...Next, let’s move to response to recommendations. The executive team gives three main problems, which are SkyWest Reliance on United and Delta for its customers and revenue, Atlantic Southeast Airline’s poor customer service, and SkyWest has High Operating Costs as compared to competitors. However, the executive team just focuses on first two of them and gives the recommendations. The first recommendation is try to acquire contracts with low-cost providers, such as Southwest and JetBlue. We are agreeing with this recommendation. Because, if SkyWest only rely on United and Delta, it will increase their financial risk, assume one of them have a financial or managerial problem, the SkyWest will have a hard time, and that not only will affect their total revenue, but their public reputation and the power of competitive in this market. Also, only have United and Delta will limited the resource of income; therefore, find some more copartner is reasonable, but due to the SkyWest’s financial situation, the low-cost providers can be on the list. However, the question is whether Southwest and JetBlue, they are individual company, and they doing well on their business, so why they will come to SkyWest? What benefit that SkyWest can provide to those companies due to their current finical situation or the future years? We need more detail. The second recommendation is SkyWest share customer service strengths with ASA. And we agree with this recommendation. For any customer, when they...
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...Justin Flatt Mgmt. 439.01 March 8, 2012 Case Study #3 SkyWest, Inc., and the Regional Airline Industry in 2009 Situation: The regional airline industry specializes in short-haul flights that operate to serve as feeder airlines transporting passengers to and from major hub airports that have larger aircraft and the ability to cover a larger geographical area. Regional airlines partner with major airlines to create an efficient hub and spoke system. Major carriers pay regional airlines a fee for every departure. This allows regional airlines to develop a customer base and establish a revenue stream. Regional airlines are controlled by or have contracts with major carriers to secure flights but because one cannot exist with the other, the relationship between regional and major airlines is reciprocal and necessary for the success of both entities. Complication: Since 2001, SkyWest, Inc. has been struggling to maintain their string of success. SkyWest was adamant on acquiring new contracts with major carriers, but would have to overcome the external situations to achieve this growth. During this time, it was difficult for SkyWest to develop and maintain high levels of customer service, develop and maintain a strong safety image, maximize on-time arrivals, and acquire new aircraft. Before SkyWest could compete with existing contracts and competitors, it first had to prevail over external factors in the industry to achieve the requisites for acquiring new contracts. Table 1 shows...
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...SkyWest, Inc. and the Regional Airline Industry in 2009 Julia Whitaker HPU: MGMT 4001 SkyWest Inc. is an independently owned airline company. They own two regional airlines, SkyWest (with focus on west coast) and Atlantic Southeast Airlines or ASA (with focus on east coast). Regional airlines usually conduct their business one of two ways: 1. Under a major network airline, using the network airlines brand name, regional airlines fly customers from smaller communities to larger airports. They also supplement the mainline market when demand doesn’t require large aircraft. 2. Regional airlines also conduct their own flights serving as commuter airlines for business travelers needing to travel between small communities and larger cities. As many other regional airlines, SkyWest Inc. earns most of its revenue by partnering up with the larger network airlines. In this type of partnership, regional airlines typically receive a contracted departure fee and are sometimes offered incentives for airline performance such as being on time. The airline industry is vulnerable in many ways. They have vulnerability to market changes, fuel costs, regulations, weather, and customer preferences. Being a smaller company also puts them at risk of being disenfranchised by the larger, network airlines. In 2006, regional airlines had some of the worst on time records in the industry. They also had six out of seven worst records for cancelled flights. My analysis has shown that...
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...SkyWest and the Regional Airline Industry Webster University MNGT 6000 15 November 2012 Table of Contents History: Page 3 Company Introduction & Products Page 3-5 Company S.W.O.T. analysis Page 5-8 Company Strategy/Goal/Vision/Recommendation Page 8-11 To be competitive in today’s airline industry, airlines face an increasing number of social and economic challenges. Inflation, a slumping economy, high fuel prices, and high unemployment all serve to add to consumer uncertainty toward the future. Taking this into consideration, there is perhaps no other industry directly impacted by these issues than the airline industry. With high unemployment and a recessive economy, families cannot afford to take vacations that require flying. Businesses that are hurting financially will use other means, (such as Teleconferencing) to coordinate nationally and internationally instead of flying. Today, many consumer attitudes towards the entire flying experience range from a necessary nuisance to a nightmare. Flying today in the post 9-11 world, has become an unpleasant experience to say the least. From check-in to baggage pick...
