...Precio de los bienes relacionados (PR). Gustos o preferencias de los consumidores (T). Precio esperado del bien o servicio en el futuro (Pe). Número de consumidores en el mercado (N). En Estados Unidos hasta antes de la desregulación de la industria aeronáutica el precio era el mayor determinante de la demanda de boletos de avión (Michael, S. C. & Silk, A.J. 1993, pág 4); esto se confirma porque en los 10 años siguientes a la desregulación las tarifas aéreas decayeron casi un 15% y el volumen de pasajeros creció casi en 80% en el mismo periodo. De acuerdo a lo anterior, se considera al precio, el mayor determinante de la demanda de boletos de avión y la cantidad de opciones de horarios y horas de salida de vuelos (American Airlines’ Value Pricing, Harvard Business School, pag. 4), es otra variable importante. Para este caso, los principales determinante que se consideran son: Precio del bien o servicio Ingreso de los consumidores (porcentaje del ingreso que el precio representa para el consumidor) Precio de los bienes sustitutos (autobús, tren) Precio de los bienes complementarios (hoteles, comida) Todos los determinantes de la demanda están...
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...Matthew Catan September 22, 2015 ACC 380K | Smith Cash Flow Analysis 1. Prepare a table comparing the following metrics for Southwest Airlines for the years 2007 - 2009. Use reported numbers from the 2009 10-K. Southwest Calculations Year 2009 2008 2007 A Revenue $10,350 $11,023 $9,861 B Operating profit margin 2.53% 4.07% 8.02% C “Net” profit margin 0.96% 1.61% 6.54% D Accounts Receivable days 6.67 8.08 9.62 E Inventory days 9.51 9.82 11.10 F Trade creditor days 31.72 30.32 35.36 G Return on assets 0.70% 1.15% 4.27% H Return on common equity 1.90% 2.99% 9.63% I Cash Flow From Operations $985 -$1,521 $2,845 J Cash Flow From Investing -$1,569 -$978 -$1,529 K Cash Flow From Financing $330 $1,654 -$493 2. Briefly describe the cash generation / usage activity of Southwest over this same time period. From analyzing the statement of cash flow we get a good picture at Southwest’s cash usage over the three-year period. Operating Activity In 2007 Southwest was able to generate a comparatively large amount of cash. The main reason for this large cash gain is due to the relativity large starting Net Income for the period, about 72% and 84% higher than in 2008 and 2009 respectively. In 2008 the recession really hammered the net cash from operating income with a 153% loss from 2007. Besides the major decrease in Net Income, Cash collateral provided to fuel derivative counterparties resulted in an unusually large loss, this...
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...Southwest Airlines in 2010 (pages 401-436) Gamble, J. E., Thompson, A. A., Jr., and Peteraf, M. A. (2013). Essentials of strategic management: The quest for competitive advantage (3rd ed.). New York: McGraw-Hill/Irwin. DISCUSSION QUESTIONS 1. What are the key policies, operating practices, and core values underlying Southwest’s efforts to implement its low-cost/no frills strategy? In order for Southwest Airlines to implement its low-cost/no frills strategy, they charge the lowest price possible to make air travel affordable to a wide segment. The lowest fares were usually nonrefundable but could be applied to future travel on Southwest Airlines, while rival airlines charged a change free of $100 to $175. Southwest Airlines also implemented the “Bags Fly Free” policy. Other airlines were charging up to $120 round trip to check bags due to the increase in jet fuel costs, but Southwest chose to let fliers check bags for free, which resulted in a company-record load factor. Southwest also uses dynamic pricing to charge more during peak travel periods. Southwest was able to experience revenue gains from increased ticket sales and passenger traffic. Southwest does not use the hub-and-spoke route systems of rival airlines and instead uses point-to-point scheduling. This allows Southwest to minimize the time aircraft is at the gate to 25 minutes. Southwest’s point-to-point route system minimized connections, delays, and total trip time. Southwest also has no assigned...
