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Competitive Advantage In The Us Airline Industry

5037 words - 21 pages

Competitive Advantage in the US Airline Industry The GREENair Strategy

Executive MBA in Business & IT Class of 2014 Module 4 - Strategy & Organization - Assignment

Author: Luís Faria Reviewer: Prof. Dr. Isabell Welpe

Competitive Advantage in the US Airline Industry The GREENair Strategy
Subject Page Module 4 - Strategy & Organization - Assignment 2/17

Abstract The US airline industry experienced many years of difficult and had consistently failed to earn returns that covered its cost of capital. Several changes such as regulation, deregulation and consolidation have affected the structure of the industry. The new conditions of competition led to changes on the strategy of ...view middle of the document...

..................................................................................... 6 2.2.3 Supplier power ................................................................................................... 7 2.2.4 Buyer power ....................................................................................................... 9 2.3 Threat of Substitutes ............................................................................................... 9 3 The GREENair Strategy ................................................................................................ 10 3.1 Strategy ................................................................................................................... 10 3.2 Cost Leadership ..................................................................................................... 10 3.3 Differentiation Leadership .................................................................................... 11 3.4 Vision & Goals........................................................................................................ 11 4 Implementation Plan ...................................................................................................... 13 4.1 Communication ...................................................................................................... 13 4.2 Main Initiatives ....................................................................................................... 13 4.2.1 Stabilization of fuel costs ................................................................................ 13 4.2.2 Reduction of fuel burn ..................................................................................... 14 4.2.3 Improve operating procedures....................................................................... 15 4.3 Marketing ................................................................................................................ 15 5 Conclusion ....................................................................................................................... 17

Competitive Advantage in the US Airline Industry The GREENair Strategy
Subject Page Module 4 - Strategy & Organization - Assignment 3/17

1

Introduction

The airline industry history can be split into two distinct periods: the period of regulation up until 1978 and the period of deregulation thereafter. Between 1938 and 1978, the U.S. government, through the Civil Aeronautics Board (CAB), regulated the US airline industry by imposing entry and price restrictions on airlines. The CAB had three main functions: to award routes to airlines, to limit the entry of air carriers into new markets, and to regulate fares for passengers. In a regulated environment, the competition within the industry focused on non-price dimensions: customer service and in-flight food and entertainment. Most of the cost increases were passed along to consumers under a fixed rate-of-return based pricing scheme. As a result...

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