AirTran Continue Successful to Be Successful in This Highly Competitive Industry?
The objective of this study is to answer the question of whether AirTran will continue to be successful in this highly competitive industry.
According to Rouse (n.d.) in her work on AirTran Holdings, Inc., the ability of AirTran Airways to grow in the worst environment for the airlines in a long time and stated to be an unexpected turnaround. The stated strategy of AirTran is the development of a brand identity that is innovative in nature and that distinguishes it from other low-fare and full-service airlines. Two segments are reported to be targeted by AirTran: (1) price-sensitive travelers; and (2) leisure travelers, in the eastern U.S. (Rouse, 2005) AirTran also has a business class product reported to be equal to the first class service of its competitors.
Primary Services and Elements
Products of AirTran include: (1) a frequent flier program -- A+…...
Taken together, all these economic factors are making the turn-around of the losses AirTran is experiencing extremely difficult. The reductions in employees will not fix the more systemic and more strategic issues the company faces; it will however buy them time to get their fundamental business reorganized and downsized to a point where they can operate profitably given the severe constraints on their business today. It is a very tough time to run an airline today as is shown in the article.
The greatest challenge internally is to keep the existing employees motivated and focused on working productively while 480 job cuts were announced for September of this year. Everyone is literally wondering if they will be let go, and in this type of environment, not much work is going to get down. The article states that "the announcement comes less than a week after AirTran said it would seek…...
Overall, AirTran Airways has successfully achieved high profits, which are consistently growing on an annual basis. This growth is due in great part to the effective marketing and promotional activities developed and executed by the company. Whether it be promotional campaigns aimed at specific target markets, such as youth or business travelers, or through sales campaigns aimed at attracting customer of all types through the promotion of low fares, AirTran has been able to effectively balance the "four P's" of the marketing mix, in order to attract customers while still earning profits and keeping costs low. The growth and development of the marketing and promotional strategies utilized by AirTran Airways could serve as a positive model for other airlines, as well as other business within the hospitality and customer service industries.
eferences
No Author Given (2007). The Marketing Mix: The 4 P's of Marketing. NetMBA, retrieved 6/17/2007 at http://www.netmba.com/marketing/mix/.
Another is high labor productivity, yet another is high asset utilization. The net result is that AirTran has one of the lowest levels of cost per ASM in the industry.
In terms of weaknesses, one major weakness is that AirTran has no discernable source of sustainable competitive advantage. Its success to date has been based on its ability to combine many small sources of advantage into a single airline. Yet, none of these sources can be considered sustainable in the long run. The industry is highly competitive. Competition comes from all manner of airlines both domestic and international. Any or all of these competitors and potential competitors, including new entrants, could replicate AirTran's success factors.
AirTran also has a high level of debt, the bulk of which derives from debt and lease obligations on their fleet. They presently hold over $800 million in debt on their balance sheet. The debt-to-equity ratio…...
Another issue is the legal/political power that Southwest has (or does not have, in relation to its rivals). Ultimately, the company has suffered as the result of the right Amendment, and it needs to leverage its current size to fight back against American Airlines over this legislation. Not only should Southwest fight for the amendment to be repealed in its entirety and immediately, but it should fight for punitive action against American Airlines and DF airport. A civil suit against these parties for the financial harm caused to Southwest could prevent them from undertaking such illegal and unethical actions in the future and could help Southwest to put AA out of its misery. Lastly, Southwest has had problems with its maintenance. The company spends a lot less than any of its rivals on maintenance, and while its accident in Chicago was ruled the result of pilot error, concerns over…...
Southwest Airlines has been a highly successful airline, it has been one of the most successful airlines in U.S. history with the low cost carrier model created by Southwest emulated successfully by many other airlines across the world. Today it is the largest domestic carrier in the U.S. And has a history of consistent profits, with on a few quarters in the recent recession showing losses (Southwest Airlines, 2013). There are numerous reasons behind the success, the main reason are the leadership and the way that the firms ability to gain and maintain effective competitive advantages. These will provide a good basis from which to consider the future of the firm.
Effectiveness of Leadership
Southwest Airlines was founded by ollin King and Herb Kelleher, having seen successful interstate airline operating out of California it was believed that Texas could also support an interstate airline (Barratt, 2008). The idea was to…...
Bryant, E, (2008, Dec), Leadership Southwest Style, T+D, p36-39
Mintzberg Henry, Ahlstrand Bruce, Lampel Joseph B. (2011), Strategy Safari: The Complete Guide Through the Wilds of Strategic Management, Financial Times / Prentice Hall
While luggage fees produced nearly $1.7 billion for the industry, Southwest drew the line. It made its Bags Fly Free strategy the focus of its promotion and advertising campaign (Mouawad, 2010).