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...China Airlines 1.) The airline industry allowed for both good and bad macro enviroment because of the financial issues of the airlines in the 2000’s. Due to major airlines being in debt, they had to rollback their operations and outsource more of their routes to the regional airlines (Lohman, pg. 201). This then created opportunities for regional airlines to expand their service areas. By being able to expand their service, this enabled them to compete with low-cost carriers. Overall, the airline industry correlates with the economy. The recent recession and the post 9/11 fear-of-flying effect hurt the airline industry. The regional airline industry had the same problems as the major airline industry when it comes to increasing fuel costs and competitive pressures for low-cost carriers, like Southwest Airlines. This shows the relationship between the regional and national airline industry. Although the regional airline industry was able to gain some opportunities from the recession, they still had to deal with a lot of the same problems as the national industry. 2.) Which Rivalry among competitors- Within the regional airline industry, there exist fierce competition. Factors like major and low-cost carrier competitors and low-buyer demand have contributed to this competition. Threat of new entrants- The regional airline industry has a low threat of entry. It takes large capital investments to purchase...
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...Valuation Assumptions The models used to value the target firm SkyWest will include: I. Residual Earnings Model (REM) II. Abnormal Growth Model (AGM) III. Dividend Discount Model ((DDM) IV. Discounted Cash Flow Model (DCF) V. Method of Comparables These models have been based on some fundamental assumptions. These assumptions can be found in Appendix 1.1. I. Residual Earning Model The REM splits the intrinsic value of a company into two components; the book value and the present value of the future residual earnings. The discount rate used for future earning was the Cost of Equity found in Appendix 1.1. Through obtaining the earnings per share (EPS), book value per share (BPS) and dividends per share (DPS) from Bloomberg, it is possible to estimate the value of SkyWest. A growth rate of 2.6% (2012 financial statement) was applied. The value per a share shown in Appendix 1.2 is approximately 94 cents. II. Abnormal Growth Model The RE model anchors book value whereas, the AEG model anchors earnings. In applying the model the value per a share is equal to the capitalised earning plus the extra forecasted earning and applying a growth rate of 2.6% for the CV. In Appendix 1.3 the value per a share is $9.86. However, there seems to be a problem with the CV, through excluding the CV the value per a share is equal to approximately 33cents (0.02076/0.0636). Theoretically, the AEG and RE models should give the same valuations, but due to imperfections, the two models...
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...passenger traffic (88 million passengers per year) and number of landings and takeoffs. Delta is the 3rd largest and the oldest airline still operating in the United States. Between 2001 and 2005, Delta airlines lost $10 billion. The firm’s cash assets had significantly fallen short of its debt obligation, which stood at $14 billion. Standard and Poor’s (S&P) placed Delta’s debt ratings on “credit-watch” with negative implications, citing critical liquidity problems. The leaders of Delta Air Lines’ pilot union had alerted their members that the firm might have to file for bankruptcy protection under chapter 11 of the American Bankruptcy Code. In a bit to increase the liquidity, Delta sold its subsidiary (Atlantic Southwest Airlines) to SkyWest Airline for $425 million in August 2005. At the time of the sale, Delta was also experiencing a major operational crisis. As Delta was struggling to pull together its restructuring plan to survive, many analysts believed that the airline was under an increasing risk of bankruptcy. However, Delta continue to grow throughout mergers and acquisitions as below: - In 1972, it merged with Northeast Airlines - In 1984, Delta expanded its reach in the domestic U.S market with its Delta Connection Program. Under this program, regional airlines could bring their passengers to Delta Hubs. - In 1987, it merged with Western Airlines. With this merger, Delta become the 4th largest aviation company in the United States and the 5th largest in the world...
