Strategic Profile and Case Analysis Purpose:
The US regional airline industry like any industry has experienced some major pitfalls that can be attributed to the current economic global downturn. As a result, major stakeholders in the industry are looking for better strategies to cope. Among the pressing challenges are; the increasing and fluctuating cost of fueling the jets, the prohibitive costs of acquiring funds to purchase new jets, the intense competition among the major players, the dwindling market of business and leisure travelers, regulations that have increased costs, and the effects of September 11, 2001 terror attacks which has brought enhanced security which for the airline industry means long checks and overall dissatisfaction in customer service. Although it looks like the sky is falling for the airline industry, the gleam of hope that regionals like SkyWest are bringing to the complex airline business is showing a slow but hopeful recovery for the airline industry. This case analysis will first detail the internal workings of the regional airline industry and will specifically address SkyWest, Inc., with regards to its strategies including the challenges it faces and the core competencies it has in its operations. This analysis will also focus on the product SkyWest, Inc. sells and the challenges, strengths, weakness, opportunities and threats (including financial) it faces in the regional airline industry and will recommend strategies that will strengthen the brand of the company. Industry analysis:
Regional carriers like SkyWest airlines provide transportation to and from small communities through large airports where the major airlines operate, which in the industry lingo is called a regional feed. They also help to increase frequency of service in mainline markets during times of day of the week when demand does not call for use of large aircraft. The service that regionals provide is as a result of partnerships with the major airlines that are usually contractual. This partnership is a symbiotic relationship that caters to the needs of both segments. Aircraft used by regionals include turboprops and jets that are usually owned by the regionals but carry the major airline’s flag. Regionals also own and operate their own brands that mostly cater to small communities; the term commuter airline is usually used when they perform this role. In the past decade, US Regional airlines enjoyed robust growth and financial returns over the past several years when major’s or network partners reduced capacity and outsourced flying due to financial trouble. SkyWest, Inc., is a leader in the regional arena and this case will be based on that premise. SkyWest Strategy:
Strategy according to the textbook is “doing what competitors don’t do or, even better, doing what they can’t do”. (Page 9). SkyWest is focusing on a low-cost provider strategy in the regional airline industry. By focusing on a narrow market niche, SkyWest is building a competitive edge by doing a better job than its rivals. Another strategy it employs is growth; the company has realized an internal growth through the expansion of its partnerships, geographic growth and the pursuit of new partnerships. But most importantly the reasons why SkyWest is successful is the efficiency it employs by the way: •It manages its fleet, thus less accidents and downtimes. •It empowers its employees better than other regionals; benefits, pay, continuous education. •On time performance- by consistently being the best in on time arrivals. •Most importantly is how it manages its finances. Cost control is a major company undertaking and the ability to anticipate and cut costs has made the company competitive. The company has fine-tuned its core competencies through partnerships with Delta Connection and United Express which has created growth opportunities through the volume of business these two...