Airline Industry - Web viewAir travel remains a large ... In order to implement the best strategy in...
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Table of ContentsPART I: DESCRIBE TWO PUBLICLY TRADED BUSINESS RIVALS......................................................................3
Question 1: Airline Industry: US Airways and Southwest Airways.........................................................3
PART II: OPPORTUNITY................................................................................................................................4
Question 1: Airline Industry....................................................................................................................4
Question 2: Geographic Area..................................................................................................................5
PART III: INDUSTRY ANALYSIS......................................................................................................................5
Question 1: “5-forces” Analysis..............................................................................................................5
Question 2: Profitability..........................................................................................................................7
Question 3: Key Success Factors.............................................................................................................8
Question 4: KSF Protecting Profit..........................................................................................................11
PART IV: STRENGTH ASSESSMENT.............................................................................................................12
Question 1: Calculation of Key Success Factors....................................................................................12
Question 2: Distinctive Competency Scores.........................................................................................15
Question 3: Average of Distinctive Competency Scores.......................................................................16
Question 4: Company with the Competitive Advantage.......................................................................16
Works Cited...............................................................................................................................................18
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PART I: DESCRIBE TWO PUBLICLY TRADED BUSINESS RIVALS
Question 1: Airline Industry: US Airways and Southwest Airways
Air travel remains a large industry and it continues to grow. Two airlines that are among the
major players are Southwest Airlines and US Airways Group. These two businesses are competing in the
Domestic Airlines in the US Industry. Although US Airways has some flights internationally, our main
focus will be on their domestic flights. Both companies are competing on optimum capacity utilization,
fuel and labor costs, maintenance capacity, and customer service and satisfaction. Southwest Airlines
holds 8.4% of the market share in this industry and US Airways Group holds 6.8% (Airlines, 1999-2010).
Southwest Airlines was incorporated in 1976 and began operation on June 1971 with three Boeing 737
aircrafts (Airlines, 1999-2010). Their corporate office can be located at 2702 Love Field Drive, Dallas,
TX 75235. Southwest Airlines provides “point-to-point service, rather than the hub-and-spoke service
provided by most major U.S airlines, in order to minimize connections, delays, and total trip time”
(Southwest Airlines Co., 2009). This has helped them become the most successful low cost carrier in the
U.S. Even during our economic downturn, they have continued to be profitable. Southwest only uses one
type of aircraft, the Boeing 737, which has helped keep costs down and minimized training and
maintenance costs (Airlines, 1999-2010). In an attempt to differentiate their service and gain market
share, Southwest has been marketing their lack of bag fees (Corridore, 2009). According to a Wall Street
Journal article, “Southwest Airlines plans to buy AirTran for about $1.4 billion in cash and stock. The
deal is expected to close in the first half of next year” (Solsman, 2010).
US Airways Group was formed in 1982 and has origins tracing back to the formation of All
American Aviation in 1939 (US Airways Group, Inc., 2009). Their corporate offices can be found at 111
West Rio Salado Parkway, Tempe, Arizona 85281. When US Airways emerged from bankruptcy in
September 2005, they merged with America West Holdings Corporation to form the “first nationwide
low-cost, hub-and-spoke carrier (Airlines, 1999-2010). Today, they are the “fifth largest airline in the
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United States as measured by domestic revenue passenger miles and available seat miles (US Airways
Group, Inc., 2009). Their focus city is at Ronald Reagan Washington National Airport and they also have
hubs in Charlotte, Philadelphia and Phoenix. US Airways Group believes that if they concentrate on their
strengths and eliminate unprofitable flying, they will be better positioned; therefore during the first half of
2010 they cut approximately 1,000 positions (US Airways Group, Inc., 2009). Due to the rising fuel costs
and economic conditions, US Airways Group saw a net loss of $200 million in 2009. However, this was
an improvement from 2008 where they posted a $2.2 billion loss (Airlines, 1999-2010).
