flight net-work through such partners as USAir in the United States, Qantas in Australia, and TAT European airlines in France. Via its own operational and those of its alliance partners, British Airways serves 95 million passengers a year, using 441 airports in 86 countries and more than 1,000 planes.... [tags: Business Management Studies]
1536 words (4.4 pages)
- Introduction: Accounting is the pillar of every company to measure its growth, loss, revenue , capital, its really specify the real terms in foam of figures and sometimes in tables, in accounting there are certain rules are obtained to make more accuracy while playing with figures. To apply and the all ‘ rules of game‘of an business we taking an aviation company known as “Jet Airways” before we get into, here are some intro points about this company. History: Jet Airways was found in 1st April 1992 by Mr.... [tags: Case Study]
1939 words (5.5 pages)
- INTRODUCTION JetBlue Airways entered the market in 2000 from a position of financial strength, leadership capability and several rare advantage points uncommon to others in the industry: 1) David Neeleman, the founder, had several years of industry experience as a result of having successfully launched and sold an airline (Morris Air), bringing both explicit and tacit knowledge into the his new venture; 2) Neeleman was afforded the opportunity to work directly with his idol, Herb Kelleher, at Southwest Airlines (the king of the low-cost leaders) after Southwest purchased Morris Air from Neeleman; and 3) Substantial financial support from venture capitalists who had funded Neeleman's pre... [tags: Airline Industry]
1679 words (4.8 pages)
2. AirTran has a major opportunity to expand drastically its US presence by moving airport terminals westward.
3. As noted in the milestones, AirTran is beginning service to Cancun, a popular vacation destination, but with increased competition AirTran needs to diversify its offerings.
4. One major opportunity to gain and keep loyal customer is to continue to improve its airline quality rating (AQR). Even though AirTran is currently rated number 2 there are still areas that could use improvements.
5. One way to gain customer loyalty through increased competition is to offer more consumer technologies and luxuries. AirTran is already incorporating XM Satellite radio into each plane, but other technologies could include iPod hookups for each seat and even in-cabin internet access (wired or wireless) for laptops.
1. The largest threat to AirTran is the increased competition with the low-cost sector and the industry itself.
2. AirTran is highly dependent on the fluctuations of fuel costs. Since fuel is one of the largest costs to AirTran a slight adjustment can mean the difference between a loss and a profit.
3. Along of fuel, labor costs are one of the largest costs to AirTran and a slight adjust can mean the difference between a loss and a profit.
4. Political policies enforced by the US and other countries in which AirTran operates can have a huge impact on the company as a whole. With terrorism a top priority of the government, new policies can cause a huge burden on AirTran for new technologies or more labor costs (security, maintenance).
5. As with any business labor strikes can halt a company’s operations causing the company to loose millions in revenue.
AirTran is performing average in their external environment. Most of AirTran’s opportunities and threats need to be addressed more aggressively, such as decreasing operating costs, expanding internationally, and increased competition.
Competitive strategies for AirTran include the following:
AirTran is seeking to increase market share in its current markets through increased marketing efforts and capacity. AirTran was voted the “Best Airline Website” in 2004 that showcases AirTran’s efforts to increase its market share. Along with marketing efforts, AirTran is expanding its capacity by replacing airplane galleys with seating. Adding extra seats per flight increase the amount of revenue per flight and also decreases cost per passenger per flight.
AirTran is trying to expand from its eastern US concentration into western US and international to popular vacation spots like Cancun, Mexico.
AirTran is improving its present airplanes with consumer technologies like XM Satellite Radio for each passenger free of charge.
In an industry of decreasing profits and increases costs, AirTran is trying to find ways to cut its “fat” by outsourcing mechanic work.
Ratios derived from 2004 data
AAI Industry (RMA, SIC 4512)
L M H
Current Ratio 2.04 .60 1.1 1.6
For every dollar of current debt (liability), AirTran has $2.04 of current assets to pay for that debt. This number is above the industry average of 1.1, meaning that AirTran is doing a great job of managing its assets.
Quick Ratio 1.9 .40 .70 1.1
For every dollar of current debt (liability), AirTran has $1.90 of current assets, not counting inventory, to pay for that debt. Again this number is above the industry’s average of .7 meaning that AirTran is doing a great job of managing its very liquid assets.
For every dollar of assets, AirTran has $.63 of debt issued.
Debt-to-Equity 1.71 -4.6 .90 1.8
For every dollar of equity, AirTran has $1.71 in debt. Compared to the industry average of $.90 AirTran is doing very good.
Long-term Debt-to-Equity 1.11
For every dollar of equity, AirTran has $1.11 of long-term debt issued. Compared to the previous ratio, this shows that most of AirTran’s debt is long-term.
Times-Covered Ratio 1.69 2.2 4.5 10.6
For every dollar of interest, AirTran has $1.69 to pay for those interest charges. Compared to the industry, AirTran is far below the industry.
Note: The number, 1.69, may be artificially deflated since there is income earned from interest.
Inventory Turnover 36.79
For every dollar in inventory, AirTran generates $36.79 in sales. This number is artificially inflated and contains little value since AirTran is primarily a service company and little inventory is stocked.
Fixed Asset Turnover 2.71 1.4 3.6 8.9
For every dollar of fixed assets, AirTran is able to generate $2.71 in sales. This is average compared with the industry average of $3.60. This number for AirTran may be low due to the high costs/ worth associated with their young airplane fleet.
Total Asset Turnover 1.15 1.0 2.1 3.0
For every dollar of assets, AirTran is able to generate $1.15 in sales. This below average compared to the industry average of $2.10. Compared to the previous ratio, AirTran must have a greater amount of current assets (cash and non-fixed assets).
Capital Intensity Ratio .87 1.0 .48 .33
AirTran needs $.87 in assets to generate a dollar in sales. This is quite high compared to the industry average of $.48. This ratio confirms that AirTran needs to reduce its operating costs, which is one of its weaknesses. Reducing this number will greatly improve AirTran’s profitability.
Gross Profit Margin 3.15%
For every dollar of sales, 3.15% of the sale goes into AirTran’s gross profits. This number seems extremely low, but it is confirmed by AirTran’s high operating costs.
This number was determined by (Sales Revenue-Operating Expenses)/ Sales Revenue. “Cost of Goods Sold” was not used because AirTran’s costs are mainly operation related (fuel, labor). Therefore, using cost of goods sold would artificially inflate AirTran’s gross profit.
Net Profit Margin 1.18%
For every dollar of sales, 1.18% of the sale goes into AirTran’s net profit, profits after taxes and interest. This is directly related and could be increased by decreasing AirTran’s overly high operating costs.
Return on Total Assets .01
For every dollar of assets, AirTran is able to generate $.01 of net income. This number is horrible; AirTran needs to more efficiently utilize its assets.
Return on Shareholder’s Equity .04
For every dollar of equity, AirTran is able to generate $.04 of net income. Again this number is horrible; AirTran need to better utilize its equity.
I would recommend that AirTran continue its expansion into other domestic and international markets, and to work hard to decrease is operating costs per available seat mile (ASM) to better compete with its competition, notably Delta Air Lines.
AirTran Airways, a Fortune 1000 company, offers more than 700 affordable, daily flights to 58 U.S. destinations. With 8,900 friendly Crew Members and America's youngest all-Boeing fleet, AirTran Airways provides XM Satellite Radio and Business Class seating on every flight. For more information and free online booking, visit http://www.airtran.com .
Shares of most airlines fell Friday along with the broader market, as the price of oil jumped more than $1 a barrel and several airlines reported their March passenger traffic results.
30% oil price increase in past 6 months