Blue Skies for Southwest Airlines

Southwest AirlinesA study of the current and future state of growth and acquisition strategy, by Thunderbird students Manash Banerjee, Owen Chen, Chris Hardesty, William Keller and Dustin Ward

“If the Wright Brothers were alive today, Wilbur would have to fight Orville to reduce costs.” — Herb Kelleher, founder of Southwest Airlines

Southwest Airlines (SWA) transports more passengers (101M) than any other US carrier while maintaining an 80%+ on-time performance rate. Further, SWA recorded its 39th consecutive year of profitability1 – a remarkable accomplishment for a company that previously did not fly outside of Texas and especially considering the general turmoil and collapse of the airline industry as a whole. SWA is known for its committed approach to short-haul, point-to-point service with “no frills”. Nevertheless, the question for the future is – how can SWA continue its low-cost advantages and current operational strategy to achieve successful growth targets? In other words, where is the next blue sky for SWA?

Boeing in China: Creating Their Own Competitor?

BoeingA corporate strategy article by Thunderbird students  Amanda Bhatia, David Freeman, David Wilson, Geoffrey Christanday, Jennifer Mousseau and Matthew Larson

As China’s economy develops, so do the prospective opportunities for foreign firms eager to sell their goods and services to these new Chinese customers.  However, many multinational corporations have already tried and failed – and yet – what makes these MNC’s keep coming back?

On March 6, 2012, Boeing and COMAC (Commercial Aircraft Corp. of China) announced[i] to the world that they will be joining forces for the first time ever, in creating a “collaboration agreement to partner in areas that will enable commercial aviation industry growth in China and potentially around the world”.  This partnership sounds well intentioned, but could make Boeing, and even Airbus (their current main competitor) nervous as to their future prospects in China and the future global market.  Will Boeing’s partnership with COMAC provide Boeing with an opportunity to meet strong aircraft demand forecasts in China in coming years, or instead mean the creation of their own competitor?

Analyzing the Boeing/COMAC Partnership in China

Boeing/COMACA corporate strategy article by Thunderbird students Jack Coulter, Rob Pangborn, Matt Richards, Todd Young and Scott Yuska

China’s aviation market is booming.  Aircraft manufacturers predict China will need 5,000 new airplanes by 2030, catapulting China into the world’s second largest market for commercial aircraft.  With the demand for aircrafts growing in China, The Boeing Company has started keeping the Chinese market in mind when designing new planes.  Features, such as seating arrangement, size, and fuel efficiency, are some of the items the Seattle-based aircraft company is evaluating.

The world’s largest aerospace company, Boeing is the largest provider of commercial jets to the airline industry.  It makes aircraft that seat from 50 to more than 500 passengers.  Models include the 737, 777, and the 787 Dreamliner.  Currently, Boeing holds almost 60 percent of the Chinese market, while Airbus, a European-based aircraft manufacturer, holds about 40 percent the Chinese market.

JetBlue redefines the “budget” airline

gap-china476A corporate strategy article by Thunderbird students Amina Ahmed, Marquita Blanding, Benjamin Donner, Julia Glad and Carla Vila


Positioned as a budget airline company with a tourism focus, JetBlue is synonymous with the keywords “quality” and “customer satisfaction.” JetBlue offered many firsts in the airline industry, including: satellite TV, satellite access to e-mails, vacation packages on eBay, and a “customer bill of rights” — that enables customers to be compensated for their inconveniences. Today, JetBlue has expanded its operations to include partnerships with international airlines, with a fleet of more than 400 airplanes. Despite the fierce competition of the airline industry, JetBlue continues to rise in popularity and revenues. How does JetBlue manage to continue its growth, especially while competing with rival discount airline Southwest?

Fierce Competition – Jet Blue and the airline Industry

The airline industry has changed dramatically since the early 2000s, due, in part, to the volatile global economy. Many airlines, more so in the U.S., have had to alter their competitive plans in order to keep up with the changing dynamics of the industry. In order to stay afloat, many full-service airlines looked to cost-cutting options, while airlines like Jet Blue and Southwest focused on delivering services differently than their competitors. At the time, these services were either standard or unique to the industry. Ultimately, full-service airlines found it much harder to compete with low-cost, convenient service airlines. Some of those airlines either went out of business, or completely re-engineered their business plan, or merged with other airlines to be competitive. Some of the most noteworthy mergers and acquisitions are United and Continental, US Airways and American West, American Airlines and TWA, and Southwest and AirTran.

The ABC’s of Aviation: Airbus, Boeing, China

COMACA corporate strategy article by Thunderbird students Brett Davis, Don Dennis, Tras Obsuwan, Kyungwhan Park and Ryan Wegner

How comfortable would you feel if you boarded an aircraft that was entirely developed, manufactured, and assembled in China by a wholly-owned Chinese company?  That reality may occur in the near future. With global industry revenue projected to increase to $4 trillion by 2029[i], of which approximately 12% [ii] is expected to occur in the Chinese market, new competitors are quickly strengthening their positions in the historically duopolistic airline industry. Amongst these players is Commercial Aircraft Corporation of China (COMAC), a Chinese state-owned aircraft manufacturing company, which is focused on fiercely competing with industry leaders Boeing and Airbus. COMAC’s aspirations are to obtain market share and at the behest of the Chinese government reduce the country’s reliance on foreign airline manufacturers.

