Strategic Vision for Airtran Airways?
Group report
Strategic Vision for AirTran Airways?
New Strategy for AirTran Airways?
(4228 Words)
Executive Summary
On September 27, 2010, a merger of AirTran Airways and Southwest Airlines, two major low-fare carriers in the U.S, was officially announced and lead to a nearly-establishment of a “most competitive low-fare airlines”. The U.S Airlines industry had grown in competitiveness since “the deregulation act” in 1978, seeing increasing entry of new carriers into the industry and continuous innovation in operation and service. However, since the beginning of this decade, it has been in a crisis due to the long-term recession of the U.S economy and instable fuel price, which in turn, led to bad performance and increasing debt of many players in the industry, and AirTran was among them.The merger was a result of such situation. The merger, at the current time, is planned to be completed within the next two years, and once complete, all AirTran’s utilities, including aircrafts, pilots, service network, etc.,will be rebranded and served under the name of Southwest. However, this strategy, in which the AirTran brand will be completely disappeared, offers merits to the merged airline, but it certainly has demerits as well. Although merging into one operator would give the two carriers competitive edge to become the largest low-fare airline in U.S and a potential to expand overseas, AirTran’s core competencies including strong hub presence in Atlanta and its unique cost control and advertising techniques would be highly possibly abandoned and adapted to those of Southwest. Besides, differences in cultures and corporate objectives are proved to be a not simple task for the merge. Therefore, instead of this in-planning strategy, what we recommend is a new strategy, in which the brand AirTran will still be maintained and serve majority as an international business unit of Southwest. Following in this report will be our analysis of business environment of the
Strategic Vision for AirTran Airways?
New Strategy for AirTran Airways?
(4228 Words)
Executive Summary
On September 27, 2010, a merger of AirTran Airways and Southwest Airlines, two major low-fare carriers in the U.S, was officially announced and lead to a nearly-establishment of a “most competitive low-fare airlines”. The U.S Airlines industry had grown in competitiveness since “the deregulation act” in 1978, seeing increasing entry of new carriers into the industry and continuous innovation in operation and service. However, since the beginning of this decade, it has been in a crisis due to the long-term recession of the U.S economy and instable fuel price, which in turn, led to bad performance and increasing debt of many players in the industry, and AirTran was among them.The merger was a result of such situation. The merger, at the current time, is planned to be completed within the next two years, and once complete, all AirTran’s utilities, including aircrafts, pilots, service network, etc.,will be rebranded and served under the name of Southwest. However, this strategy, in which the AirTran brand will be completely disappeared, offers merits to the merged airline, but it certainly has demerits as well. Although merging into one operator would give the two carriers competitive edge to become the largest low-fare airline in U.S and a potential to expand overseas, AirTran’s core competencies including strong hub presence in Atlanta and its unique cost control and advertising techniques would be highly possibly abandoned and adapted to those of Southwest. Besides, differences in cultures and corporate objectives are proved to be a not simple task for the merge. Therefore, instead of this in-planning strategy, what we recommend is a new strategy, in which the brand AirTran will still be maintained and serve majority as an international business unit of Southwest. Following in this report will be our analysis of business environment of the
References: Southwest Airlines Co. (2011). 2010 Annual report. Retrieved from: http://phx.corporate-ir.net/External.File?item=UGFyZW50SUQ9ODExNTl8Q2hpbGRJRD0tMXxUeXBlPTM=&t=1 [Strategic options for resolution of the problem] Pender, K. (2001, October 4). Southwest Sets Standard For Success In Depressed Airline Industry.San Francisco Chronicle.Retrieved from:http://www.sfgate.com/cgi-bin/article.cgi?f=/chronicle/archive/2001/10/04/BU196238.DTL Yamanouchi, K Yamanouchi, K. (2011, September 28). AirTran, Southwest Pilots to Vote on Seniority Deal in Merger.Airline NewsAmericas.Retrieved from: http://www.airlinenewsamericas.com/2011/09/airtran-southwest-pilots-to-vote-on.html Yamanouchi, K U.S Airlines Industry, 2010 Annual Report. Retrieved from: http://www.airlines.org/Economics/ReviewOutlook/Documents/2010AnnualReport.pdf AirTran Merger Means Fewer Local Jobs How Merger Could Hurt Southwest Airlines’ Competitive Advantages.(2011, Jan 20). Retrieved from: http://blog.smartadvantage.com/competitive-advantage-blog/bid/52148/How-Merger-Could-Hurt-Southwest-Airlines-Competitive-Advantage [Recommendation] AirTran Holdings, Inc. (2011). 2010 Form 10K. Retrieved from http://phx.corporate-ir.net/External.File?item=UGFyZW50SUQ9NDIyMjQ1fENoaWxkSUQ9NDM2MTU5fFR5cGU9MQ==&t=1 Southwest Airlines Co