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...Case Analysis Study Approach (CASA) (Read the case a couple of times) Describe the Following for this Case Study- 1. Industry & Market: Delta is in the airline industry. It is a major economic force, both in terms of its own operations and its impacts on related industries such as aircraft manufacturing and tourism. There are few industries that create the amount and intensity of attention that airlines receive. Delta is the world’s largest airline in terms of both fleet size and scheduled passenger traffic. Delta’s major competitors are Southwest Airlines and United Airlines. 2. External Environment: (Factors beyond the control of the firm that influence its choice of direction and action, organizational structure, and internal processes) STEP Analysis: Social- Social factors and travel practices of individuals have extensive effects on the airline industry. There are individuals from a number of income classes and the airlines have to classify these people and ought to give them what they need. Technological- as clients’ wants develop in the future and there are more technological expectations the airline industry will have to be ready to meet their clients’ wants. Delta must keep up with competition and their technological advances such as online ticketing, booking, updating flight information, baggage check-in and handling of customer complaints all on the internet. Economical- Consumers tend to reduce travel if personal economic conditions are suboptimal, forcing...
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...MBA 610 Case Study: Southwest Airlines Corporation 1. Southwest Airlines Corporation is an extremely popular and profitable company due to their strategy of being the nations’ low-fare, high customer satisfaction airline. Southwest is able to offer the nation’s lowest fares due in part to their low operating-cost structure, the lowest in the domestic airline industry. This low operating-cost structure (refer to Exhibit 1 for 5 year financial highlights and 2004 data) is the basis on which Southwest builds its competitive advantage, as it allows Southwest to sell low fare tickets while still enjoying a gross margin percentage of sales (29.2% of sales in 2004) much higher than United Airlines (22.7% of sales), American Airlines (1.9% of sales), and Delta Airlines (18.9% of sales). Southwest achieved this low cost operating structure through eschewing the traditional “hub-and-spoke” approach used by their competitors, and instead flying short haul, medium haul, and point-to-point flights, allowing for more frequent flights. As a result, about 80% of Southwest’s passengers fly non-stop and the overall passenger length is approximately 758 miles. Additionally, Southwest consistently seeks out ways to improve its efficiencies and low cost structure. For an example, at Southwest, turnaround time (from the time a plane lands until it is ready for takeoff) takes approximately 20-25 minutes and requires a ground crew of four plus two people at the gate. By comparison, turnaround times...
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...UA CASE ANALYSIS REPORT Group 4 2014-12-17 1. Industry Background 1.1. Poor Customer Reputation The US airline industry has been criticized for poor customer services, inefficient operations, and frequent flight delays for quite long time. Poor reputation seems to have been a typical characteristic of the whole industry. According to the customer satisfaction survey conducted by ACSI in 2014, airline industry ranked at the 40th place among all the 43 industries involved, ahead of only Internet service providers, social network corporations, and cable TV operators. 1.2. Intricate Challenges These years, the US airline industry suffered a lot from plenty of problems. The 9.11 attacks had dealt a crushing blow to the whole industry which made the airline lose much money and some of them even filed for bankruptcy. With teleconferences used to substitute for in-person meetings, travel budgets for businesses declined which reduced the airline’ revenues from first-class and business-class passengers and lowered the profit margin. Besides, the Great Recession damaged passengers’ purchasing power as well as their willingness to purchase. Data shows the US domestic average itinerary fare experienced an obvious downward trend from the year 2000. And the skyrocketing oil price increased airline’s cost to a great degree as for every one percent increase of crude oil price, airline’s net profit would decrease by more than two percent. As a response, many airlines reduced scheduled...
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...Case #20 – Southwest Airlines Marisa Melchiorre Amber Harrison Emeka Onyia Company History 1966 Rollin King approached Herb Kelleher’s law office with plan to start low-cost/lowfare airline Ran into legal problems, rival airlines in Texas did everything they could to block new airline Herb Kelleher was determined to start up airline 1971 – Lamar Muse Southwest CEO, background in industry to get it up and starting Raised $7 million in capital and private investors to purchase planes and equipment Flights started between Dallas, San Antonio, and Houston known as the “Golden Triangle” First ever annual profit in 1973 2010 – market share leader in domestic air travel in US, consistently profitable even during down turning economy, profit every year since 1973 Number of passengers increased by more than 28 million 1. Is there anything that you find particularly impressive about Southwest Airlines? One of the most impressive characteristics about Southwest Airlines is their fun, loving, determined company culture that believes first in making employees happy which then results in happy customers. Herb Kelleher was adamant about listening and allowing employees to think and to most importantly be heard. The strong value of the happiness of their spunky employees is their competitive advantage against other rival airlines in the industry. Southwest is able to create a competitive advantage not only with their low prices but also offering a fun and humorous experience...
