When reading this case on the airline industry, the first thing that came to my mind was the lack of adaptability between the two strategic approaches known as the budget and the network airlines. Usually when you see businesses in the same industry, they continuously compete, taking others ideas and turning them into their own. What’s wrong with the airline industry today is the lack adaptation, depending on what they have done all these years, instead of molding new trends into their businesses. As you can see, the budget airlines have taken a new approach to bettering the overall needs of their customers, offering low fares and direct flights from cheaper airports. The network airlines need to rethink their strategies for the industry to return to profitability. An option may be taking an airline such as US Airways or Delta and add a budget airline to their business to boost revenue, while still offering the network flights as they always have. Budget airline profits have done nothing but create a solid increase in the past few years. Like I said previously, the bottom line is adaptation. If the airline industry wants to see a change, including profitability, there needs to be acquisitions made such as mergers or new budget airlines formed that add onto the network airlines.
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2 comments:
Danielle O'Neill - Plane Wreck Question #2
The budget airlines are in a different strategic group thant the major network airlines because they all follow the same guidelines : they purchase just one type of aircraft, hire non-union labor and cross-train employees to perform multiple jobs, whereas the major airlines have to have over 115 employees for just one flight.
The system of the major airlines is also different because they use the "hub and spoke" system. Under this system, the network airlines route their flights through major hubs, and the budget airlines only do "point-to-point" service. There are many contrasts between the Big Six airlines and the budget airlines that make one more successful than the other.
Tyler Bishop- Plane Wreck Question # 5
Major Network airlines need to cut their operating costs. By doing this they will be able to lower air fairs, which will lesson the price gap between the major network airlines and the budget airlines. Yes, they have cut their operating cost. No it is not enough to compete with these budget airliners. The big rise in oil prices hurt the major airline companies alot, in response to this they tried to raise prices. Raising prices did not help the major network airliners, it only made the budget airliners look that much better. No, they have not done enough, they need to be more inventive to lower their costs and to compete with the budget airliners.
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