Post on 24-May-2015
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
April 12, 2023 Seminar #1 3
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
April 12, 2023 Seminar #1 4
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
April 12, 2023 Seminar #1 5
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
April 12, 2023 Seminar #1 6
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
April 12, 2023 Seminar #1 7
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
April 12, 2023 Seminar #1 8
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
April 12, 2023 Seminar #1 9
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
April 12, 2023 Seminar #1 10
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
April 12, 2023 Seminar #1 11
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.
April 12, 2023 Seminar #1 12
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
April 12, 2023 Seminar #1 13
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
April 12, 2023 Seminar #1 14
Strategy
Pursuit of new partnerships
Geographic expansion
through acquisition
Expansion of current
partnerships
April 12, 2023 Seminar #1 15
Other Tactics
•Southwest & Jet Blue
Establishing partnerships
with low-cost carriers
•Contract with Midwest Airlines
Diversifying operations to
reduce risk
April 12, 2023 Seminar #1 16
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.
April 12, 2023 Seminar #1 17