AIRTRAN: Competitive Trend Analysis BY: Candace Eldridge, Damian Pryor and E. Summer Banks.

AIRTRAN: Competitive Trend

AnalysisBY: 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 TexasDallas, 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 – 8.18Quarter 4 of 2005 – 8.42

Revenue per Available Seat Mile

Quarter 4 of 2004 – 7.59Quarter 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 StatementInnovative 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.

• CourtesyShowing respect and providing caring customer service to travelers and Crew Members.

• PrideIn our work, in one another and in contributing to the success of our airline.

• TeamworkSupporting one another and valuing our diverse contributions to meet every traveler's needs.

• InnovationActing 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 Coca-Cola 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

Network Rank Group

2003 Operating Revenue $(Millions)

2004 3rd Quarter Operating Revenue $(Millions)

2005 3rd Quarter Operating Revenue $(Millions)

1 US Airways $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

6 Alaska 555.6 1,304.8 652.3

7 Continental 1,253.3 2,990.8 3,404.3

  Group Total $13,643.5 14,270.1 15,980.4

This is the domestic Operating Revenue per Available Seat Mile

(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

3 Southwest 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

  Group Total $3,196.2 3,445.8 4,216.4

(Source 17-19)

Unit Revenue 2003-2005

0

1000

2000

3000

4000

5000

6000

2003 2004 2005 Total

Delta

AirTran

SouthWest

(Source 17-19)

Unit Cost 2003-2005

Network Rank Group

2003 Operating Expenses $(Millions)

2004 3rd Quarter Operating

Expenses $(Millions)

2005 3rd Quarter Operating

Expenses $(Millions)

1 US Airways -$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

7 Alaska -496.6 564.3 575.8

  Group Total -$13,867.5 15,352.5 16,691.7

Operating Expenses Per Available Seat Mile in Cents

(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

5 Southwest -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

  Group Total -2,837.9 3,321.8 4,127.4

(Source 17-19)

Unit Cost 2003-2005

-4000

-3000

-2000

-1000

0

1000

2000

3000

4000

2003 2004 2005 Total

Delta

AirTran

SouthWest

(Source 17-19)

QUESTIONS…

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BibliographySource 1 - Southwest Airlines. http://www.southwest.com/about_swaSource 2 - Security and Exchange Commission: Southwest Airlines Co. Form

10-K

http://www.sec.gov/Archives/edgar/data/92380/000095013406001553/d32370e10vk.htm#001

Source 3 - http://mwashington.ba.ttu.edu/5%20parts%20org%20change%20catalyst%2004.ppt#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/index.jsp

Source 6 - http://www.businessweek.com/investor/content/jan2005/pi2005016_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.aspxSource 9 – From Team A1Source 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_USPR_____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_USPR_____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__BUSNEWS_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_USPR_____NYF059

Source 16 - http://en.wikipedia.org/wiki/RASMSource 17 - Third Quarter 2005 Airline Financial Data: Regional Passenger

Airlines and Low-Cost 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