skywest airlines

Seminar #1

SKY WEST INC. & THE REGIONAL AIRLINE

INDUSTRY

April 12, 2023 Seminar #1 2

U.S. Airline Industry•Hub & spoke system•United, Northwest, American, Continental & Delta airlines

Network Carriers

•Point to point flights•Southwest & JetBlue airlines

Low-Cost Carriers

•Provided service from smaller cities•Supported the hub & spoke system of network carriers

Regional Carriers


Features of the IndustryAffected by seasonal fluctuations

• Increased travel in summer• Inclement weather (winter) lead to flight cancellations & delays

Recession in early 2000s reduced overall demand

Over expansion of major airlines

Bloated flight schedules

Increasing fuel costs

Increased competitive pressures from low-cost carriers

Fear of flying post-9/11


Airline PassengersBusiness travellers

•More profitable•Flew often•Tended to purchase premier services

•Short notice of travel Last minute ticket purchase

Leisure travellers

•More price-sensitive•Flew less•Usage of premier services almost nil


Other FactorsSafety

• 9/11 attack fear of flying lesser revenue• People preferred smaller, regional aircrafts since they would not be target for terrorism• Regional airlines had better safety standards

Regulation

• Increased security additional costs• Provide oxygen for needy passengers

• Cost $262 to $577 million

Fuel Cost

• Cost of fuel 10-20% of overall costs• Increasing costs threat for regional airlines

Labour Unions

• Acrimonious relationships leading to strikes


Regional Airline IndustryShort-haul flights

• Served a larger hub airport• Established customer base• Steady revenue stream

Serviced communities that were not well connected

• Turboprop – short to medium haul flights, lands on shorter runways• Regional Jet – longer haul, lesser noise & vibration levels

Operated small slow planes

Partnered with major airlines

Aircrafts used


Strengths

Steady revenueUse of commuter jets lowered operating costs

Weaknesses

Limited to one regionDependent on major airlinesMore affected by bad weather

Opportunities

Routes outsourced by major airlines due to recessionBankruptcy filings of major airlines

Threats

Potential merger of major airlinesShutting down of major airlines’ hubs

SWOT


Requisites for Acquiring Major Airline Contracts

Develop & maintain high

levels of customer service

Develop & maintain a

strong safety image

Maximise on-time arrivals

Acquire new aircraft


SkyWest Inc.

Founded on Sep 8, 2005Parent company of SkyWest and

Atlantic Southeast airlinesBased in St. George, Utah

For the year ending 2006 – consolidated revenues were

$3,114 million(Previous year : $1,964 million)

Set to take over 20 additional routes from United


SkyWest Airlines

Mission/Vision

• “We understand the value and priceless commodity of time. We respect every individual’s quality of life and are committed to promoting dignity and trust in all we do. We strive to be: the airline of choice, the employer of choice and the investment of choice. Our Guiding Principles: health and safety first, excellence in service and quality, personal and operation reliability, fairness and consistency, respect and teamwork, personal and corporate integrity, superior profitability and efficient use of all resources.”

Founded in 1972 in St. George, Utah


Atlantic Southeast Airlines

Vision•Atlantic Southeast Airlines is committed to connecting more people, more often, to the places they love, by becoming the world’s first super regional airline.•Source: flyasa.com

Values•Putting safety first in everything we do.•Treating all people with dignity and respect.•Operating with honesty, integrity and transparency in everything we do.•Working smart with commitment to continuous self improvement.•Taking pride in making sure the job is done right.

Origin•Founded in 1979 in Atlanta, Georgia until its acquisition by SkyWest Inc.


Partnerships

Delta Connection

•59.9% of SkyWest Inc.’s capacity•SkyWest airlines received from Delta on a weekly basis•Reimbursement of 100% of direct costs•Fixed dollar payment per completed flight block hour•ASA received from Delta on a weekly basis•Reimbursement of 100% of direct costs

United Express•40.1% of its capacity for United Express contracts•Received fixed fee per completed departure, per passenger•One time start-up cost for each aircraft delivered


Human Resource Policies SkyWest Airlines – Non-union workforce

More flexibility in making decisions Acquisition of ASA changed relationship of SkyWest Inc.

with workforce since ASA employees were unionised Holding job fairs for hiring Career opportunities posted in their websites Benefits to employees

Credit union Wellness program Medical, dental & vision benefits Income protection Travel discounts Disability insurance programs


Strategy

Pursuit of new partnerships

Geographic expansion

through acquisition

Expansion of current

partnerships


Other Tactics

•Southwest & Jet Blue

Establishing partnerships

with low-cost carriers

•Contract with Midwest Airlines

Diversifying operations to

reduce risk


Our Suggestions Replacing 50-seaters with 70-seaters would

provide an opportunity to spread out costs and lower fares

Continue with separate operations for SkyWest Airlines & ASA

Develop contracts with major airlines to outsource their 100-seater jets to SkyWest Inc.

skywest airlines

Business

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