PART II: OPPORTUNITY
Question 1: Airline Industry
The Domestic Airlines industry in the US provides air transport services for passengers, cargo,
and/or mail. It consists of “about 50 mainline commercial passenger airlines, of which about 20 are
considered major airlines, defined as airlines with annual revenues in excess of $1.0 billion” (Corridore,
2009). The difficult U.S economy has affected the airline industry and this has “reduced business
demand, as companies tighten corporate travel policies, resulting in a decline in business travel and a
decrease in the percentage of full-fare purchases” (Southwest Airlines Co., 2009). The world price of
crude oil is a key driver that affects the airline’s industry up and down cycle. “During 2009, the price of
crude oil on a per barrel basis ranged from a high of $81.03 to a low of $34.03, and closed at $79.39 on
December 31, 2009” (US Airways Group, Inc., 2009)). These high fuel prices plus the global economic
recession have been major factors behind the airline industry experiencing low revenues. In recent years,
Americans have reduced their spending which has included their total number of domestic trips by airline.
In 2008, a number of airlines had to cease operations, some merged together, and in order to reduce costs,
airlines increased code sharing arrangements (Airlines, 1999-2010). A few airlines, such as Southwest,
have made it through this economic crisis particularly because of strong fuel-hedging strategies (Airlines,
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1999-2010). Lately, airlines have found other ways to become profitable and nickel-and-dime their
consumers. Stand-by charges, cancellation penalties, and, of course, baggage fees are all in play for
airlines now (Matlin, 2010). Also, because there are less seats of available, consumers who are willing to
fly, pay more.
Question 2: Geographic Area
Due to the fact that we are focusing primarily on the Domestic Airlines industry in the US, the
geographic region that has the largest amount of demand is the United States. This industry has been
declining since 2001. The demand for domestic flights has decreased at an annualized rate of 1.3% over
the past five years (Airlines, 1999-2010). About 7.8% fewer passengers boarded domestic flights in 2009
compared from 2008 (Airlines, 1999-2010). “Domestic travel peaked at 681.9 million enplanements in
2007 before plunging by 4.0% 2008 and 5.1% 2009” (Airlines, 1999-2010). However, the Domestic
Airline industry did experience an 8.3% increase in revenue between 2009 and 2010, ending at $139.24
billion (Airlines, 1999-2010). In the next five years, industry revenue is forecast to exhibit positive
growth, increasing at a rate of 3.0% per year to $161.75 billion (Airlines, 1999-2010). “This recovery will
be driven by Americans regaining employment and thus having higher disposable incomes to pursue
leisure activities, including travel” (Airlines, 1999-2010)
PART III: INDUSTRY ANALYSIS
Question 1: “5-forces” Analysis
In order to implement the best strategy in an attempt gain a sustainable competitive advantage
over rivals, business managers must analyze their industry using Porters Five Forces Model. Five-forces
analysis measures the intensity of competitive forces within an industry against threats to profit of the
average firm with no particular strengths or weaknesses. The competitive forces include suppliers, rivals,
buyers, substitutes, and threat of new entrants.
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Supplier’s threat to profit in the airline industry is highly intense. According to the 10-k filing of
Southwest airline, item 1a, page 16, “The company is dependent on one sole supplier for aircraft parts. If
the company were unable to acquire adequate support for parts, operations would be materially affected.”
It is reasonable to assume the supplier power for the industry is similar to Southwest airlines threat. There
are only a two major suppliers that compete in the airline supply industry, Bowen and Airbus
(Investopedia). Having only two large manufacturers of aircrafts, airlines are forced to make purchases in
advance, which can significantly hurt profit it future demand falls.
Rivalry amongst competitors in the airline industry is very intense and poses a high threat to
profit. According to the US airways 10-k filing, item 1a, on page 20, “The airline industry is intensely
competitive and dynamic. Our revenues are sensitive to numerous factors and the actions of other carriers
in the areas of pricing, scheduling, and promotions can have an adverse affect on our revenues and the
overall industry.” The airline industry has many competitors that are proportionate in their market share
which poses a high threat, as fixed cost are very high (Airlines, 1999-2010).
Consumers looking to purchase the services provided by the airline industry provide a high threat
to profitability for a company. Stated in the Southwest 10-k filing, item1a, on page 17, “The airlines
industry is affected by many conditions beyond its control, especially changes in consumer preference,
perceptions, spending patterns, and demographic trends.” Customers have the ability to choose among
many different airlines with a low cost of switching (Industry analysis lecture). When buyers have less
money to spend, they use air travel less frequently, which poses a high threat to the profit in the airline
industry.
