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The Airline Industry - Case Study Example
Author : xhermann
Pages 4 (1004 words)
Airlines operating in the Americas. Despite a global recess in airlines industry, Southwest carried "78 million revenue passengers in a recent year, about 75 per flight, and flew 60 billion revenue passenger miles (RPM)." (Airlines: Industry overview, 2009).
This achievement is indeed remarkable against the backdrop of escalating fuel prices, rising operating coats and fierce competition in the airlines industry, either leaving many airline companies to close shop, or seek mergers and strategic alliances with larger airlines, to save themselves from virtual extinction.
Business strategy in terms of quick, short and multiple entry and departures from secondary airports, or short haul flights, which not only add to revenues but also cut downs operating costs and saves fuel dramatically.
Larger airlines are committed to long haul services, especially over global skies, which, economically speaking, freezes revenues and incurred large burn-out of fuel. When a comparative analysis of short flights and long hauls are made, it is seen that the former serves profits and revenues more loyally and conscientiously than the latter. It is necessary for a no frill airlines like South West to work "with new schedule planning tools and processes and fleet flexibility," so that Southwest are " well-positioned to respond to a rapidly changing environment and have the flexibility to adjust our flight schedule, as necessary, to eliminate unproductive flying." (Berg, 2008).
The Company has entered into understanding for hedging 80% of estimated fuel needs with values assigned being approx. $ 61 /barrel. ...