Problem Solution: Classic Airlines Abstract Classic Airlines is the world’s fifth largest airline (University of Phoenix, 2008). According to the UOP, it was reported as being profitable but face the challenges that plague today‘s airlines. The increase in uncertainty about flying has affected industry stock prices across the board, and Classic has seen a 10% decrease in share prices in the past year (University of Phoenix, 2008). There is a reported concern with the investment community placing the airline industry under a microscope in terms of operation thereby opening them up for scrutiny from all sectors. The negativity from Wall Street to the media to the public has affected employee morale and confidence in the organization bringing it to the lowest it has ever been in years. Consumer confidence also appears to be waning due to a decrease in the Classic Rewards program measuring a 19 percent decrease in the number of Classic Rewards members, and 21 percent decrease in flights per remaining member (University of Phoenix, 2008). It was evident that loyal customers were no longer committed to them and the ones still aboard seemed to be flying less frequently -- or at least less frequently with Classic Airlines (University of Phoenix, 2008). The rising costs, particularly of fuel and labor, have limited Classic‘s ability to compete for the valued frequent fliers. Problem Solution: Classic Airlines Classic Airlines fleet consists of more than 375 jets serving 240 cities with more than 2300 daily flights (University of Phoenix, 2008). Classic has grown to an organization of 32,000 employees in its 25-year inception and last year earned $10 million on $8.7 billion in sales (University of Phoenix, 2008). This paper will identify the problems in the case scenario and describe each one a separate from the others and numerically prove that the problem is a problem (in business anytime you lose money, it is a problem according to the guidelines by the lecturer, Prof. Ancis). To what business concept in the case study is the problem related to by justifying where in the case study is the concept/problem identified. In doing so, effort will be made to relate it to my personal experience as indicated in the guidelines provided. Problem Identification and Metrics One of the issues within Classic Airlines is that the company has experienced a 10% decrease in share prices (A share price is the price of a single share of a company's stock) in the past year.
The following value chain, which focuses on Spirit Airlines, is representative of most of the firms in the Ultra Low-Cost Airline industry. Spirit is the industry leader in many areas such as operational efficiencies/cost structure, aircraft fleet management, brand/network and growth. The firm, however, trails industry foes in areas such as customer service and operational reliability and recoverability. While most in this segment pursue the cost-leader competitive strategy, Spirit has demonstrated the most effective model to date – whether the model is the most sustainable remains to be seen.
Superheroes and villains are not commonly associated with airlines, but in the article “A Tale of Two Airlines” by Christopher Elliot, it is put into a different perspective. The two airlines in question are Spirit and Southwest. Although both have some similarities, they both have considerably different views on how to treat customers. Southwest practices treating customers with respect, while fares may be a little higher. Spirit’s beliefs are to treat customers “like cargo” with lower fares. With their friendly attendants and better overall customer interaction, this appoints Southwest as the hero, making Spirit our villain. Elliot makes his point by exclaiming the “heroes” should be rewarded with a higher multitude of passengers and the “villains” should not be granted this satisfaction.
The Airline Industry is a fascinating market. It has been one of the few industries to reach astounding milestones. For example, over 200 airlines have gone out of business since deregulation occurred in 1978. Currently, more than 50% of the airlines in the industry are operating under Chapter 11 regulations. Since 9/11, four of the six large carriers have filed for and are currently under bankruptcy court protection. Since 9/11 the industry has lost over $30 billion dollars, and this loss continues to increase. Despite the fact that the airline industry is in a state of despair, JetBlue has become the golden example, a glimpse of what the industry could be.
As Frontier approached its 10th year of operation, Frontier officials realized an image shift was in order. The airline had established a reputation for friendly and reliable service, and reasonable airfares, mainly appealing to leisure travelers. But they reali...
Since 1987, when the Department of Transportation began tracking Customer Satisfaction statistics, Southwest has consistently led the entire airline industry with the lowest ratio of complaints per passengers boarded. Many airlines have tried to copy Southwest’s business model, and the Culture of Southwest is admired and emulated by corporations and organizations in all walks of life. Always the innovator, Southwest pioneered Senior Fares, a same-day air freight delivery service, and Ticketless Travel. Southwest led the way with the first airline web page—southwest.com, DING, the first-ever direct link to Customer’s computer desktops that delivers live updates on the hottest deals, and the first airline corporate blog, Nuts About Southwest. Our Share the Spirit community programs make Southwest the hometown airline of every city we serve.