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...I. Customer Analysis a. Who: consumer, business, national, international i. Consumer: Younger, affluent, present on social media, fare-conscious 1. The “middle space” for those who dislike larger airlines and love amenities that low-cost rivals don’t offer ii. Business: NY Jet’s Official Team Carrier iii. National: Serves 90+ destinations in 25 states, the District of Columbia, Puerto Rico, and Virgin Islands 2. New routes from: Detroit, Ft. Lauderdale, Hartford Springfield (CT), Washington-National (DC), Salt Lake City, Orlando, Las Vegas, San Francisco, Cleveland, West Palm Beach, NYC, Pittsburgh, Boston, Savannah/Hilton Head, Charleston, Fort Myers, Reno/Tahoe, Martha’s Vineyard, Anchorage, Portland, and Nantucket iv. International: Serves 15 countries in the Caribbean and Latin America 3. New routes from: Nassau (Bahamas), Port of Spain (Trinidad & Tobago), Curacao (Curacao), Catagena (Colombia), Montego Bay (Jamaica), Newark, Punta Cana, Hyannis/Cape Cod (MA), St. Lucia (UVF), Puerto, Plata (DR), Santiago (DR), and Port-au-Prince (Haiti) b. B2B, B2C, etc. v. B2B: Subsidiary, LiveTB, LLC, provides in-flight entertainment systems and internet connectivity in commercial aircrafts, sells vacation packages through JetBlue Getaways which provides fares for air travel on JetBlue along with a selection of JetBlue-recommended hotels, resorts, car rentals, and attractions 4...
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... As of December 2014, there were 18 major carriers, which defined by the United States Department of Transportation as an airline that posts more than $1 billion in revenue during a fiscal year. Eleven of which are mainline passenger airlines, four are freight carriers, and three regional airlines. The mainline passenger airlines are Alaska Airlines, American Airlines, Delta Air Lines, Frontier Airlines, Hawaiian Airlines, JetBlue, Southwest Airlines, United Airlines, US Airways (subsidiary of American Airlines Group), and Virgin America. The four freight carriers are Atlas Air, FedEx Express, Kalitta Air, and UPS Airlines. The three regional airlines are Envoy Air (subsidiary of American Airlines Group), ExpressJet (subsidiary of SkyWest, Inc.), and...
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...1 Introduction The purpose of this report is to make a recommendation on whether Tiger Airways can remain a profitable business in Australia. Tiger Airways Australia, incorporated on 19 March 2007,is a subsidiary of the Singapore based Tiger Airways Holdings, which is partly owned by Singapore Airlines and commenced its inaugural flights in Australia on 23 Nov 2007. Currently, Tiger Airways flies to 13 destinations from its main hub in Melbourne and operates 10 aircrafts (tigerairways.com, 2011). Between the weeks ending 3 February 2007 & 17 February 2007, the market share of internet visits to Tiger Airways more than doubled to gain 2.81% of the commercial airlines industry (Hanchard S, 2007). Refer to appendix I. The combination of Tiger Airways aggressive low cost strategy and internet booking options make it attractive to consumers. The airline operates as a low cost carrier. A low cost carrier (LCC) is any airline that does not provide a range of services, charges low fares, offers a single class of service, offers electronic booking system, uses a common fleet of aircraft and maximises its use of factors of production (Button, K& Ison, S 2008). The report covers a detailed analysis of the economic performance of Tiger Airways including its Financial ratios for the year end 2010 and 2011 and an analysis of the current issues/problems like safety, management issues, Queensland flood on Tiger Airways performance including competition from Qantas Group (Jetstar...
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...With approximately four million visitors each year, Wichita, Kansas is a pleasant surprisegreat destination with first- class attractions for everyone in the family! Over More than 1,000 restaurants representing a wide array of cuisines, including from craft beer, and wineries and to French patisseries dot the city landscape, while eclectic shops, antique stores and open malls offer premium shopping opportunities. Take advantage of cultural exhibits and museums that offer art, Western history, botanical gardens and more. After the little ones are tucked away the city stays alive And at night, the city stays alive with choices from in-theater dining, to dancing and live music venues. Wichita is serious about bringing people together and...