The efficiency and convenience of air travel is tough to imitate by other forms of transportation
although there are other travel options customers can substitute for air travel. As there are other options, I
believe the magnitude of the substitute threat is moderate. According to IbisWorld airline industry
analysis, under competitive landscape, “Customers may substitute car, train, bus, or sea transportation
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instead of air transportation. But the convenience and competitive price for air travel experiences low
competition with these ground and sea transportation.” This reveals that industry analyst admit there’s
competition from substitutes, but don’t see it as high threat to profit. The 10-k filing from Southwest and
US airways leads me to assume there is a higher threat to profit then analyst might think. Both companies
believe that increased unemployment and lower discretionary spending has led more consumers to travel
on the ground instead of in the air. Using this evidence, I believe a moderate threat to profit exist from
substitutes to the airline industry.
The airline industry is very tough to enter because of numerous firms already existing and start up
exhausts a lot of capital. According IbisWorld industry analysis, “Cost to purchase aircrafts and specialist
machinery, hanger and other airfield space, skilled labor and to satisfy stringent safety requirements are
very high and make entry very hard. Existing companies may have network alliances and a wide network
of industry contracts where it would make it very tough for new entrants to win business even after
massive capital outlays.” New entrants with the capital to enter the market, major airlines can use
economies of scale by consistently undercutting smaller players on price and delivery speed (Airlines,
1999-2010). Therefore, I strongly believe the threat of new entrants to profitability of an existing firm is
very low.
Question 2: Profitability
After an in-depth analysis of Porters Five Forces using IbisWorld, Southwest Airlines 10-k filing,
and US airways 10-k filing, I found the airline industry to have one low threat to profit, from new
entrants. According to the Industry Analysis lecture notes, the higher the collective power of the five
competitive forces, the lower the expected profitability of the average rival with no particular strength or
weakness. As four of the five competitive forces are high threats, a reduction in average profit is expected
for a firm with no particular strengths or weaknesses on key success factors. I believe the expected
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profitability of an average competitor in the airline industry with no particular strengths or weaknesses on
all key success factors will be less than their cost of capital.
Question 3: Key Success Factors
Businesses should operate to gain a sustainable competitive advantage and a superior profit over
the competition by having distinctive competency with specific skills needed for success (Competing
Resources Lecture). These skills needed for success and superior profitability is what industry analyst call
Key Success Factors (KSF). A key success factor is specific resources or activities any competing
company must be good at if they are to be profitable satisfying demand and defending against hi-power
threats (Analysis Fundamentals Lecture). Examples of KSF include particular strategy elements, products
attributes, resources, competencies, capabilities, and market achievements (Analysis Fundamentals
Lecture). Businesses that are good implementing their industries key success factors will be seek
profitability and success in that industry.
The airline industry has six important Key Success Factors that rivals must be good at in order to
have superior profitability. Most of these key success factors focus on efficiency as the airline industry
has high fixed cost and low margins. In the calculation of certain KSF I will be using figures used solely
for the airline industry. An airlines Revenue passenger-miles (RPM) is the total number of passengers
enplaned, multiplied by the average distance flown (Corridore, 2009). RPM is a good measure of the total
traffic on an airline. The Available seat-miles (ASM) for an airline are calculated as aircraft miles flown,
multiplied by the number of seats available for revenue passengers use (Corridore, 2009). ASM provides
a good measures the number of seats available when planes are in flight. The six KSF for the airline
industry are the following:
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Optimum Capacity Utilization: Is the ability of airlines to utilize every seat on the aircraft before
departure without delaying the flight (Corridore, 2009). The more seats that are filled on a flight, the more
profitable the flight will be for the company. This is hard for rivals to imitate because it is based on
performance. Measuring this KSF is easily done with the load factor ratio. This KSF increases
profitability because it increases sales quantity and average price. The calculation for Load Factor=
RPM/ASM.
Effective Fuel Cost Control (Fuel Efficiency): This is airlines ability to utilize fuel consumption
efficiently compared to other rivals. Using fuel efficiently is important to profitability because of the
volatility of fuel prices. Utilizing the newest fuel-efficient aircrafts and having maximum enplanements
allows airlines to use fuel efficiently. According to the S & P Industry Survey, fuel cost consumed 24.6
percent of revenues for the nine largest airlines in the United States. We can measure fuel efficiency with
the ratio of fuel cost per Available Seat-Miles. This KSF makes a company more profitable because it
decreases cost. The calculation for Fuel Efficiency= Total Fuel Cost/ ASM.
