Strategic Management Model
Linda Gay Cahill
Table of Contents:
PEST Analysis (Political, economic, social & technological factors)
Value Chain Analysis
Alaska Airlines is the ninth–largest U.S. airline based on passenger traffic and is the dominant U.S. West Coast air carrier. Headquarter in Seattle, Washington, Alaska carriers more passengers between the state of Alaska and the Lower 48 than any other airline. During recent years it has expanded significantly to serve more U.S. East Coast, Mexican and Canadian destinations. Long know for its Alaskan roots, symbolized by the Eskimo painted on the tail of the aircraft, Alaska Airlines offers a friendly and relaxed style of service, one that passengers have came to appreciate as the “Alaska Spirit.” The airline is known for embracing innovative technology to improve the customer experience. The carrier traces its roots back to 1932, when Linious “Mac” McGee airways started flying his three-seat Stinson between Anchorage and Bristol Bay, Alaska. A merger with Star air service in 1934 created the largest airline in Alaska, which eventually became Alaska Airlines. Alaska and its sister carrier, Horizon, are owned by Alaska Air Group.1
Alaska Airlines has a dominant market share serving Alaska. Unlike the rest of the economy Alaska has been seeing increasing significant revenues from oil business and tourism. Air travel is the states largest form of transportation because of the geography of the state and its arctic climate. There are over 1,100 airports in Alaska and over 3,000 landing strips in the state. Thirteen percent of revenue generated by tourism goes to air travel. Alaskan travelers fly on average nine times per year compared to the main land US average of twice a year. Alaska maintains a 50% market share based on passenger enplanements at Seattle, Los Angeles, Portland, and Anchorage airports. When looking at industry as a whole very few airlines realize a profit. Alaska Airlines, the smallest of the nation’s nine largest airlines in terms of flying capacity, showed the biggest profit, with $88 million in net income. Chairman, president and chief executive William Ayers called it "one of the best quarters we've had in a very long time." He suggested that Alaska's small size helped it be nimble during a difficult period. "We are closer to our customers and able to make changes and adapt to economic realities more quickly."2
To have the best people, provide the safest and best service, for the best value, to each customer each day. The PEST analysis is a useful tool for understanding market growth or decline, and as such the position, potential and direction for a business. A PEST analysis is a business measurement tool. PEST is an acronym for Political, Economic, Social and Technological factors, which are used to assess the market for a business or organizational unit.
The recent increase of safety concerns has led toward the Federal Aviation Administration (FAA) to enforce stricter safety regulations and add reforms. The recent news of airline companies forgoing service intervals has led to an increase in the number of inspections to ensure better analysis and completeness of data collected. Just recently the FAA after improving inspections fined Southwest Airlines $10.2 million and grounded 38 planes because of the skipped maintenance intervals. 12 With recent filings of bankruptcy and the American Trans Air (ATA) going under on April 3, 2008, we should wonder, as do passengers, just how many corners airline companies are cutting.11. Expiring taxes would make it hard for the Airport Improvement Program (AIP) to fund its expected funding of $42 billion for...
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