Airline Analysis Statement of Problem: SlugAir, a small regional airline, aspires to become a much larger airline. They pride themselves on being an efficient, single-class, on-time and reliable airline. This airline appeals to those who want reliable, get me where I wanna go service whether the passengers be the everyday traveler or a cost-conscious business traveler. Currently, SlugAir serves small locations throughout California and the Western US. SlugAir serves these locations by feeding hubs for the national carriers and servicing routes that avoid the major hubs.
This strategy has allowed SlugAir to become a very profitable small no frills airline. Most airlines are organized in what is called hubs and spokes. The hubs are two major cities that all of the airline’s flights fly out of to smaller cities called the spokes. In between the hubs is what is considered the airlines main route as the flights in between the hubs are the companies most profitable. Flights to the spokes make the airline extra money and people on these flights usually have a lay over at the hub and then go onto the smaller city or may even switch planes to get to their final destination.
Thus, the airline feeds its own route by flying to their hubs ( main money making cities) on the way to also getting those that want to get to smaller cities to their destinations. In order for SlugAir to become bigger and more profitable it must open a route between two major cities in the west. For efficiency, these cities need to be ones that it currently services in order to allow them to feed their own route. The competitors that we are considering are 1) United 2) Alaska 3) Delta and 4) Southwest. In order to find the best possible route to open we will evaluate each of these airlines and the routes in which we want to compete.
We will look at each airline in terms of their size, power and efficiency in the routes we are considering. We will look at the flights offered, their times and frequency. We will also look at the possibility of SlugAir competing with each of the competitors and how each might react should SlugAir enter their market. Lastly, we will evaluate ways to improve SlugAir as an airline. We will look at ways to make the company more appealing, more widely known and more successful. United Airlines Corporation (UAL Corp.) United Airlines is the largest domestic air carrier in the world.
With hubs in Chicago, Los Angeles, Denver, San Francisco, and Washington D.C., and key international gateways in Tokyo, London, Frankfurt, Miami and Toronto. United flies to 134 destinations in 27 countries, with a fleet of 577 aircrafts. United’s 101,000-plus employees worldwide bring people together safely, conveniently and efficiently almost 2,300 times a day. United’s mission statement is: To be recognized worldwide as the airline of choice. In 1994, United launched Shuttle By United, which competes successfully against the new wave of low-cost, no-frills carriers.
In 1997, United formed The Star Alliance global partnership with four International carriers to provide customers with access to more than 815 destinations around the world. In May 1997, United discontinued its Friendly skies slogan introduced in 1965, and launched a new ad campaign called Rising, which focuses on the company’s new Customer Satisfaction Philosophy (CSP), which will become the basis for all their actions in the future. There is only one direct route to and from Seattle to San Francisco, which is provided by Shuttle By United and not by United Airlines itself. Shuttle By United provides approximately 10 daily flights from Seattle to San Francisco for as low as 166.50 USD (based on round trip); and 10 daily flights from San Francisco to Seattle for as low as 133.00 USD (based on round-trip and 7-day advance-purchase). These flights operate only between the hours of 6:00 AM and 6:00PM-10:30PM, depending on the day.
And according to their online reservation system, they do not offer one way trips, only round-trips (this may be different, if calling the airline directly or booking flights by other means). It would be virtually impossible for SlugAir to compete with United, because United is such a huge, world-renowned corporation. United could respond to SlugAir’s competition by doing one of a few things; they could introduce more low fare deals, and in the long-run could probably create additional direct routes to and from Seattle to San Francisco themselves. They can also do nothing at all about SlugAir’s imposition on their territory. They are making so much money from their other domestic and international routes, that SlugAir’s imposition wouldn’t even cause a dent on their total revenue.
United has bigger issues to worry about, like their planned merger with US Airways; which will make them an even greater Corporation. Whichever way they choose to react to SlugAir’s imposition, they are still powerful enough to compete on their own, and still be the strong name and corporation that they are. Delta Airlines Delta Air Lines, the #3 US carrier (behind UAL’s United and AMR’s American), is expanding its US regional operations while building a global alliance. With hubs in Atlanta, Dallas/Fort Worth, Cincinnati, New York City (Kennedy), and Salt Lake City, Delta flies to 205 US cities and about 45 foreign destinations. It also serves more than 220 US cities and nearly 120 destinations abroad through code-sharing agreements. In the US, Delta owns regional carriers Delta Express, Atlantic Southeast, and COMAIR.
Internationally, it has formed the Sky Team alliance with Air France, Aero Mexico, and Korean Air Lines to compete with rival alliances Star and One world. Delta also owns 40% of computer reservation service WORLDSPAN. Delta Air Lines, has three flights each day round trip from San Francisco to Dallas (Fort Worth). Delta has no flight from San Francisco to Dallas (Love Field). Delta’s connection carriers suspended three flights. Delta has also reduced its domestic schedule by 2.7% during the first quarter of 2001 to provide more reliable service for its customers.
The key issue facing the industry today is the possibility of consolidation and restructuring. Delta’s objectives are to Become #1 in the eyes of their customers; develop an airline network to take passengers from anywhere to everywhere, build a superior team with the will and the means to win, and find innovative ways to maximize the value of the company’s core.