Effective Labor Cost Control (Labor Efficiency): Airlines that can control labor cost have the ability to
gain superior profit compared to competitors. According to the S&P Industry Survey, the airline industry
averaged 26.2 percent of revenue on labor during 2009. Airlines effectively implementing technological
improvements will increase worker productivity and decrease labor cost (Airlines, 1999-2010).
Outsourcing certain operating functions can also improve labor efficiency. Labor efficiency can be
measured by a ratio of total labor cost per Revenue Passenger-Miles. Being successful on this KSF will
increase profit by decreasing operating cost. The calculation for Labor Efficiency= Total Labor
Cost/RPM.
Effective Maintenance Capabilities (Jet Utilization): According to the S&P Industry Survey, the faster a
carrier can get its aircraft back into revenue service, the more profitable it will be. Jet utilization is the
number of hours the aircraft is in service, but this is not a comparable measure across the industry because
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of inconsistencies with short-haul flights and long-haul fight (Corridore, 2009). A better measure of the
airlines ability to keep aircrafts in flight is their capability to repair aircrafts when there is a problem.
According to the 10-k reports of Southwest and US Airline, both companies keep an inventory of spare
parts, have maintenance facilities, and employ workers to manage the fleet. I believe a good measure of
this capability is a ratio of total maintenance material and repair cost per revenue passenger-mile.
Companies successful on this KSF can increase sales quantity by reducing repair time and increasing
number of flights. This can be calculated by Maintenance capability ratio= Total maintenance and
repair cost/RPM.
Prompt Delivery to Market: As the airline industry is highly competitive, the ability to deliver services on
time will reduce the loss of customers to rivals (Airlines, 1999-2010). The Department of Transportations
Air Travel Consumer Report, released November 2010, ranks airlines based on number of flights that
arrive on time compared to number of total flights. This is very important for companies because
customers can use this report to see which airlines are most likely to be delayed. A BussinessWeek article
quoted a United Airline worker, “We make decisions on a variety of factors, the most important being
how quickly we can get our customers to their destinations...” The frequency and reliability of flights are
critical factors for competing airline companies (Corridore, 2009). We can measure this KSF with a
simple ratio of on time flights compared to total flights. This KSF builds brand loyalty, which increases
sales quantity and profit. The calculation for percentage of on time flights= Number of Flights arriving
on time/Total Departures
Customer Service and Satisfaction: Customer service and satisfaction includes ratios to measure
mishandled baggage, customer complaints, delayed flights, and overbooking flights. According to the US
Airways 10-k filing, item1A, risk factors, “ If we incur problems with any of our third-party regional
operators or third-party service providers, our operations could be adversely affected by a resulting
decline in revenue or negative public perception about our services.” To differentiate themselves from
other competitor’s airlines may strive to build brand loyalty through good customer service (Corridore,
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2009). Airlines are ranked annually in the Airline Quality Rating report, which uses an equation to
produce rankings based on mishandled baggage, complaints, delayed flights and overbooking. According
to a CNN article, airline industry customer service performance is rising, primarily due to airlines
recognizing customer service matters to consumers. The Centre for Asia Pacific Aviation believes
customer service ranks as a top concern for many travelers. Therefore the ability to provide good
customer service builds brand loyalty. We can measure this KSF by using the percentage of mishandled
baggage, number of customer complaints, percentage of on time flights, and number of overbooking’s on
a flight. Using these five statistics we can input the figures into the equation developed by Dr. Brent D.
Bowen and Dr. Dean E. Headley, to measure which airline is superior in customer service. We can
measure each statistic with the following calculations:
Mishandled Bags (MB) =Total Baggage reports/ (Total Passengers emplaned/1000)
Denied Boarding (DB)= Involuntary Denial/ (Enplaned passengers/10000)
Customer Complaints (CC)=Total Complaints/(Total enplanements/100,000)
On time flights (OT)= Arrival delays/ Total flight operation
We can then input these individual statistics into the equation developed by the producers of the Airline
Quality Rankings, to see who has the best customer service and satisfaction.
Equation used in the Airline Quality Rankings:
=(8.63x OT)+(-8.03xDB)+(-7.92xMB)+(-7.17xCC) / (8.63+8.03+7.92+7.17)
Question 4: KSF Protecting Profit
The high power threat of rivalry in the airline industry means that rivals are likely to be
competing intensely on price, frequency and capacity, and service quality (Airlines, 1999-2010). This
essentially means that airline companies frequently discount prices and are likely to take on additional
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cost for increased customer service and reliability. In the business model profit=(Quantity x average
price)-cost, meaning if airlines lower prices and take on added costs profit could to be negatively affected.