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...CASE ANALYSIS Southwest Airlines, Co. COMPANY NAME: Southwest Airlines Co. INDUSTRY: Regional Airlines COMPANY WEBSITE: www.southwest.com COMPANY BACKGROUND: Southwest Airlines was founded in 1967 (Yahoo Finance, 2012) and started out as an idea from Rollin King, a San Antonio entrepreneur of a commuter air service. The idea was a response to complaints from his banker about the expense and inconvenience of ground travel between the cities of Houston, Dallas and San Antonio, also known as the Golden Triangle (Dess, Lumpkin, & Eisner, 2010 page C194). King, wanting to bring the idea to fruition, pooled his money together with a San Antonio lawyer, Herb Kelleher, who later won many of the company’s legal and territorial battles, and they started Southwest Airlines. After four years of legal battles with major airlines while the company was still very new, Southwest Airlines (SWA) finally launched its first flight in 1971 and continued to run with the assistance of many key people. One of the key people who got the company on its feet was Lamar Muse, former CEO. Howard Putnam later took Muse’s place as CEO from 1978 to 1982 and was then replaced by Herb Keller who was previously Chairman of the Board. Under the influence of Keller and SWA’s “low-cost strategy” (Dess, Lumpkin, & Eisner, 2010 page C194), SWA expanded from flying to only 14 cities, but still earning $270 million, to later servicing 64 cities, all at low rates. SWA continues to be a popular...
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...Southwest Airlines Calsouthern University Introduction “There is only one boss. The customer. And he can fire everybody in the company from the chairman on down, simply by spending his money somewhere else (Sam Walton, 2015).” Millions of people fly everyday. Southwest airlines provide low-fare travel among 58 cities in the United States. Although the airline industry suffered greatly in the aftermath of September 11, Southwest was able to continue to hold strong. Southwest airline continues to maintain steady sales as much of the industry was affected by changes in laws/regulations and competition entering the market. In the following report there is a brief introduction to Southwest Airlines and their strategy and then what, if anything, they need to do or not do to remain at the top and competitive in the airline industry. The Problem The major problem of the company is whether they can continue growing and at the same time keep offering the same services to their clients. To continue growing, Southwest Airlines needs to analyze the external environment in order to ensure their success. The solutions that will be presented for Southwest airlines have to attack two main issues: 1. How will they be able to keep their “Southwest airlines LUV” 2. How to keep their expansion and not affect the image of the airline. Southwest Airlines has a list of infinite options, many will hinder their image from the inside out (employees to costumers) while providing a set of services...
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...21715 - Strategic Management (Summer Session 2012) Individual Written Case Analysis Case 32 – JetBlue Airlines: Getting “Blue” Again? Sam Lui (00039469) 21715 – Individual Case Analysis Table of Contents Executive Summary................................................................................................................................. 3 1. General and Industry Environment................................................................................................. 4 1.1 The General Environment ....................................................................................................... 4 1.2 The Industry Environment ...................................................................................................... 5 2. Internal Resources and Assets (JetBlue) ......................................................................................... 7 3. Competitive Advantage (JetBlue) ................................................................................................... 9 4. Recommendation for JetBlue ....................................................................................................... 11 5. Lessons and Insights for Tiger Airways ......................................................................................... 12 6. References ..................................................................................................................................
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...Case Study Report: Classic Airlines 1 A Case Study Report on Classic Airlines: Marketing Solutions Anthony Almanzar, Northeastern University Abstract The airlines industry has grown incredibly over the years. The rapid growth may limits the availability to stay competitive. Air carriers must use all possible resources to maximize growth and boots profits. Classic Airlines has the opportunity to develop a new strategic marketing plan that will make them succeed in today's competitive world. Introduction Classic Airlines Classic Airlines is experiencing several organizational issues due to the fact that their long-term marketing objectives are not being met. Customers are not satisfied with their services and they are considering services provided by other airlines that meet their expectations. Sales revenues, profits and stock prices are declining. A new marketing strategic plan is required in order to attract and retain costumers while boosting sales and profits. "Marketing looks at consumer needs and the company's ability to satisfy them." (Kotler et al., 1991, p.37). Therefore, Classic Airlines must stress on creating a new plan that will help them meet their long-term marketing objectives. Case Study Report: Classic Airlines 2 The Current Situation Classic Airlines is facing numerous challenges "because of rising costs and lack of innovation" (Tokhi., 2009, p.1). Internal disagreements between managers have arisen. "Employee morale is low as due to finger pointing...
