Monday, October 8, 2007
Planwreck Question # 2 Jonathan Coltrain
Yes, budget airlines are in a different stratgeic group than major network airlines. Budget airlines use a strategic posture that gives them a 30 to 50 percent cost adavantage over traditional airlines. Each budget airline purchases only one type of aircraft. Then they hire nonunion labor and cross-train emloyees to perform multiple jobs. Budget airlines also favor "point to point" flying, instead of stopping off a major hubs they use smaller less expensive runways. They also focus on large ares with lots of traffic. Most major networks tend to fly into all major hubs, instead of a "point to point" flight.
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Plane Wreck Question #4 - Nerrisa Pareja
For the industry to return to profitability and be successful again, they need to focus on what their competitors are doing in order to make profits. For example, Budget Airlines employ nonunion employees and the Big Six airlines employ unionized employees. The fact that Budget Airlines hires nonunion employees is very affective in that it saves them a lot more money. I also think that Big Six airlines should not raise their prices so incredibly high because it is not going to attract business. Budget Airlines focuses setting their prices low and their planes fill right up. It seems as though Big Six airlines just targets businesspersons and people that fly first class, they should really be targeting everyone if they want to make more profits. Therefore, I think that the industry should take a better look at what their competitors are doing as well as focus on major markets with a lot more traffic.
I am doing another question because Jenna and I did the same one.
Plane Wreck Question # 3: Nerrisa Pareja
The Network airlines and the Budget Airlines definitely had different strategic approaches. The first major difference was that budget airlines focused on major markets that had a lot of traffic while the Big Six airlines focused on a “hub and spoke” system. They were also very different in the way they hired employees. Big Six hired unionized workers while Budget airlines hired nonunion workers. This was a major strength on their part because they cut costs this way. Big Six also hired cross-trained employees so that they could perform multiple jobs while working and have less people on their payroll therefore, cutting costs again. Another difference was that Budget airlines promoted very low prices and Big Six charged higher prices. I think that if Big Six would have used lower prices their industry would not be pushed back into huge losses. Also, if Big Six would have thought more about setting low prices to fill up seats rather than just focusing on businessmen and people flying first class they would make more profits in the long run.
Planewreck Question #5- Mike Dombrowski
The airline industry, especially the major airlines, attempted to cut operating costs so that they could lower fairs, in order to make up the gap in prices between the major and budget airlines. Yes, to cut costs. The increasing oil prices hurt the big airlines and forced them to raise thier prices. No, I don't think they have done enough and need to develop better ideas to lover their costs in order to complete with the lower cost budget airlines.
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