The Airline Industry Value Chain Essay

The airline industry has been a major factor in the globalization of the world economy. It connects the sellers and the buyers as well as transports goods across countries. It also breaks the time and distance barriers. In the past, air travel was considered a luxury but it is now a common necessity.

This new reservation system opened many doors in the industry. Most of the travel Agencies started using the system as well as the advantages of discount fares that they could find in this system.

None of the Southwest’s competitors can completely copy what Southwest is doing, because Southwest is a values-based firm. Southwest’s strategies can be imitated, but Southwest’s culture cannot be copied. I would like to explain what the values-based diverse firm looks like, how Southwest is values-based diverse, and why Southwest’s culture cannot be copied. The following are the relevant facts, the analysis, and justification using supporting evidence.

Product markets consist of various variables such as household sector, capital investment, business sector, the government, and foreign sector. The main function of a product market is to provide a viable platform for exchange of these variables. To gain strategic understanding of product markets, one needs to have adequate knowledge on both demand and supply side of the market. Through product market, household sector has an access to consumer goods (Liberman‐Yaconi, et al 2010). Besides, the business sector access capital investment available in the economy. The government and foreign sector are also interested parties in capital investment. Clear knowledge of these variables and interaction among themselves enables one to acquire strategic

Southwest Airlines aims to satisfy these requirements, by providing an environment that is desirable to our customers. This organization firmly believes that technology can be work together with consultants to target a wide range of customers, who are looking for a quick and efficient way to beat the, hassles of how we arranges our travel plans today. The President of Southwest Airlines will look at providing services to its customers at a very competitive price.

Those who travel through the skies using the different airline companies, choose their carrier for various reasons. Some consumers are loyal to one airline, others may choose the airline due to price, and then others may choose it based on takeoff and land times, and then there are those who do not have a choice as only one airline services the location they need to arrive at. Regardless of the reason, when we all choose our next airline to travel, the majority of travelers will not choose Southwest Airlines for their heart shaped logo being installed on the seats of their latest 737-800 aircraft built by Boeing (SOUTHWEST, 2016). Southwest employees commit themselves to their jobs and are proud to put on their newest uniform with a heart logo to show every passenger the love they have for their employer. Companies with a good culture can change an employee’s behavior and attitude due to their surroundings and be far more successful, than a company who does not value the work or personal sacrifices their employees make. Sometimes a company’s success can draw attraction from another company looking for a takeover with the intension of increasing their bottom line. When this type of action occurs; they may be two different in the type of industries, just as night is to day, both organizations need to share a common ground to be as successful as they are separately. Nonetheless, there are some investors who would have expected Southwest to buy one the

The airline industry has seen drastic changes since September 11, 2001. The government ordered a complete shutdown for three days of not only all commercial aircraft but such carriers as domestic flights and emergency aircraft. For days after September 11th, all aircraft stayed on the ground. Even military aircraft had to receive special clearance to fly. In a ripple effect, the entire economy of the United States and the world was put on hold. The New York Stock Exchange shut its doors because of the attacks on the towers of the World Trade Center.

In April 1992, American Airlines launched "Value Pricing" -- a radical simplification of the complex pricing structure that had evolved over more than a decade following deregulation of the U.S. domestic airline industry. American expected that the new pricing structure would benefit consumers and restore profitability to both American and the industry as a whole. The critical issue raised is: Would American's bold initiative work?

The Airline industry has experienced continual problems with rising costs with both fuel and maintenance which has caused them to increase their fees to the consumers to pay for those rising costs. This paper will help explain what an airline such as Delta does to help alleviate such costs without forcing its consumers to flip the bill through high fees that consist of tickets, baggage fees and food. The costs of doing business in aviation today have spiraled out of control making it very expensive for both airlines and the

The Airline Industry is in an interesting situation. Simply adding a low cost alternative is not enough in the industry. The Internet has made the power of buyers grow with the transparency of ticket prices. This is not something that will change any time soon. Because of this profitability is predominately reserved for low-cost yet distinctive carriers. No consumer wants to ride what they consider a “lesser” airline. Airlines need a way to distinguish themselves from one another while also acknowledging the increased power of buyers.

Airlines use a formula of combining their yield and inventory costs to determine ticket prices. While it is imperative to focus on the idea of being profitable, the focus is to maximize the cost of the flight revenue. One huge factor that encourages an increase in the cost of tickets relates to a customer ordering a ticket close to the departing date, define this as a risk factor because they need to make up for all unsold seats. A high percentage of the revenue is dedicated to overhead costs such as fuel and labor. When a ticket price is higher with one airline than the other, the customer interprets this as being an excessive cost. The demand is greatly affected by the external market

1) Introduction to airline industry 2) Drivers of globalisation using yip’s model 2.1 Market globalisation 2.2 Cost globalisation 2.3 Globalisation of government policies 2.4 Globalisation of competition 3) Localisation- arguments against globalisation 4) Pestle Analysis 5) Porter’s 5 forces analysis and their application to Airline industry 5.1 Rivalry amongst Existing Firms 5.2 Threat of substitution 5.3 Threat of new entrants 5.4 Power of customers 5.5 Power of buyers 6) Opportunities and Threats of Airline industry 7) Internal analysis of Virgin Airlines: Strengths and Weakness 8) Financial Statics of Virgin Atlantic Airline 9) Strategic Changes of Virgin

Over the past years, customers have been heavily relying on airline reservation systems to book their tickets, reserve seats, pay for the tickets and also check-in online. For customers, this has been a very convenient method and they are able to easily plan their trips. For the Airline companies, these systems have the whole flight inventory managed. They have all the flight information stored and records are maintained. It also provides a platform for communication between other airline companies for their “code-sharing plans” and

American Airlines’ “store front” is the computerized reservations system, SABRE (semi-automated business research environment). All sale and cancellation transactions, whether from American Airlines reservations agents or travel agents, pass through SABRE, updating reservations inventory for all affected flights. Because the yield management decision-making process is so large and complex at American Airlines, effective control of the inventory of seats can be accomplished only with more advanced automated models.

Elimination of several services including in-flight meals, assigned seating and baggage transfer to connecting airlines results in costs savings; and