AIRTRAN:
Competitive
Trend Analysis
BY: Candace Eldridge, Damian Pryor and E. Summer Banks
Southwest Airlines
The Mission of Southwest Airlines is
dedication to the highest quality of
Customer Service delivered with a
sense of warmth, friendliness,
individual pride, and Company
Spirit. (Source 1)
SWA Product
• Transportation
– Boeing Jet 737 – 451 aircrafts
– Frequent and timed flights
– Point – to – Point verse Hub – to – Spoke
service
– Seventy – nine percent non-stop flights
• Shipping
(Source 1)
SWA Place
• Southwest flies to 62 cities in 32
states.
• Founded in Texas
Dallas, Houston, San Antonio
(Source 1)
SWA Place (cont.) - Other Cities Served
by Southwest (Source 1)
Albany
Houston (Hobby)
Orlando
Albuquerque
Indianapolis
Philadelphia
Amarillo
Long Island/Islip
Phoenix
Austin
Jackson
Pittsburgh
Baltimore/Washington
Jacksonville
Portland
Birmingham
Kansas City
Providence
Boise
Las Vegas
Raleigh-Durham
Buffalo
Little Rock
Reno
Burbank
Los Angeles (LAX)
Sacramento
Chicago (Midway)
Louisville
St. Louis
Cleveland
Lubbock
Salt Lake City
Columbus
Manchester
San Antonio
Corpus Christi
Midland/Odessa
San Diego
Dallas (Love Field)
Nashville
San Jose
Denver
New Orleans
Seattle/Tacoma
Detroit (Metro)
Norfolk
Spokane
El Paso
Oakland
Tampa
Ft. Lauderdale/Hollywood
Oklahoma City
Tucson
Ft. Myers/Naples
Omaha
Tulsa
Harlingen/South Padre Island
Ontario
West Palm Beach
Hartford/Springfield
Orange County
SWA Promotion
Southwest.com
Commercials
Advertisements
(Source 1)
SWA – Price
Low-cost, low-fare strategy
Cost per Available Seat Mile
Quarter 4 of 2004 – 8.18
Quarter 4 of 2005 – 8.42
Revenue per Available Seat Mile
Quarter 4 of 2004 – 7.59
Quarter 4 of 2005 – 9.14
(Source 2)
Delta Airlines Vision
• We want Delta to be the Worldwide Airline Of
Choice
• -Worldwide… access to the world with the
highest standard for customer service
• - Airline…staying in the business we know best,
air transportation
• -Of Choice …passengers, provide the best
service and value. personnel, recognizes and
appreciates contributions. Shareholders, earn a
consistent, superior financial return
(Source 3)
Delta Product
• Transportation
• Delta is the world's second-largest airline
in terms of passengers carried and the
leading U.S. carrier across the Atlantic,
offering daily flights to 492 destinations
in 89 countries on Delta, Song®, Delta
Shuttle®, the Delta Connection® carriers,
and it's worldwide partners.
• Founded in 1928 in Monroe, LA
• Now headquartered in Atlanta, GA
(Source 4)
Delta Promotion
• Delta is a founding member of SkyTeam, a
global airline alliance that provides customers
with extensive worldwide destinations, flights
and services
• SkyTeam Alliance: AeroMexico
Air France
Alitalia
Continental Airlines
CSA Czech Airlines
KLM Royal Dutch Airlines
Korean Air
Northwest Airlines
(Source 5)
SimpliFares
• Delta’s ticket pricing is
simplified
• Some flight restrictions
removed (ex: Saturday night
stays)
• Some fares reduced
(Source 6)
Cost per Available Seat Mile
• Quarter 3 of 2005 – 13.7
• Revenue per Available Seat
Mile
• Quarter 3 of 2005 – 10.6
(Source 7)
AirTran Mission Statement
Innovative people dedicated to delivering the best flying experience to smart
travelers. Every day.
Our Guiding Principles:
• We celebrate bringing people together through:
• Safety
Taking personal responsibility for the safety of each traveler and every Crew
Member.
• Courtesy
Showing respect and providing caring customer service to travelers and Crew
Members.
• Pride
In our work, in one another and in contributing to the success of our airline.
