Download - AIRTRAN: Competitive Trend Analysis BY: Candace Eldridge, Damian Pryor and E. Summer Banks
AIRTRAN: Competitive Trend
AnalysisBY: Candace Eldridge, Damian Pryor and E.
Summer Banks
Southwest Airlines
The Mission of Southwest Airlines is dedication to the highest quality of Customer Service delivered with a sense of warmth, friendliness, individual pride, and Company Spirit. (Source 1)
SWA Product
• Transportation – Boeing Jet 737 – 451 aircrafts – Frequent and timed flights – Point – to – Point verse Hub – to –
Spoke service – Seventy – nine percent non-stop
flights
• Shipping(Source 1)
SWA Place
• Southwest flies to 62 cities in 32 states.
• Founded in TexasDallas, Houston, San Antonio
(Source 1)
SWA Place (cont.) - Other Cities Served by Southwest (Source 1)
Albany Houston (Hobby) Orlando
Albuquerque Indianapolis Philadelphia
Amarillo Long Island/Islip Phoenix
Austin Jackson Pittsburgh
Baltimore/Washington Jacksonville Portland
Birmingham Kansas City Providence
Boise Las Vegas Raleigh-Durham
Buffalo Little Rock Reno
Burbank Los Angeles (LAX) Sacramento
Chicago (Midway) Louisville St. Louis
Cleveland Lubbock Salt Lake City
Columbus Manchester San Antonio
Corpus Christi Midland/Odessa San Diego
Dallas (Love Field) Nashville San Jose
Denver New Orleans Seattle/Tacoma
Detroit (Metro) Norfolk Spokane
El Paso Oakland Tampa
Ft. Lauderdale/Hollywood Oklahoma City Tucson
Ft. Myers/Naples Omaha Tulsa
Harlingen/South Padre Island Ontario West Palm Beach
Hartford/Springfield Orange County
SWA Promotion
Southwest.com Commercials
Advertisements(Source 1)
SWA – Price
Low-cost, low-fare strategy
Cost per Available Seat Mile Quarter 4 of 2004 – 8.18Quarter 4 of 2005 – 8.42
Revenue per Available Seat Mile
Quarter 4 of 2004 – 7.59Quarter 4 of 2005 – 9.14
(Source 2)
Delta Airlines Vision
• We want Delta to be the Worldwide Airline Of Choice
• -Worldwide… access to the world with the highest standard for customer service
• - Airline…staying in the business we know best, air transportation
• -Of Choice …passengers, provide the best service and value. personnel, recognizes and appreciates contributions. Shareholders, earn a consistent, superior financial return
(Source 3)
Delta Product• Transportation• Delta is the world's second-largest
airline in terms of passengers carried and the leading U.S. carrier across the Atlantic, offering daily flights to 492 destinations in 89 countries on Delta, Song®, Delta Shuttle®, the Delta Connection® carriers, and it's worldwide partners.
• Founded in 1928 in Monroe, LA• Now headquartered in Atlanta, GA(Source 4)
Delta Promotion
• Delta is a founding member of SkyTeam, a global airline alliance that provides customers with extensive worldwide destinations, flights and services
• SkyTeam Alliance: AeroMexico Air France Alitalia Continental Airlines CSA Czech Airlines KLM Royal Dutch Airlines Korean Air Northwest Airlines
(Source 5)
SimpliFares
• Delta’s ticket pricing is simplified
• Some flight restrictions removed (ex: Saturday night stays)
•Some fares reduced (Source 6)
Cost per Available Seat Mile
• Quarter 3 of 2005 – 13.7• Revenue per Available Seat
Mile• Quarter 3 of 2005 – 10.6(Source 7)
AirTran Mission StatementInnovative people dedicated to delivering the best flying
experience to smart travelers. Every day.
Our Guiding Principles:
• We celebrate bringing people together through:• Safety
Taking personal responsibility for the safety of each traveler and every Crew Member.
• CourtesyShowing respect and providing caring customer service to travelers and Crew Members.
• PrideIn our work, in one another and in contributing to the success of our airline.
