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Low Cost Airlines - Case Study Example

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based on variance of services, has been the entry in the industry of Low Cost Airlines.
The Southwest airline initially started its operation with short-haul destinations i.e. less than 1,500 km, and at present the company has increased its activities beyond the initial values. It has introduced new airplanes into operations, but initially it was particular number of airplanes which were on continuous run.
The performance of the Southwest airline has been encouraging due to adoption of effective techniques, the company recorded net profit of USD 413 million in 2001, which is lower than in 2000, but the company was the only profitable airline in United States in 2001. Southwest has planned to create more than 4,000 jobs in 2002. The company at retained low unit costs (costs per ASM): 7.66 cents in 2001, against the cost of 7.73 cents in 2000.
The Southwest Company has kept safety as important criteria for the evaluation of its operations, and this is an important aspect of management with reference to Health and Safety, the practice is not widely popular among other low cost airlines, and therefore the Southwest has successful to retain maximum market shares.
According to Carlton, the company has complied by the International and National standards of safety and operations, and has invested sufficient amount in this regard. The company's most important management has been its adherence to quality service, and this is termed as an important strategic element for the company. The company purchased Boeing 737 to capsulate required stand-by crews, lower training and maintenance cost. The company has involved its aircraft into continuous operations i.e. higher aircraft utilization. As a result, South West's utilization rate is 7.1 hours. (Carlton, 2000)
Southwest has adopted different and effective mode of service, which is of great relevance, the airline has introduced an innovation distribution system through Internet, and telephone and travel agency i.e. traditional modes. The airline has further adopted strategies based on horizontal product differentiation that has proved to be important competitive element for the Southwest. The horizontally differentiated products have no classification of the particular product and brand in terms of qualities.
The success of the Southwest Airline has been the function of its ability to introduce and maintain minimum operating cost, and implementation of pricing strategies which have attracted different segments of consumers and have increased the load factors of carriers, which has further contributed towards sustenance of minimum cost. According to Clemons, the airline has preferred its operations in the regional airports, and which is based on strategic considerations, and subsequently the price factor. (Clemons, 2001)

Southwest is considered to be the leader among the Low Cost Airlines, and the airline has professional edge over its competitors.
The airline has adopted following measures to ensure that the traveling cost can be reduced significantly, for the convenience of the traveler and company's expenses. IN Varian has appreciated the plan, according to which, the Airline offers no meals, drinks, and snacks for free, and narrow seating arrangement has been adopted, the company offers no services for the ...Show more
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