Southwest Airline Case Study

Jun 18th, 2015
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Alabama State University
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Q.No.1. What are the strengths on which the company has been able to be profitable, even during the recession? ANS. There are five major carriers in the U.S. and they account for over 80% of the airline market share. United is the largest airline with 22.1% market share and is categorized as a major carrier, whereas Southwest is a national carriers with 4.4% market share. 1. The major carriers utilize a hub and spoke travel model where passengers are brought to a central location on smaller planes, and transferred to larger planes for major routes. Southwest operates on a point-to-point system where more flights are direct. 2. The majority of airlines expenses are fixed costs; these include fuel, planes, labour and facilities. Half of these fixed costs are labour. 3. A carrier's passenger capacity is measured in Available seat miles (ASM). An ASM is one seat flown one mile. Carrier productivity is calculated by dividing total operating costs by ASM. Load factor is another measure o

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Management of Customer ServicesMuhammad Akbar A1KW202001Ms. Shabana FarrukhMs. Shaheen KamalMs. Kausar SultanaSouthwest Airline Case StudyQ.No.1. What are the strengths on which the company has been able to be profitable, even during the recession?ANS. There are five major carriers in the U.S. and they account for over 80% of the airline market share. United is the largest airline with 22.1% market share and is categorized as a major carrier, whereas Southwest is a national carriers with 4.4% market share.1. The major carriers utilize a hub and spoke travel model where passengers are brought to a central location on smaller planes, and transferred to larger planes for major routes. Southwest operates on a point-to-point system where more flights are direct.2. The majority of airlines expenses are fixed costs; these include fuel, planes, labour and facilities. Half of these fixed costs are labour.3. A carrier's passenger capacity is measured in Available seat miles (ASM). An ASM is one seat flown one mile. Carrier productivity is calculated by dividing total operating costs by ASM. Load factor is another measure of airline utilization of ASM and is measured by dividing revenue passenger miles (RPM) by ASM. Finally yield is calculated by diving passenger revenue by RPM. Yield is an expression of the cost of flying one passenger on mile.4. The airline within an airline concept was an attempt by the major carriers to make their hub and spoke systems coexi

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