• Teamwork
Supporting one another and valuing our diverse contributions to meet every
traveler's needs.
• Innovation
Acting with an empowered "can do" spirit to continuously improve our airline.
(Source 8)
Company Information from A1
• Operates over 600 flights a day
• Market Consists of 49 cities currently (Source 10)
• More than 6,700 employees
• Airline hub is Atlanta’s Hartsfield
• Second largest carrier
• World’s largest operator of the Boeing 717
• Operates America’s youngest all-Boeing fleet
• Recently added Boeing 737-700 aircraft
(Source 9 )
Major Products and Services
• AirTran provides low fare domestic air
transport services across the US
primarily focused in the East. The
company offers the following services:
• Short haul flights
• Connecting services
(Source 11)
(Source 10)
Future Outlook
(Source 10)
Recent Promotions
 Has added all Coca-Cola products including the CocaCola with Lime and New Black Cherry Vanilla Coke
 Held a promotional with Wendy’s to redeem coupons
for one way tickets
 AirTran offered low one way flights between
Minneapolis/St. Paul to Chicago for seven major
shopping days this past Christmas season
 Re-launching “X-Fares” which is a standby program for
18-22 year olds
(Source 12-15)
DEFINITIONS:
• Cost Per Available Seat Mile (CASM) –
The cost to operate each seat mile
which is found by dividing operating
cost by Available Seat Miles.
• Revenue Per Available Seat Mile
(RASM) – The Revenue received for
each seat mile offered which is
determined by dividing operating
income by Available Seat Miles.
(Source 16)
Unit Revenue 2003-2005
This is the domestic Operating Revenue per Available Seat Mile
Network
Rank
Group
1 US Airways
2003 Operating
Revenue
$(Millions)
2004 3rd Quarter
Operating
Revenue
$(Millions)
2005 3rd Quarter
Operating
Revenue
$(Millions)
$1,458.1
2,038.6
2,202.1
2 Delta
2,938.4
1,444.3
1,511.0
3 Northwest
1,602.8
3,061.7
1,880.1
4 United
2,593.7
2,824.1
3,064.8
5 American
3,241.1
605.8
3,265.8
555.6
1,304.8
652.3
1,253.3
2,990.8
3,404.3
$13,643.5
14,270.1
15,980.4
6 Alaska
7 Continental
Group Total
(Source 17- 19)
Unit Revenue 2003-2005
Low Cost
Rank
Group
2003 Operating
Revenue
$(Millions)
2004 3rd Quarter
Operating
Revenue
$(Millions)
2005 3rd Quarter
Operating
Revenue
$(Millions)
1 Frontier
$165.8
214.4
868.3
2 AirTran
237.3
1,674.4
251.4
1,553.4
245.6
373.6
4 America West
565.6
599.4
1,988.6
5 Spirit
109.6
113.9
104.9
6 Jet Blue
273.6
323.2
176.7
7 ATA
290.9
274.8
452.9
$3,196.2
3,445.8
4,216.4
3 Southwest
Group Total
(Source 17-19)
Unit Revenue 2003-2005
6000
5000
4000
Delta
3000
AirTran
SouthWest
2000
1000
0
2003
(Source 17-19)
2004
2005
Total
Unit Cost 2003-2005
Operating Expenses Per Available Seat Mile in Cents
Network
Rank
Group
1 US Airways
2003 Operating
Expenses
$(Millions)
2004 3rd Quarter
Operating
Expenses
$(Millions)
2005 3rd Quarter
Operating
Expenses
$(Millions)
-$1,541.1
1,650.4
2,391.5
2 Delta
-3,113.5
3,460.7
1,624.4
3 United
-2,592.6
2,005.2
2,045.3
4 American
-3,300.8
3,040.5
3,005.2
5 Northwest
-1,516.0
1,395.8
3,460.0
6 Continental
-1,306.9
3,235.6
3,588.8
-496.6
564.3
575.8
-$13,867.5
15,352.5
16,691.7
7 Alaska
Group Total
(Source 17-19)
Unit Cost 2003-2005
Low Cost
Rank
Group
2003 Operating
Expenses
$(Millions)
2004 3rd Quarter