“Without change there is no innovation, creativity, or incentive for improvement. Those who initiate change will have a better opportunity to manage the change that is inevitable.” William Pollard’s, a 20th century physicist, words show us the power of being proactive, and igniting change to strengthen a company’s productive climate (Sellers, Boone, Harper, 2011). Acme Airlines flight attendants lacked incentive to improve the quality of their work, as a result of distrustful management and overall frustration within the company. Acme took successful steps to rebuild their FA program into a more relationship oriented work environment. Through an understanding of effective leadership, we will use the
In the airline industry, Southwest Airlines is considered a true innovator. By shaking up the rules of flying and improving upon inefficient industry norms, Southwest has quickly grown by leaps and bounds. From the very start, Southwest Airlines' goals were to make a profit, achieve job security for every employee, and make flying affordable for more people (Southwest,2007). Southwest has not strayed from these goals. It does not buy huge aircrafts, fly international routes or try to go head to head with the major carriers; and thanks to a great planning, Southwest airlines has become the most successful airline company in the U.S., if not the world.
For years, Southwest Airlines has been experiencing stable costs, low fares and traffic stimulation. However, the latest changes in the marketplace (See Exhibit 1: SWOT Analysis), including the higher energy costs and the entrance of new low fare/cost carriers are threatening the future of the airline. As a result, LUV needs to decide whether or not to acquire the slots and gates from the bankrupt ATA Airlines at LaGuardia (LGA) terminal in New York City (NYC) in order to expand its capabilities.
Airline and travel industry profitability has been strapped by a series of events starting with a recession in business travel after the dotcom bust, followed by 9/11, the SARS epidemic, the Iraq wars, rising aviation turbine fuel prices, and the challenge from low-cost carriers. (Narayan Pandit, 2005) The fallout from rising fuel prices has been so extreme that any efficiency gains that airlines attempted to make could not make up for structural problems where labor costs remained high and low cost competition had continued to drive down yields or average fares at leading hub airports. In the last decade, US airlines alone had a yearly average of net losses of $9.1 billion (Coombs, 2011).
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.
It has stayed relevant to the market through its propelled philosophy of relationships to generate profits in the business. Since its establishment in Monroe, Louisiana the once tiny airline has stretched to greater heights serving in 6 continents. It has also established a distinguishable name among its competitors with a reputation of leading customer services. However, even as an established venture, the company needs to maximize its profits in order to stay in business and expand in to new territories beyond its conquered boundaries. A strategic analysis was carried out by our team to establish the company’s current situation. A SWOT analysis was performed to come up with three referenced, strategic alternatives. This alternatives are meant to act as a strategic guidance to the company in order to enhance growth. The strategic recommendation provided will improve and enable the business to cope with the competitors while the implementation of the strategy section will outline the way to go about achieving these alternatives in the business setting. Lastly, we put up a discussion on the evaluation procedures and necessary controls for the
There is an enormous prospect for the Pkolino Company to start a business. The current task has adequate resources and a great plan to keep it operational. Nevertheless, dangers that might plunge Pkolino Company into financial disaster are also present. This is due to the fact that there are always a couple of things that tend to advance in an unanticipated direction even in a well- planned plan. For instance, P’kolino Company’s financial statements do not have provisions for the worst, average, and best scenarios.
The mission of Southwest Airlines is a dedication to the highest quality of service delivered with warmth, friendliness, individual pride, and company spirit (Mission…, 2007). The company also provides opportunities for learning and personal growth to each employee. Creativity and innovation is very important and highly encouraged, for the purposes of improving effectiveness. Employees are to be provided the same concern, respect, and caring attitude within the organization that the employees are expected to share with the customer. Southwest Airlines was initially created to be a low-cost alternative to high price of intra-Texas air carriers (Freiberg, 1996). Southwest’s fares were originally supposed to compete with car and bus transportation. It was a little airline, and it would withstand the test of time. As a discount, no-frills airline, it would provide stiff competition for larger airlines. Their strategy was to operate at low cost, offering no food, no movies, no first class, and no reserved seats. They created their own market and provided increased turnaround times at the gate, by avoiding hub-and-spoke airports and opting for short-haul, direct flights. Through this market approach, Southwest has a majority of market share in the markets they serve.
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). Since its first grand opening in 1971, Southwest Airlines has shown steady growth, and now carries more passengers than any other low-cost carrier in the world (Wharton, 2010). To expand the business operations, Southwest Airlines took over AirTran in 2010 as a strategy to gain more market share for the Southeast region and international flights. However, the acquisition of AirTran brought upcoming challenges both internally and externally for Southwest Airlines. In this case analysis, the objectives are focusing on the change process post the merger with AirTran, and evaluating alternatives to address the impacts of the merger.
In a dysfunctional time for the airline industry, most airlines, especially major carriers, are adapting the concept of "doing less with more." One low-cost carrier, JetBlue, is changing the domestic aviation landscape in this regard and is defying the odds. Here is a company that has examined each marketing mix elements carefully, has adapted them to its customer’s needs, and is succeeding because of this approach.