The best way to protect profit from intense rivalry is to be good on the capacity utilization key success
factor. Optimum capacity utilization for an airline will increase sales quantity without reducing the
quality of service or decreasing frequency and reliability. If airlines are not able to utilize every seat on
the aircraft the cost per passenger increases without an increase to sale quantity or average price. The
increased price per passenger will result in a lower profit for the airline.
PART IV: STRENGTH ASSESSMENT
Question 1: Calculation of Key Success Factors
Optimum Capacity Utilization is a Key Success Factor that IBIS World found for the airline
industry in their September 2010 report. To find the Optimum Capacity Utilization the Revenue
Passenger Miles Flown (RPM) is divided by Available Seat-Miles (ASM). (Airlines, 1999-2010) These
numbers are found on the Standard & Poor’s Airline Industry Survey. The latest data that can be used to
calculate the Optimum Capacity Utilization is from 2009, at which time Southwest Airlines had a RPM of
74,456,710,000 and an ASM of 98,001,550,000. (Southwest Airlines Co., 2009)This results in their
Optimum Capacity Utilization of 75.98%. In 2009, US Airways had a RPM of 68,459,000,000 and an
ASM of 85,092,000,000 which resulted in 80.45% for their Optimum Capacity Utilization. (US Airways
Group, Inc., 2009)
Effective Cost Controls are vital to the airline industry. Two major costs which airline companies
have to endure on a daily basis are labor and fuel costs according to the Standard & Poor’s Industry
Survey. US Airways was referenced in the S&P Survey having only 20.7% labor costs to revenues while
Southwest Airlines Co. is on the high end of the US airline industry at 33.5% of labor costs to total
revenues. (Corridore, 2009) The calculation used for the key success factor was fuel cost divided by
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ASM. Using the 10K from each company’s investor relation’s sections of their websites the numbers
were found with a result of 2.91% for US Airways (US Airways Group, Inc., 2009) and 3.09% for
Southwest Airlines (Southwest Airlines Co., 2009).
Fuel prices also have the same trend with the two competitors with US Airways’ costs at 17.9%
of revenues while Southwest is at 29.4% of revenues using the S&P Survey. (Corridore, 2009) Using the
10-K information and the key success factor calculation US Airways was found to have a 2.54% (US
Airways Group, Inc., 2009) fuel costs while Southwest was found to have a 3.54% (Southwest Airlines
Co., 2009) costs.
Effective maintenance capacity is also known as the amount of jet utilization. This key success
factor is calculated by taking the total direct maintenance costs and divides them by the revenue
passenger miles. The RPM amount for both US Airways (US Airways Group, Inc., 2009) and Southwest
Airlines (Southwest Airlines Co., 2009) are found in their 10K annual reports on their investor relation’s
sections of their websites. The total direct maintenance costs for each are found on the RITA website.
(U.S. Department of Transportation) The result was 1.37% for US Airways and 1.17% for Southwest
Airlines for effective maintenance capacity.