Southwest's principal challenge going forward is going to be merging with AirTran and continuing to realize growth. The attainment of AirTran Airways by Southwest Airlines will join together two huge corporations and generate one even grander low cost transporter. The joint carrier will profit from superior markets of degree and the incorporation of processes will be supported by large fleet unity. The consequence is a carrier that is more ready to meet the confrontations of a more and more competitive carrier surroundings and take benefit of tactical occasions better than ever before. This arrangement will benefit all shareholders by way of a growth of low prices for patrons, chances for workers of both corporations and for providers and sellers,…...
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References
Mouawad, Jad. (2010). Pushing 40, Southwest Is Still Playing the Rebel. Retrieved January 13,
Southwest is a strong performer in the U.S. airline industry. There are a number of reasons for this success, based on the strengths that the company has cultivated over the years. Southwest's strengths include its organizational culture, which is a source of sustainable competitive advantage and supports virtually every other strength that the company has. The other strengths are its management team and leadership; its financial situation and its operational excellence. These strengths are counterbalanced by weaknesses such as poor political relations, maintenance and safety issues and ongoing issues with the integration of AirTran into the company. Overall, however, Southwest's strengths are both intense and permanent, while the weaknesses are not particularly intense in nature, and are for the most part transient.
Introduction
Southwest Airlines is one of the market leaders in the U.S. airline industry, and one of its best performers financially. The company trails Delta and United Continental in terms…...
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Works Cited:
AP. (2006). Bush signs bill repealing the Wright Amendment in 8 years.
Lehigh Southwest
Why Southwest Should Come to Lehigh
Lehigh Valley International Airport is located in the heart of Pennsylvania's third largest metropolitan area, after Pittsburgh and Philadelphia, and is far and away the most convenient regular scheduled-service airport for millions of Pennsylvanians (DOT, 2012). In addition, the airport is located in the proximity of many attractions as well as business destinations, making it an important hub for travel even for those that are not residents of the areas (DOT, 2012). Service increases to the airport through the entrance of new airlines and/or the expansion of existing airlines that include the Lehigh Valley International Airport in their routes would further increase the convenience and the usefulness of this airport for travelers, and this increase in airport traffic would be good for a number of businesses located in and within the vicinity of the airport (DOT, 2012; Zanki, 2010).
Southwest Airlines Analysis Case Study
Vision and Mission Statement Development
Southwest Airlines stands out amongst its competitors in the travel industry for many reasons. One of those reasons is the company's ability to change with the times and adopt current strategies that reflect the market trends of today which can affect the profitability of the future for the company.
The recent expiration of the Wright Amendment suggests that Southwest Airlines adopts a more relevant approach to their business model that reflects this current policy change which will allow the company to expand its services to many new markets and essentially deregulating many of the past agreements relevant to the airline industry. DeVoss (2014) agreed with this idea and saw an opportunity for Southwest to grow by maximizing the deregulation efforts. He wrote "The main beneficiary of the Wright Amendment's demise is Southwest Airlines. It has spent the past decade fighting for the right…...
DeVoss, D. (2014). Southwest Airlines gets a boost from expiration of Wright Amendment. Fortune, 13 Oct 2014. Retrieved from gets-a-boost-from-expiration-of-wright-amendment/http://fortune.com/2014/10/13/southwest-airlines -
The Southwest Airlines The Southwest AirlinesBrief BackgroundThe U.S department of transport 1995 classified its passenger airlines into three categories based on the annual revenue generated. These are a \\\"major carrier\\\" airline that could generate up to $1 billion annually, a \\\"national carrier\\\" that could range between $ 100 million and $1 billion annually, and a \\\"regional and commuter airline\\\" that could generate less than $100 million annually (Pg, 480). Before this, the Civil Aeronautics Board (CAB) board was responsible for regulating fare, routes, and company mergers, and before any change was made, CAB approval was required. However, the CAB operated on biasedness in that they awarded highly profitable and semi-exclusive routes to individual airlines and then left the remaining to the public interests. It suppressed the price competition, and some airlines increased their fare because they were the only ones operating on those routes. However, in 1978 a new airline…...
