Current Situation
The airline industry is an intense and highly competitive market. Everyday millions of consumers travel and each airline both national and international compete for sales revenue, in fact, each airline has developed and evolved to sustain in this volatile industry. For Southwest Airline to capitalize in this market and steadily maintain their sales, they have procured a niche market. The company has positioned itself as a low fare cost leader in air transportation service. On June 18, 1971, the airline delivered a short-haul, point-to-point, low-fare, high-frequency airline committed to exceptional customer service, (Kerin & Perterson, 2011). Their model is a combination of high quality customer service, strategic operations, …show more content…
How can Southwest Airlines respond to the unexpected news where the “Shuttle by United Airlines” has discontinued some of their service and raised fares, and planning on matching Southwest’s model strategy. Should Southwest respond? Should they follow with a $10 increase in their fares, or continue with their present price and current fare strategy. What might be the impact of United’s tactic? How should Southwest respond? (Kerin & Perterson, …show more content…
The airline industry in its entirety has a recorded cumulative deficit of $12 billion from 1990-1993
Only four of the nine major U.S. carriers recorded a profit in 1994 (United, America West, and Northwest). Southwest has to create a strategy to carefully respond to the unexpected developments and changes made by the United Airlines in their services and pricing. Operation costs such as labor and fuel costs represent approximately one half of an airline’s costs, which entails high operating leverage due to these high fixed costs. Highlighted are their profitable distinctive features that propelled them to be successful in the airline industry:
• They deliver fast turnaround time from departure to arrival. Low connecting flights, short-haul service and low fares
• They operate without travel agents, which makes it convenient to book flights directly with Southwest. Therefore, there is no travel agent fees, and they savings are passed on the
The airline industry is an intense and highly competitive market. Everyday millions of consumers travel and each airline both national and international compete for sales revenue, in fact, each airline has developed and evolved to sustain in this volatile industry. For Southwest Airline to capitalize in this market and steadily maintain their sales, they have procured a niche market. The company has positioned itself as a low fare cost leader in air transportation service. On June 18, 1971, the airline delivered a short-haul, point-to-point, low-fare, high-frequency airline committed to exceptional customer service, (Kerin & Perterson, 2011). Their model is a combination of high quality customer service, strategic operations, …show more content…
How can Southwest Airlines respond to the unexpected news where the “Shuttle by United Airlines” has discontinued some of their service and raised fares, and planning on matching Southwest’s model strategy. Should Southwest respond? Should they follow with a $10 increase in their fares, or continue with their present price and current fare strategy. What might be the impact of United’s tactic? How should Southwest respond? (Kerin & Perterson, …show more content…
The airline industry in its entirety has a recorded cumulative deficit of $12 billion from 1990-1993
Only four of the nine major U.S. carriers recorded a profit in 1994 (United, America West, and Northwest). Southwest has to create a strategy to carefully respond to the unexpected developments and changes made by the United Airlines in their services and pricing. Operation costs such as labor and fuel costs represent approximately one half of an airline’s costs, which entails high operating leverage due to these high fixed costs. Highlighted are their profitable distinctive features that propelled them to be successful in the airline industry:
• They deliver fast turnaround time from departure to arrival. Low connecting flights, short-haul service and low fares
• They operate without travel agents, which makes it convenient to book flights directly with Southwest. Therefore, there is no travel agent fees, and they savings are passed on the