Customer service and satisfaction can be found using the standard ranking equation called the
AQR equation. (U.S. Department of Transportation) This equation is used by every major airline in the
industry in order to see their rank between their competitors. The actual AQR equation is:
AQR= (8.63 x OT) + (-8.03 x DB) + (-7.92 x MB) + (-7.17 x CC) (8.63+8.03+7.92+7.17)
Each unknown variable is found using these equations:
OT=Delays in Arrival= Arrival Delays/ Total Flight Operation US= .1772 SW= .1406
DB= Denied Boarding= Involuntary/ (Enplaned Passengers/10,000) US= .0141 SW= .0129
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MB= Mishandled Bags= Total Baggage Reports/ (Passengers Enplaned/ 1,000) US= .0303 SW= .0343
CC= Customer Complaints= Complaints/ (Total Enplanements/ 100,000) US= .0131 SW= .0021
The result of the AQR equation was 3.41% for US Airways and 2.59% for Southwest. (U.S. Department
of Transportation)
Prompt delivery to markets is found using the percent of flights on time. (Airlines, 1999-2010)
The percent of flights on time can be found by using the number of flights on time during the 2009
calendar year divided by the total flights in 2009. Both of these numbers for both US Airways and
Southwest Airlines were found on the RITA website. The percent of flights on time was 80.87% for US
Airways and 83.00% for Southwest Airlines. (U.S. Department of Transportation)
Key Success Factors US Airways Southwest Airlines1. Optimum Capacity
Utilization (RPM/ASM)
68,459,000,000/85,092,000,000= 80.45% 1
10K
74,456,710,000/98,001,550,000= 75.98% 2
10K2. Effective Fuel Cost
Control (Fuel Cost/ASM)
2,476,320,000/85,092,000,000= 2.91%1
3,027,360,000/98,001,550,000= 3.09% 2
3. Effective Labor Cost Control(Labor Cost/ RPM)
1,740,423,000/68,459,000,000= 2.54%3
2,637,294,000/74,456,710,000= 3.54%3
4. Effective Maintenance Capacity (Total Direct Maintenance Costs/RPM)
938,569,000/68,459,000,000= 1.37%3
869,818,000/74,456,710,000= 1.17%3
5. Customer Service and Satisfaction(AQR Equation see above)
(8.63 x .1772) + (-8.03 x .0141) + (-7.92 x.0303) + (-7.17 x .0131) / 31.75=3.41%3
(8.63 x .1406) + (-8.03 x .0129) + (-7.92 x .0343) + (-7.17 x .0021) / 31.75=2.59%3
6. Prompt Delivery to Markets (% of Flights on Time= # of Flights on
80.87% 3 83.00%3
1 (US Airways Group, Inc., 2009)2 (Southwest Airlines Co., 2009)3 (U.S. Department of Transportation)
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Time/Total Flights)
Question 2: Distinctive Competency Scores
After calculating the optimum capacity utilization for both airline competitors, US Airways came
out with a higher percentage than Southwest Airlines. Therefore, the distinctive competency scores were
given with a 5 for US Airways and a 1 for Southwest.
Effective cost controls for fuel were calculated and found that US Airways had lower costs than
Southwest Airlines. Therefore, US Airways was given a 5 and Southwest was given a 1 for the
distinctive competency scores.
Effective labor cost control was calculated the same result as fuel costs was found with US
Airways lower than Southwest. Hence, US Airways was given a 5 and Southwest was given a 1.
Jet utilization or effective maintenance capacity was found with US Airways being more effective
than Southwest. However, since the ratios were so similar, US Airways was given a 4 while Southwest
was given a 3.
Customer service and satisfaction resulted in US Airways ranking higher than Southwest using
the AQR equation. US Airways was given a 5 in the comparison while Southwest was given a 1.
The percentage of flights on time happened to have Southwest trumping US Airways. This
resulted in Southwest’s first 5 and US Airway’s first 1.
Key Success Factors US Airways Southwest Airlines1. Optimum Capacity
Utilization (RPM/ASM) 5 1
2. Effective Fuel Cost Control 5 1
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(Fuel Cost/ASM) 3. Effective Labor Cost
Control(Labor Cost/ RPM) 5 1
4. Effective Maintenance Capacity (Maintenance material and repair cost/RPM)
4 3
5. Customer Service and Satisfaction(Passenger Service Cost/Total Operating Expense OR Total Revenue)
5 1
6. Prompt Delivery to Markets (% of Flights on Time= # of Flights on Time/Total Flights)
1 5
Average 4.17 2.00
Question 3: Average of Distinctive Competency Scores
The average for the distinctive competency score for US Airways was 4.17 while the average was
2.00 for Southwest Airlines. Average scores can be seen in the table above.
Question 4: Company with the Competitive Advantage
After the key success factors have been calculated and given distinctive competency scores, the
company that most likely creates and sustains a competitive advantage against the other is US Airways.
US Airways was given higher competency scores for five of the six key success factors. The only
category they weren’t competitive compared to Southwest was the percent of on time flights. US
Airways is able to be more efficient regarding maintenance, fuel and labor costs as well as customer
service and satisfaction.
According to a recent Wall Street Journal Article called “A Big Jump in Gripes about Airline
Service”, this year has resulted in more customer complaints since the 2009 results above. This could be
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due to the “steps the department took to make it easier to file complaints online and heightened attention
to airline performance”. Although there haven’t been any differences in performance, the customer
complaints have rose 32% this year compared to last. These will cause a significant change in customer
service and satisfaction rates. However, because it is industry wide, there may not be a difference once
compared against competitors and US Airways will probably still come out as the company with the
competitive advantage. (McCartney, 2010)
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