Operating
Expenses
$(Millions)
2005 3rd Quarter
Operating
Expenses
$(Millions)
1 Frontier
-$143.4
215.0
320.5
2 AirTran
-210.9
257.6
922.4
3 America West
-520.1
129.1
238.2
4 Spirit
-107.7
627.7
119.8
-1,368.1
1,483.1
372.4
6 ATA
-268.0
309.1
1,715.6
7 Jet Blue
-219.7
300.2
438.5
-2,837.9
3,321.8
4,127.4
5 Southwest
Group Total
(Source 17-19)
Unit Cost 2003-2005
4000
3000
2000
1000
Delta
0
AirTran
SouthWest
-1000
-2000
-3000
-4000
2003
(Source 17-19)
2004
2005
Total
QUESTIONS…
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Bibliography
Source 1 Southwest Airlines. http://www.southwest.com/about_swa
Source 2 Security and Exchange Commission: Southwest Airlines Co. Form 10-K
http://www.sec.gov/Archives/edgar/data/92380/000095013406001553/d32370e1
0vk.htm#001
Source 3 http://mwashington.ba.ttu.edu/5%20parts%20org%20change%20catalyst%2004.pp
t#328,19,Delta Airlines Vision
Source 4 - http://www.delta.com/about_delta/index.jsp
http://www.delta.com/about_delta/corporate_information/delta_stats_facts/index.jsp
Source 5 http://www.delta.com/about_delta/corporate_information/delta_stats_facts/inde
x.jsp
Source 6 http://www.businessweek.com/investor/content/jan2005/pi2005
016_2351_pi036.htm
Source 7 - http://www.bts.gov/press_releases/2005/bts058_05/html/bts058_05.html
Source 8 - http://www.airtranairways.com/about-us/our_mission.aspx
Source 9 – From Team A1
Source 10 - Citigroup 2006 Small & Mid-Cap Conference Presentation
http://media.corporate-ir.net/media_files/irol/64/64267/Citigroup_3/sld004.htm
Source 11 - Datamonitor Company Profiles Authority
http://search.epnet.com/login.aspx?direct=true&db=buh&authdb=dmhco
Bibliography Continued…
Source 12 - AirTran Airways Is First Airline to Board Black Cherry Vanilla Coke(TM) Website:
http://www.mergentonline.com/compdetail.asp?company=1&company_mer=80077&Type=news&Area=Recent&StoryId=200601111603PR_NEWS_U
SPR_____NYW157
Source 13 - AirTran Airways Welcomes X-Fare Travelers in 2006Website:
http://www.mergentonline.com/compdetail.asp?company=1&company_mer=80077&Type=news&Area=Recent&StoryId=200601050500PR_NEWS_U
SPR_____NYTH040
Source 14 - Wendy's air fare deal promotion called "a great seller." :
http://www.mergentonline.com/compdetail.asp?company=1&company_mer=80077&Type=news&Area=Recent&StoryId=200512300001KRTRIB__BU
SNEWS_27423
Source 15 - Not Finding the Perfect Gift? AirTran Airways to Offer One-Day Shopping
Getaways at Mall of America(R) or the Magnificent Mile:
http://www.mergentonline.com/compdetail.asp?company=1&company_mer=80077&Type=news&Area=Recent&StoryId=200512090935PR_NEWS_U
SPR_____NYF059
Source 16 - http://en.wikipedia.org/wiki/RASM
Source 17 - Third Quarter 2005 Airline Financial Data: Regional Passenger Airlines and LowCost Airlines Report Domestic Profit; Network Carriers Report Smaller Loss
http://www.bts.gov/press_releases/2005/bts058_05/html/bts058_05.html
Source 18 - Third Quarter 2004 Airline Financial Data: Regional Passenger Airlines Report
Highest Rate of Domestic Profit
http://www.bts.gov/press_releases/2004/bts035_04/html/bts035_04.html
Source 19 - BTS Releases Third Quarter 2003 Airline Financial Data; Regional Passenger
Airlines Report Highest Rate of Domestic Profit
http://www.bts.gov/press_releases/2003/bts029_03/html/bts029_03.html