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...Case Study: Alabama Airlines Alabama Airlines opened its door in 1995 as a commuter service with its headquarter s and only hub located in Birmingham. A product of airline deregulation, Alabama Air joined the growing number of successful short-haul, point to point airlines, including Lone Star, Comair Atlantic Southeast, SkyWest, and Business Express. Alabama Air was started and managed by two former pilots, David Douglas (who had been with the defunct Eastern Airlines) and Savas Ozatalay (formerly with Pan Am). It acquired a fleet of used prop-jet planes and the airport gates vacated by the downsizing of Delta Airlines. With business growing quickly, Douglas turned his attention to Alabama Air’s toll-free reservation system. Between midnight and 6 am, only one telephone reservation agent had been on duty. The time between incoming calls during this period is distributed as shown in Table 15.16. Douglas carefully observed and timed the agent and estimated that the time taken to process passenger inquires is distributed as shown in Table 15.7. All customers calling Alabama Air go on hold and are served in the order of the call unless the reservation agent is available for immediate service. Douglas decided whether a second agent should be on duty to cope with customer demand. To maintain customer satisfaction, Alabama Air does not want customers to hold more than 3-4 minutes and also want to maintain “high” operator utilization. Further, the airline is planning a new...
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...Impact of web-based Sales on the airline industry | AbstractExpedia, Travelocity, Priceline, and Orbitz: examples of how the travel industry in general, but more importantly the airline industry, has taken a deeper turn towards the low cost affair that consumers have tried to accomplish with that specific industry for many years now. It is a proven fact that the competitive advantage has been taken away from the airlines as consumers have much of the information required at their fingertips on the web at all times.Javier Alfonso FIN6644 - Global Financial Strategy for Professor Krishnan Dandapani | Impact of web-based Sales on the airline industry | AbstractExpedia, Travelocity, Priceline, and Orbitz: examples of how the travel industry in general, but more importantly the airline industry, has taken a deeper turn towards the low cost affair that consumers have tried to accomplish with that specific industry for many years now. It is a proven fact that the competitive advantage has been taken away from the airlines as consumers have much of the information required at their fingertips on the web at all times.Javier Alfonso FIN6644 - Global Financial Strategy for Professor Krishnan Dandapani | Table of Contents Introduction 2 History of AMR 4 Financial Analysis of the Airline Industry 5 History of Expedia 8 Financial Analysis for Expedia, Inc. 9 Comparison of Both Businesses and Their Industries 13 Conclusion 15 Introduction The airline...
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...quality brand • Hiring dedicated employees • Pursuing the latest technology Its overall strategy has been to identify routes with high average fares and beat the competition price, as well as to distinguish itself with service offerings such as TV and radio programming. （3）Time-bound: 2. （1）customer segmentation: Major carriers, regional carriers, and low-cost airlines. Currently there are 16 major carriers, the largest of which are American, Continental, Delta, Northwest, Southwest, and United (JetBlue Airways 2006 Annual Report, n.d.). These airlines offer scheduled flights to most large cities, and except for Southwest, use the traditional hub and spoke network route system (Flint, 2005). Regional airlines such as SkyWest and Mesa generally operate smaller aircraft on lower volume routes. These airlines generally form alliances with the major carriers and provide service from their hubs to smaller cities in the region....
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...RUNNING HEAD: THE AIRLINE INDUSTRY The Airline Industry Name College Table of contents Abstract 3 Introduction: 4 Products and services: 4 Organization: 4 Major players in the airline industry: 5 Economic impact of the airline industry: 8 Employment within the industry: 9 Key trends in the airline industry: 9 - Economic forces: 9 - Technological forces: 11 - Socio-cultural forces and political-legal forces / Government Regulations 13 Logistics and supply chain factors 14 Porter’s Five Forces Analysis: 16 Strategies used by airlines: 17 Expected Entrants: 18 Conclusion and Recommendations: 18 List of Abbreviations 20 Appendix: 20 References 21 Abstract The US airline industry is one of the key sectors of the country’s economy. Employing over ten million people, it contributes up to half a trillion dollars in annual revenues (about 5% of the US GDP). In recent years, the industry has been faced with major challenges arising from its external environment. Some of these include rising fuel prices and the global economic recession. As a result, growth in the industry has significantly slowed down with the ATA estimating that by the end of 2008 the industry had lost between $9 and $24 billion. With high intensity of industry rivalry, high supplier bargaining power, low threat from new entrants, low threat of substitution, and low buyer bargaining power; the industry’s attractiveness can be described as moderate. To be successful...
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