• TeamworkSupporting one another and valuing our diverse contributions to meet every traveler's needs.
• InnovationActing with an empowered "can do" spirit to continuously improve our airline.
(Source 8)
Company Information from A1
• Operates over 600 flights a day • Market Consists of 49 cities currently
(Source 10)• More than 6,700 employees• Airline hub is Atlanta’s Hartsfield• Second largest carrier• World’s largest operator of the Boeing 717• Operates America’s youngest all-Boeing
fleet• Recently added Boeing 737-700 aircraft(Source 9 )
Major Products and Services
• AirTran provides low fare domestic air transport services across the US primarily focused in the East. The company offers the following services:
• Short haul flights
• Connecting services(Source 11)
(Source 10)
Future Outlook
(Source 10)
Recent Promotions
Has added all Coca-Cola products including the Coca-Cola with Lime and New Black Cherry Vanilla Coke
Held a promotional with Wendy’s to redeem coupons for one way tickets
AirTran offered low one way flights between Minneapolis/St. Paul to Chicago for seven major shopping days this past Christmas season
Re-launching “X-Fares” which is a standby program for 18-22 year olds
(Source 12-15)
DEFINITIONS:
• Cost Per Available Seat Mile (CASM) – The cost to operate each seat mile which is found by dividing operating cost by Available Seat Miles.
• Revenue Per Available Seat Mile (RASM) – The Revenue received for each seat mile offered which is determined by dividing operating income by Available Seat Miles.
(Source 16)
Unit Revenue 2003-2005
Network Rank Group
2003 Operating Revenue $(Millions)
2004 3rd Quarter Operating Revenue $(Millions)
2005 3rd Quarter Operating Revenue $(Millions)
1 US Airways $1,458.1 2,038.6 2,202.1
2 Delta 2,938.4 1,444.3 1,511.0
3 Northwest 1,602.8 3,061.7 1,880.1
4 United 2,593.7 2,824.1 3,064.8
5 American 3,241.1 605.8 3,265.8
6 Alaska 555.6 1,304.8 652.3
7 Continental 1,253.3 2,990.8 3,404.3
Group Total $13,643.5 14,270.1 15,980.4
This is the domestic Operating Revenue per Available Seat Mile
(Source 17- 19)
Unit Revenue 2003-2005
Low Cost Rank Group
2003 Operating Revenue $(Millions)
2004 3rd Quarter Operating Revenue $(Millions)
2005 3rd Quarter Operating Revenue $(Millions)
1 Frontier $165.8 214.4 868.3
2 AirTran 237.3 1,674.4 251.4
3 Southwest 1,553.4 245.6 373.6
4 America West 565.6 599.4 1,988.6
5 Spirit 109.6 113.9 104.9
6 Jet Blue 273.6 323.2 176.7
7 ATA 290.9 274.8 452.9
Group Total $3,196.2 3,445.8 4,216.4
(Source 17-19)
Unit Revenue 2003-2005
0
1000
2000
3000
4000
5000
6000
2003 2004 2005 Total
Delta
AirTran
SouthWest
(Source 17-19)
Unit Cost 2003-2005
Network Rank Group
2003 Operating Expenses $(Millions)
2004 3rd Quarter Operating
Expenses $(Millions)
2005 3rd Quarter Operating
Expenses $(Millions)
1 US Airways -$1,541.1 1,650.4 2,391.5
2 Delta -3,113.5 3,460.7 1,624.4
3 United -2,592.6 2,005.2 2,045.3
4 American -3,300.8 3,040.5 3,005.2
5 Northwest -1,516.0 1,395.8 3,460.0
6 Continental -1,306.9 3,235.6 3,588.8
7 Alaska -496.6 564.3 575.8
Group Total -$13,867.5 15,352.5 16,691.7
Operating Expenses Per Available Seat Mile in Cents
(Source 17-19)
Unit Cost 2003-2005
Low Cost Rank Group
2003 Operating Expenses $
(Millions)
2004 3rd Quarter Operating
