Southwest Airlines
A Basic Description of the Airline Industry Industry - The nature of the service The Airline Industry is a service industry but due to all the equipment and facilities involved in transportation, it is easy to lose sight of that fact. Airlines perform a service for their customers-transporting them and their belongings (or their products, in the case of cargo customers) from one given point to another for an agreed price. The objective is to provide a service at a price that people are willing to pay and to keep costs below that price so that a profit can be made. Industry - Information about Customers and Channels of Distribution There are several types of airlines, defined by the type of service they offer, annual revenues and the type of aircraft they use. All federal safety requirements are pegged to aircraft size. Major Airlines earning revenues of $1 billion or more annually in scheduled service. They generally provide nationwide and in some cases worldwide service. There were 12 major U.S. airlines in 1997: Delta, United, American U.S. Airways, Southwest, Northwest, Continental, Trans World, American West, Alaska, Simmons, and Reno. National carriers are scheduled airlines with annual rev . . .
Many of the airlines in this category serve particular regions of the country, although some provide long-haul and even international trade Regionals, as their name implies, are airlines whose service is limited to a single region of the country, transporting travelers between the major cities of their region and smaller, surrounding communities. It is an undisputed fact that there is no viable alternative to air travel over long distances, such as international travel. Increasingly, airlines are leasing equipment, including equipment they owned previously but sold to someone else and leased back High Cash Flow : Because large airlines own large fleets of expensive aircraft which depreciate in value over time, they typically generate a ------------------------------------------------------------------------ **Bibliography** . These systems help airlines and travel agents keep track of fare and service changes, which occur much more rapidly today than they did when the government controlled such things. The result of such peaks and valleys in travel patterns is that airline revenue also rises and falls significantly through the course of the year. The agreements allow the small carriers to share the two-letter code used to identify their larger partners in the CRSs. Industry - Economic Trends General trends in the U. Industry - Size of the Industry With greater competition on the vast majority of routes, extensive discounting, and more available flights, air travel has grown rapidly since deregulation, recessionary periods excluded. Thin Profit Margins The bottom line result of all of this is razor thin profits, even in the best of times. While these flyers represent only 8% of the total number of passengers flying in a given year, they make about 45% of the trips. By 1993 they were carrying nearly 490 million. Airline prices change daily in response to supply and demand and to changes in the prices of competitors.
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