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...Read the following case study and answer the questions Pegasus Airlines Until 1982, Turkish Airlines was the only airline company in Turkey, and it had no domestic competitors. Over the past 20 years, Turkey experienced a number of financial crises, as well as political turmoil. Pegasus was created in 1989 as a charter airline partnered with the Irish airline Aer Lingus to create all-inclusive holidays. In 2005, the airline changed from charter airline to a low-cost airlines. The Airline became the best private airline better than any other local airline. What is the secret to the airline’s success? Quite simply, it involves making sure Pegasus is continually developing to meet passenger expectations and priorities. Pegasus has put in place a yield management strategy for ticket pricing, using the strategy of Southwest Airlines of North America as an example. Supply and Demand as well as time are taken into account in the ticket pricing strategy; for example, if a customer book early (60+ days) they receive further savings while those who book later pay the maximum current fare offered by competitors. The system is complemented by an electronic ticket policy whereby passengers receive their information via email and SMS. Pegasus has also developed a credit/loyalty card, which offers customers a range of benefits including insurance rate reductions. Although airlines can’t often control flight delays, Pegasus has developed a specific customer satisfaction guarantee policy...
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...Southwest Airlines Case Study After the acquisition of AirTran, Southwest Airlines (SWA), a company with years of profitability in airline industry is now facing challenges in both external and internal environment. The strength of success in marketing strategy and organizational management and the threats from uncertainty environment exist at the same time. This paper is a brief analysis of the company’s strategy and estimated future performance. External Environment Airlines in United States present a wide variety of services based on their strategies to satisfy different needs of the leisure travelers group and business travelers group. There are three main groups of airlines, which are national airlines, regional airlines and commuter or feeder carriers. Based on the territories they serve, airlines differ in routes. The two major types are point-to-point and hub-and-spoke. Both strategies have their own inherent costs and organizational implications. An airline can provide plenty of services: while most airlines have two classes of service, there are also airlines providing services in different selected classes. After the complete removal of government controls, airlines industry is going on a shakeout under the severe competition which is expected to last a long period. The industry is so difficult that its suppliers have high bargaining power; business requires large expenditures; and the price wars are extreme intensive. To survive and compete in this environment...
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...Delta(Song) is trying to compete with other low-cost airlines and the major airlines. However, it is suffering from high cost problem. As mentioned in the case, Song is running at about 15% higher than its competitor Jet Blue. Another problem is low revenue. Song targeted Women and leisure travellers, the ticket price of it should be lower comparing to other airlines facing businessmen, and it leads to a lower profit margin. Low profit margin and high cost make the financial problem together. 2) Song is trying to target customers which are differnet from Delta Airlines, the parent company.It tries to focus on mostly women and leisure travellers, it tries to cut cost by sharing staffs with Delta Airline. I think trying to focus on new groups of customers is a good strategy as the management has thinked about the industry environment and competitive environment. It is highly competitive in the high-class airline segment and low-cost environment, so the management has tried to avoid too much competition and focus on new segments. Theoretically, I think it is a good strategy. However, it turns out to a unstatisfactory result. One of the reason is that the promotion is not good enough. Although Song has spent $12 million on promotion and advertising, it does not help Song to build up a clear image. Travelling public are confused about which type of airline Song is. 3) Song is sharing pilots with its parent company, Delta Airlines. On the other hand, Song hire flight attandents itself...
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...Exit seating (a)(1.i-iv) (page 4, ¶3 ) Add a Note below the subparagraph Paragraph (6) Exit Seating / Subparagraph (a)(1.) That requirements should be part of the air carrier’s approved Exit Seat Program” Southwest Airlines would like to add the following NOTE below this subparagraph, NOTE: Air Carriers should know that if the personal briefing to each passenger seated in an exit seat becomes part of an air carrier’s approved Exit Seat Program as referred to in Operations Specification A022, that the word “should” that is used in this advisory circular concerning personal briefings to passengers seated in an exit seat is no longer valid. Since this briefing is now part of an Operations Specification all the “should(s)” become “must” as an air carrier is required to follow its Operations Specifications.” A4A Appx. 1 2.Video Briefings a)Pretakeoff 6. Exit seating (a)(1.i-iv) (page 4, ¶3 ) This subparagraph does not capture what is found in current guidance material on this subject such as having the F/A “Clearly explain what each such passenger should do in the event the exit might be needed,” which is found in 121-24C. Southwest Airlines suggests that (i) be replaced...
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