Expenses $(Millions)
2005 3rd Quarter Operating
Expenses $(Millions)
1 Frontier -$143.4 215.0 320.5
2 AirTran -210.9 257.6 922.4
3 America West -520.1 129.1 238.2
4 Spirit -107.7 627.7 119.8
5 Southwest -1,368.1 1,483.1 372.4
6 ATA -268.0 309.1 1,715.6
7 Jet Blue -219.7 300.2 438.5
Group Total -2,837.9 3,321.8 4,127.4
(Source 17-19)
Unit Cost 2003-2005
-4000
-3000
-2000
-1000
0
1000
2000
3000
4000
2003 2004 2005 Total
Delta
AirTran
SouthWest
(Source 17-19)
QUESTIONS…
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BibliographySource 1 - Southwest Airlines. http://www.southwest.com/about_swaSource 2 - Security and Exchange Commission: Southwest Airlines Co. Form
10-K
http://www.sec.gov/Archives/edgar/data/92380/000095013406001553/d32370e10vk.htm#001
Source 3 - http://mwashington.ba.ttu.edu/5%20parts%20org%20change%20catalyst%2004.ppt#328,19,Delta Airlines Vision
Source 4 - http://www.delta.com/about_delta/index.jsp http://www.delta.com/about_delta/corporate_information/delta_stats_facts/index.jsp
Source 5 -
http://www.delta.com/about_delta/corporate_information/delta_stats_facts/index.jsp
Source 6 - http://www.businessweek.com/investor/content/jan2005/pi2005016_2351_pi036.htm
Source 7 - http://www.bts.gov/press_releases/2005/bts058_05/html/bts058_05.html
Source 8 - http://www.airtranairways.com/about-us/our_mission.aspxSource 9 – From Team A1Source 10 - Citigroup 2006 Small & Mid-Cap Conference Presentation
http://media.corporate-ir.net/media_files/irol/64/64267/Citigroup_3/sld004.htm
Source 11 - Datamonitor Company Profiles Authority http://search.epnet.com/login.aspx?direct=true&db=buh&authdb=dmhco
Bibliography Continued…
Source 12 - AirTran Airways Is First Airline to Board Black Cherry Vanilla Coke(TM) Website: http://www.mergentonline.com/compdetail.asp?company=-1&company_mer=80077&Type=news&Area=Recent&StoryId=200601111603PR_NEWS_USPR_____NYW157
Source 13 - AirTran Airways Welcomes X-Fare Travelers in 2006Website: http://www.mergentonline.com/compdetail.asp?company=-1&company_mer=80077&Type=news&Area=Recent&StoryId=200601050500PR_NEWS_USPR_____NYTH040
Source 14 - Wendy's air fare deal promotion called "a great seller." :http://www.mergentonline.com/compdetail.asp?company=-1&company_mer=80077&Type=news&Area=Recent&StoryId=200512300001KRTRIB__BUSNEWS_27423
Source 15 - Not Finding the Perfect Gift? AirTran Airways to Offer One-Day Shopping Getaways at Mall of America(R) or the Magnificent Mile:http://www.mergentonline.com/compdetail.asp?company=-1&company_mer=80077&Type=news&Area=Recent&StoryId=200512090935PR_NEWS_USPR_____NYF059
Source 16 - http://en.wikipedia.org/wiki/RASMSource 17 - Third Quarter 2005 Airline Financial Data: Regional Passenger
Airlines and Low-Cost Airlines Report Domestic Profit; Network Carriers Report Smaller Loss http://www.bts.gov/press_releases/2005/bts058_05/html/bts058_05.html
Source 18 - Third Quarter 2004 Airline Financial Data: Regional Passenger Airlines Report Highest Rate of Domestic Profit http://www.bts.gov/press_releases/2004/bts035_04/html/bts035_04.html
Source 19 - BTS Releases Third Quarter 2003 Airline Financial Data; Regional Passenger Airlines Report Highest Rate of Domestic Profit http://www.bts.gov/press_releases/2003/bts029_03/html/bts029_03.html