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ReferencesEVANS, L. (2019). Southwest Airlines Co.\\\\\\\\\\\\\\\'s Mission Statement & Vision Statement (An Analysis) - Panmore Institute. Panmore Institute. Retrieved 31 May 2022, from uploaded by the customer Hawkins, O., Misra, R., & Tang, H. (2012). Economics-files.pomona.edu. Retrieved 31 May 2022, from http://economics-files.pomona.edu/jlikens/SeniorSeminars/Likens2012/reports/Southwest.pdf .Sudhakaran, A. (2021). Southwest Airlines SWOT Analysis 2021: Recovering from COVID-19 Crisis. PESTLE Analysis. Retrieved 31 May 2022, from https://pestleanalysis.com/southwest-airlines-swot-analysis/ .http://panmore.com/southwest-airlines-vision-statement-mission-statement-analysis .File
Southwest Airlines has been one of the aviation industry's success stories; founded in 1967 the airline pioneered the low cost carrier model, and grew organically leveraging a first mover advantage (Morrison, 2001). The airline now operates approximately 3,600 flights every day, employees 45,009 staff and with the acquisition of AirTran in 2011 it became the largest domestic U.S. carrier (Southwest Airlines, 2014). The airline has grown, but in recent years the airline industry has seen significant constraints on growth due to the maturity of the industry in the U.S. along with the economic influences constraining growth (IATA, 2014). However, this does not mean there is not room for growth; to assess ways in which the firm may improve and understand the position of the company, examining the way it competes and…...
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References
Belobaba, Peter; Odoni, Amedeo; Barnhart, Cynthia, (2009), The Global Airline Industry, John Wiley & Sons
Buchanan, D; Huczynski, A, (2010) Organisational Behaviour, Harlow, FT/Prentice Hall
(a) High capacity usage (few unfilled seats), and is, therefore, one of the most profitable airlines, while many other airlines are unprofitable. (b) It can maintain focus on cutting frills.
Best low-fare carrier by standardization of fleet
(a) Few unfilled seats. WA has only one basic type of aircraft. This reduces training times (b) it can continue this direction.
Price and great staff relationship
(a) Employees work very well as a team (b) Employees are encouraged to have and show their sense of humor. This should continue though within bounds
Flexible as well as unionized.
tep 4: (a) Maintains very good relationships with its unions (b) may need to set conditions with its flexibility
Weaknesses
Operations (Porter's value chain):
Mainly operates its own booking service
tep 4: (a) Booking flights is not available except directly through outhwest Airlines (b) Can work on devising other options
Are copied by other airlines
tep 4: (a) It does not…...
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Sources
Southwest Airlines Co. (2009). Southwest Airlines -- A Brief History.
southwest.com.
Mutzabaugh, B (March 1, 2012). Southwest, AirTran now single carrier in FAA's eyes. USA Today.
This savings on fuel has also given Southwest more funds to invest in programs to reduce turn-around time of their jets between flights .
Southwest Airline's Internal Weaknesses
As with any company the size of Southwest, they have several weaknesses, with the most significant being their heavy dependence only on passenger traffic as their primary source of revenue. Despite efforts to move into logistics and supply chain services, the company is still struggling to gain significant success in more profitable business services markets (Kumar, Johnson, Lai, 2009).
Despite having an employee base that has the lowest turnover and highest levels of morale, Southwest also has one of the most rapidly declining sales-per-employee revenue levels for U.S.-based airlines (Kumar, Johnson, Lai, 2009). One of the factors that contribute to this is the fact that Southwest has more ground crew members than other airlines, an investment the company makes to attain the rapid MTT…...
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References
Christopher P. Ball. (2007). Rethinking Hub vs. Point-to-Point Competition: A Simple Circular Airline Model. The Journal of Business and Economic Studies, 13(1), 73-87,116.
Bernoff, J., & Li, C.. (2008). Harnessing the Power of the Oh-So-Social Web. MIT Sloan Management Review, 49(3), 36-42.
David a Carter, Daniel a Rogers, & Betty J. Simkins. (2006). Does Hedging Affect Firm Value? Evidence from the U.S. Airline Industry. Financial Management, 35(1), 53-86.
Southwest has the lowest prices per seat of any other airline. Moreover their pricing structure is simple and relatively transparent to passengers, with few classes of fares and few ticket reservations. They are able to do this due to providing frequent point-to-point service between secondary airports that are on average only 515 miles apart. They offer more direct, non-stop flights than the traditional hub and spoke system, and have quick turn around times (of 25 minutes compared to an hour or more for most major airlines). It ranks high on-time performance, baggage handling, and least customer complaints.
Weaknesses
They do not offer meals, only peanuts and drinks. They have no major frills. Huge competition.
Opportunities
Major airlines have pared down flight schedules, and deferred or cancelled new aircraft deliveries, whilst some have also retired approximately 5% of their older planes. This leaves greater opportunity for low-cost startups such as Southwest.
Threats
Energy prices continue to…...
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