Monday, October 8, 2007
Plane Wreck Question #2 - Sean Doherty
Yes, i feel that the budget airlines are in a different strategic group than the major network airlines. They are in a group that is more appealing to customers by favoring flying "point to point" rather than indirect flights by major airlines. They also fly out of cheap secondary airports rather than expensive major hubs. So all in all the set prices low in every aspect to fill up their seats on the plane.
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2 comments:
Plane Wreck #4- Evan Gaffny
In order for the Airline industry to return to profitability companies that are under bankruptcy protection must be shut down and airlines still running need to find ways to cut costs. The majors should try to take some of the same measures that the budget airlines are taking. Such as using smaller aircraft and landing in smaller secondary airports and offering direct flights.
Plane Wreck #5
What must the major network airlines do to respond to the competitive threat posed by the budget airlines? Have they taken steps in this direction? Have they done enough?
For starters the larger airlines began to cut prices to try to maintain their passenger loads in the face of declining demand, however it didn’t work. Their next attempts was to park unused aircraft in the desert. This would cut maintenance and other such fees as well. The network airlines have also responded by adding more flights in an attempt to squeeze its competition from the market. Between 2001 and 2004 the network airlines cut costs by 13.4 billion and reduced payrolls by 100,000, however it is just not enough to rebound from this major market shift.
I think the large airlines should either use their grandfathered position to attract and keep loyal customers. It seems they can no longer offer their service in the way they used to. So adapting by downsizing and focusing their money and efforts toward a certain demographic such as business class, or first class, I would say they would still have a chance to claim their niche in the market.
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