Southwest vs JetBlue the Airline Industry Is Essay

Download this Essay in word format (.doc)

Note: Sample below may appear distorted but all corresponding word document files contain proper formatting

Excerpt from Essay:

Southwest vs. JetBlue

The airline industry is one that has rapidly evolved both with regards to technology and product offerings. This paper argues that technological advancements, deregulation and competitive pricing and marketing strategies are what have driven change in regards to both Southwest airlines and JetBlue. Segmentation, targeting and positioning have also played a profound role within the evolution of the industry. Many companies, particular those that are broad-based have experienced difficulties from more niche players. Low cost producers such as JetBlue and Southwest have developed targeted strategies that cater to a specific market. The paper goes on to explain how each of these factors affects and drives change in the other three. Deregulation occurred to increase competition; competition in turn affects innovation in marketing and pricing as well as technology, yet this process has no specific order with regards to where the change starts as innovation and competition, can then affect the way the market is regulated (Morrison, 1995). The document first begins with a comprehensive industry analysis which discusses pricing changes and segmentation within the market. Yet with the advent of the Internet, brick and mortar travel agencies became basically obsolete as more and more passengers began choosing the cheaper online alternative. This new technology cut out the middleman, and also allowed airline industries to diminish their own costs by diminishing personnel, as they developed company websites from which the passengers could purchase flight tickets. The Internet also allowed airline companies to develop dynamic pricing models, where they could monitor their competitors' price and respond with a lower price. The price of airfare has significantly dropped due to this as travel agencies no longer require a percentage of the final sale, but rather purchase the tickets at lower prices and only sell when demand is at its highest. Innovation has played a massive role in pricing strategy. The presence of innovative individuals such as David Neeleman, founder and CEO of JetBlue, has revolutionized the industry. JetBlue has been extremely influential and has been able to reduce and change fixed and variable costs, while focusing on a good marketing strategy that has ensured brand loyalty. To discuss some of the many innovations that were put forth by David Neeleman, this paper dedicates a section to the marketing analysis of JetBlue. Finally the document establishes the competitive dynamic between Southwest and Jet Blue as it relates to positioning, pricing, segmentation and overall competition.

Key External Factors

Fiscal and Monetary Policy

To begin, key external factors affecting the airline industry pertain mainly to economic circumstances. One economic issue prevailing in the United States is that of rapid fiscal and monetary stimulus and its inflation implications. Currently, due in part to prevailing market conditions, governments have embarked on a path to massive fiscal ease. Governments, including the United States, Japan, Europe, and China have all engaged in massive stimulus operations. These operations are designed to help build consumer confidence while also enhancing the overall appeal of risky asset classes. For instance, the United States has kept interest rates near 0% for the past two years with an expectation of low interest rates until 2015. This low interest rate environment makes alternative assets such as stock, bonds, and real estate more attractive on a relative basis. High dividend paying stocks for instance, offer a yield of roughly 3% which is nearly double that of the 10-year treasury. These massive stimulus efforts however, have yet to enhance economic activity as previously anticipated. As such, the massive asset purchases created by the government may result in rapid inflation as more currency is circulating in their respective economies (Robert, 1988). As governments continue to print money, the relative value of this money will continue to decline, ultimately harming the consumers it was intended to help. Furthermore, this low interest rate environment is harming those who depend on their savings to generate income. With interest rates at record lows, and savings accounts generating very little income, inflation will erode the purchasing power of these savings. As such, it is my contention that the government should reframe from massive amounts of stimulus as the threat to consumers is very large in regards to inflation. This threat to consumers comes in the form of rising commodity prices which are ultimately passed on to customers. One of the largest expenses for the airline industry is…[continue]

Cite This Essay:

"Southwest Vs JetBlue The Airline Industry Is" (2012, November 04) Retrieved December 8, 2016, from http://www.paperdue.com/essay/southwest-vs-jetblue-the-airline-industry-82964

"Southwest Vs JetBlue The Airline Industry Is" 04 November 2012. Web.8 December. 2016. <http://www.paperdue.com/essay/southwest-vs-jetblue-the-airline-industry-82964>

"Southwest Vs JetBlue The Airline Industry Is", 04 November 2012, Accessed.8 December. 2016, http://www.paperdue.com/essay/southwest-vs-jetblue-the-airline-industry-82964

Other Documents Pertaining To This Topic

  • Airline Industry Flying Full Service on

    4). The return on this modest investment was impressive: "We saw that mobile is five-to-ten times more effective than online advertising" (Butcher, 2009, para. 4). The contest also increased visitors to the company's WAP site (Butcher, 2009). 7. Description of Location The same location will be used for the envisioned marketing campaign as the "Back for a while" initiative which targeted Hispanic males and females ranging in age from 27 to 45

  • Airline Industry Has Become Increasingly

    By the turn of the century, though, these low-costs carriers had become profitable or at least had significantly reduced their losses due in large part to concomitant increases by major carriers that were increasing their prices in response to decreasing yields and higher energy prices (Doganis 2001). By and large, passenger traffic across the board increased significantly prior to September 11, 2001 and all signs indicated it was continue to

  • JetBlue Launched Its Business With

    many of its rivals. Its high debt load contributes to its cost disadvantage. The corporate culture does not give it a competitive advantage. JetBlue's culture is easily replicated by any other airline and provides no particular benefit that the customer appreciates. They lag Southwest in this regard. The human resource practices work to make the firm functional, but again JetBlue does not do anything unique that adds sustainable value

  • Monopolies vs Competition in a

    Instead, IBM began to falter after a series of product failures. As a result, many companies gained market share against IBM with some even over taking it; an efficient market took care of the issue. Yet, another example of why government should not interfere with market structures is the airline industry. After 1978, the airline industry was quickly transformed into an oligopoly market structure where only a half dozen or

  • Porter s Five Forces Industry Life Cycle Resource Based View of the...

    Airline Industry Porter's Five Forces Porter's Five Forces: Airline industry Threat of new entrants A number of new, low-cost carriers have entered the airline industry in the wake of deregulation of the airline industries, including Southwest, Jet Blue, and Spirit Airlines. At present, barriers to entry within the industry are higher than, for example, entering a small, local pizza market. But barriers are lower than before and recent "congressional mandates aimed at increasing competition

  • Description of American Airlines

    Scheduled annual ASMs went up from 300 billion in 1978 to more than 700 billion by 2000. (Tam; Hansman, 2003) Of late, the close association between economic growth and the demand for air traffic travel also led to unprecedented traffic loads and profits for the airline industry during the economic growth cycle during the later part of 1990s. The rise in the airline industry following deregulation and the average decline

  • Economics of Southwest Airlines

    Economics of Southwest Airlines A Brief Economic Analysis of Southwest Airlines Today Southwest Airlines was incorporated in 1967 and has its headquarters in Dallas. It is a U.S. airline that offers domestic point-to-point service; as of December 31, 2004, the company operated 417 Boeing 737 aircraft, with service to 60 airports in 59 cities in 31 states (Southwest 2); the company also has at least another 261 Boeing 737-700s on order (Comerford


Read Full Essay
Copyright 2016 . All Rights Reserved