Hub And Spoke System Essay

The United States carries over one third of the globe’s total traffic, where Over 1.5 billion passengers fly annually. Over the past 20 years, air travel has grown at an average of about 5% per year, the reason for annual change is usually differences in economic growth, and of course other environmental factors, such as the current war. As a rule, the annual growth in air travel has been about twice the annual growth in GDP. Deregulation, liberalization, and competition have essentially altered the management strategies and practices of airlines. Productivity improvements and cost management have been two of the greatest concerns for US airlines for the past twenty years. As a whole, the airline industry must continue to improve their specialization in terms of fleet utilization, pricing and revenue management, and schedule optimization.

2. United Airlines likes to use strategic planning to try and stay ahead of the competition but in its history it has not always worked. United Airlines has tried to make mergers without the approval of the union and were not able to complete it when the department of justice said that the merger would not happen because it would bring a loss in competition. One of the things that has helped the business, is that they use a hub and spoke method for their passengers. This allows the company to provide many different air ports and terminals that its customers can use and also helps to stream line flight schedules and saves the company millions of dollars every year. Partnering with these major companies to form a global alliance helps to circumvent national laws, share resources to develop additional routes and global marketing strategies. The major alliances were Star, Oneworld, SkyTeam, and Wings. The agreememnt that these companies made to work together saved all of the millions of dollars and was able to help all of the companies to compete globally.

Air Southwest was incorporated on “March 15, 1967” (1966 to 1971, 2016), at a time when “price competition from interstate competitors was ferocious” (Heskett & Sasser, 2013, p. 3). However, Rollin King one of Southwest original founders had an idea that would shake things up. While having a couple of drinks with his friend Herb Kelleher, he scribbled is point-to-point triangular service idea

Air Canada has been in the business of air transport for an extended period of time. Due to the experience and the exposure of the carrier in the field, it has made a commendable progress through many strategies as well as customer proximity. One of the approaches taken by the airline involves the identification as well as an implementation of cost reduction initiatives in a bid to increase revenue from its operations (Air Canada, 2016). It is also attempting to connect with the existing carriers across the world to connect the current customers to the international world. This approach has been adopted to increase its competitive advantage over other existing airlines.

Southwest Airlines shot out of the gates, much to the chagrin of their competitors as a short haul, low fare, and high frequency carrier. As SWA expanded and deregulation occurred, they had to decide what kind of airline they wanted to be and how they would adapt to the changing environment. The FAA reports that passenger numbers are expected to reach a billion passengers in 2023 (FAA, 2011). Most Airlines are responding to the increased demand by centralizing and consolidating their assets. This in turn creates a situation where capacity is maximized in some airports and congestion increases causing significant delay. Demand will continue to rise over the next few decades and these airlines must rely on regulators and policy makers to upgrade the very necessary infrastructure and technology. Southwest’s strategy is to remain a point to point carrier instead of the traditional hub and spoke carrier, satisfying their customer demand with lower congestion at underutilized airports with more flights. However Southwest continues to remain flexible looking forward as it adopts hub and spoke techniques, coordinates with the FAA and governing bodies, and invests heavily in its most important airports to stay ahead of the pack.

BlueSky flies three airplanes between Houston and three cities, Chicago, Miami, and Phoenix. These three cities are the spokes connected by the Houston hub. A few times each day the three airplanes fly from the spoke cities to Houston. They arrive

would affect the business. Delta Airlines operates off the “Hub and Spoke” system operating out

American airline industry is steadily growing at an extremely strong rate. This growth comes with a number economic and social advantage. This contributes a great deal to the international inventory. The US airline industry is a major economic aspect in both the outcome on other related industries like tourism and manufacturing of aircraft and its own terms of operation. The airline industry is receiving massive media attention unlike other industries through participating and making of government policies. As Hoffman and Bateson (2011) show the major competitors include Southwest Airlines, Delta Airline, and United Airline.

In the opinion of Dr. Grace S. Thomson, “a heterogeneous mix of long and short-haul in very thing segments, passenger, density, and per capita income at end points gives [Southwest Airlines] competitive advantage. The way to establish a company in such a market as the airline industry would be to strategically expand in to airports with less competition. Southwest Airline capitalized on this fact to become a national airline (Keller 2008). Southwest Airlines satisfies what were once negligible markets. Southwest serves “64 cities in 411 non-stop city pairs” (Thompson 2008). Saturating these markets has allowed Southwest Airlines to expand without putting a strain on its pocket book (Keller

Although the airline industry is in the business to transport people from one place to another they could not function without those who keep the airplanes operating on schedule. The airline industry has become the major provider of public transportation for Americans traveling between the nation's cities. Scheduled airlines now account for 92%

Another emerging trend in the past five years has involved the progress made on open skies agreements between the United States and other countries. Open skies agreements serve to liberalize Orlando International Airport transport markets between the two signing countries or parties in the agreement. These agreements remove government restrictions, such as limits to the number of flights any one airline is allowed to operate per week between countries. The removal of these limitations has opened some routes up to increased competition, by allowing Orlando International Airport to fly more frequently and making these routes more accessible. Orlando International Airport could not previously justify the capital expense of operating on routes with limited flights are now able to profit on routes with high demand.

The airline industry has always been a fiercely competitive sector. Since the invention of low-cost carriers, also known as no-frills or

Airlines Industry is large and growing, it is also the most fiercely competitive sector. It facilitates international trade, world economy growth, tourism and international investment. The airline industry has over time with the use of modern technology been able to take advantage of the short haul, high frequency and gained a competitive advantage over other forms of travel, such as buses and railroad travel. Additionally, the airline industry still holds the market for global travel at a low cost and convenient way to travel. The aviation industry gives a good contribution to the GDP which includes the following: airline services, general aviation, civil airport operations, aircraft manufacturing, and

There have been few inventions to change how people live and experience the world considerably as the creation of the airplane. Today, traveling by air has become the norm and it would be difficult to imagine life without it. Air travel has improved the way people are able to conduct business by shortening travel time and changing their thought of distance. The companies within the airline industry exist in a very competitive market. One of those companies, Southwest Airlines, features low-fare, no-frills air service with frequent flights of mostly short routes. Costs are kept down by the exclusive use of Boeing 737 aircraft, which allows for low maintenance costs and quicker turnaround times for flights, and by an emphasis on ticketless travel (Encyclopedia Britannica). This paper will address two segments of the general environment and how they affect Southwest and the airline industry; evaluate how Southwest has addressed two forces of competition; predict what Southwest might do to improve its ability to addresses these forces; assess the external threats affecting Southwest; discuss Southwest’s greatest strengths and most significant weaknesses; determine Southwest’s resources, capabilities, and core competencies; and analyze their value chain.

simple. If they could take airline passengers where they want to go, on time, at the lowest