Honeywell: A Supplier Customer Focus

honeywellBy Kishore Chagamreddy, Peter Addy, Ian Jensen, Darrell Member, Bindu Malik, Misty Caruth and Maggie Gu

“Aerospace is a leading global supplier of aircraft engines, avionics, and related products and services for aircraft manufacturers, airlines, aircraft operators, military services, and defense and space contractors” (Honeywell 2009 Annual Report). This statement by Honeywell sounds like the same mumbo jumbo that customers and investors read from a company. All for-profit organizations strategize in some way to be the leader in their industry. What is Honeywell’s recipe?

A favorable attribute of the aerospace industry that benefits Honeywell is the high barriers to entry into the market. This area is a recognizable strength for Honeywell and the company uses it to maintain profitability.

Initiatives this past year have shown that Honeywell is winning in the marketplace. Their pursuits into a customer focused portfolio have created over $100B in OEM wins. Their selection by Commercial Aircraft Corporation of China, Ltd (COMAC), a huge win to be the fly-by-wire flight control provider for the new C919 single-aisle commercial, is an additional $11B for the company. They’ve managed to obtain over 90% of the airline aftermarket selections. And these are just the story board wins for Honeywell.

Embraer: The Future of Flying

Embraer global strategyBy Aarohan Singh, Abhijit Chakrabarti, Alok Shah, Divy Jaisingh, Karn Dhandhania and Rishin Patel

The first credit for human flight in history is given to the Wright brothers, who took their first flight in 1903. However, for commercial air travel, that honor is given to the British Overseas Aircraft Corporation, which in 1952, provided the world’s first commercial jet service. Within commercial jets, there has been a constant innovation taking place throughout the industry. Whether aspiring to create faster, safer, or more luxurious planes, this highly competitive industry is always looking for the next big thing.

Everyone has a lot to thank for the advent of flying.  We can be in California at one moment, board a plane, have a drink, take a nap, and end up in Arizona at the next. But what price do we pay for this? The luxurious Boeing jets, which on Dec. 13 raised airline prices by 5.2 percent, are generally fast, quiet, and comfortable to fly in. However, with a lack of options prior to the advent of regional jets, passengers were forced to board commercial airliners, known as larger gas guzzling aircrafts.  In fact, these inefficient airliners also contribute enormously to air pollution that leads directly to negative environmental impacts.

Lockheed’s Joint Strike Fighter: Are you paying too much for your fighter jet?

High Price tag: The F-35 Joint Strike Fighter, unveiled at a ceremony in Washington, is part of the most expensive weapon program in history. Photo: APBy Dawn Swearingin, Rohan Verma, Jameson Neuhoff, Travis Wattles, Priyanka Jain and Wei Zheng

One of the few positive outcomes of the current financial crisis is the emergence of taxpayers as informed stakeholders in the activities of government. The U.S government, mindful of this development, is conceivably more cautious when allocating funds to its different departments. One exception is the Department of Defense, which has consistently seen on average a rise of 5 percent in its budget allocation throughout the last decade, whereas most other departments have faced major reductions.

This is partly understandable due to the geo-political scenarios in Iraq, Afghanistan and North Korea. As this is a matter of national security, it does provide a plausible explanation of why it has not attracted the wrath of taxpayers and media activists yet. But, have you ever wondered whether this increased allocation is justified on the basis of national security alone, or are there glaring inefficiencies in the Department of Defense that drive up project costs and timelines?

Rousing the Dreamliner from its nightmare

Boeing 787 DreamlinerBy Shamus Angkrom, Raghu Gopal, Joseph Hake, Jacquelyn Hunter and Matt Williamson

All people with any interest in flight, from the casual passenger to the industry analyst, will no doubt have been exposed to the recent buzz regarding the Airbus A380 and the Boeing 787 Dreamliner. In the United States all eyes have been set firmly on the production of the 787, as both regional and long-haul service providers plan to utilize the 787 in a manner that will create a great deal of competition for the A380. You would be hard-pressed to reference commercial air travel or U.S.-based defense without the inclusion of Boeing or its various subsidiaries.

Several years ago, one could scarcely mention Boeing without alluding to its former claim-to-fame, the 747 “jumbo jet.” Those of us fortunate enough to have traveled overseas for business or pleasure have undoubtedly experienced the enjoyment of being a passenger on one of these airborne behemoths. Nowadays, when discussing the premiere platform for wide-body, long-haul commercial air travel, most would reference the Airbus A380 instead of the “dated” 747.

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