Airline Industry

Katie Bakstad, Megan Gannon, and Chris Stanley

2010
Table of Contents
PART I: DESCRIBE TWO PUBLICLY TRADED BUSINESS RIVALS ...................................................................... 3
Question 1: Airline Industry: US Airways and Southwest Airways ......................................................... 3
PART II: OPPORTUNITY.................................................................................................................................. 4
Question 1: Airline Industry ..................................................................................................................... 4
Question 2: Geographic Area ................................................................................................................... 5
PART III: INDUSTRY ANALYSIS ....................................................................................................................... 5
Question 1: “5-forces” Analysis ............................................................................................................... 5
Question 2: Profitability ........................................................................................................................... 7
Question 3: Key Success Factors .............................................................................................................. 8
Question 4: KSF Protecting Profit........................................................................................................... 11
PART IV: STRENGTH ASSESSMENT .............................................................................................................. 12
Question 1: Calculation of Key Success Factors ..................................................................................... 12
Question 2: Distinctive Competency Scores .......................................................................................... 15
Question 3: Average of Distinctive Competency Scores ........................................................................ 16
Question 4: Company with the Competitive Advantage ....................................................................... 16
Works Cited ................................................................................................................................................. 18

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PART I: DESCRIBE TWO PUBLICLY TRADED BUSINESS RIVALS

Question 1: Airline Industry: US Airways and Southwest Airways

Air travel remains a large industry and it continues to grow. Two airlines that are among the

major players are Southwest Airlines and US Airways Group. These two businesses are competing in the

Domestic Airlines in the US Industry. Although US Airways has some flights internationally, our main

focus will be on their domestic flights. Both companies are competing on optimum capacity utilization,

fuel and labor costs, maintenance capacity, and customer service and satisfaction. Southwest Airlines

holds 8.4% of the market share in this industry and US Airways Group holds 6.8% (Airlines, 1999-2010).

Southwest Airlines was incorporated in 1976 and began operation on June 1971 with three Boeing 737

aircrafts (Airlines, 1999-2010). Their corporate office can be located at 2702 Love Field Drive, Dallas,

TX 75235. Southwest Airlines provides “point-to-point service, rather than the hub-and-spoke service

provided by most major U.S airlines, in order to minimize connections, delays, and total trip time”

(Southwest Airlines Co., 2009). This has helped them become the most successful low cost carrier in the

U.S. Even during our economic downturn, they have continued to be profitable. Southwest only uses one

type of aircraft, the Boeing 737, which has helped keep costs down and minimized training and

maintenance costs (Airlines, 1999-2010). In an attempt to differentiate their service and gain market

share, Southwest has been marketing their lack of bag fees (Corridore, 2009). According to a Wall Street

Journal article, “Southwest Airlines plans to buy AirTran for about $1.4 billion in cash and stock. The

deal is expected to close in the first half of next year” (Solsman, 2010).

US Airways Group was formed in 1982 and has origins tracing back to the formation of All

American Aviation in 1939 (US Airways Group, Inc., 2009). Their corporate offices can be found at 111

West Rio Salado Parkway, Tempe, Arizona 85281. When US Airways emerged from bankruptcy in

September 2005, they merged with America West Holdings Corporation to form the “first nationwide

low-cost, hub-and-spoke carrier (Airlines, 1999-2010). Today, they are the “fifth largest airline in the

United States as measured by domestic revenue passenger miles and available seat miles (US Airways

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Group, Inc., 2009). Their focus city is at Ronald Reagan Washington National Airport and they also have

hubs in Charlotte, Philadelphia and Phoenix. US Airways Group believes that if they concentrate on their

strengths and eliminate unprofitable flying, they will be better positioned; therefore during the first half of

2010 they cut approximately 1,000 positions (US Airways Group, Inc., 2009). Due to the rising fuel costs

and economic conditions, US Airways Group saw a net loss of $200 million in 2009. However, this was

an improvement from 2008 where they posted a $2.2 billion loss (Airlines, 1999-2010).

PART II: OPPORTUNITY

Question 1: Airline Industry

The Domestic Airlines industry in the US provides air transport services for passengers, cargo,

and/or mail. It consists of “about 50 mainline commercial passenger airlines, of which about 20 are

considered major airlines, defined as airlines with annual revenues in excess of $1.0 billion” (Corridore,

2009). The difficult U.S economy has affected the airline industry and this has “reduced business demand,

as companies tighten corporate travel policies, resulting in a decline in business travel and a decrease in

the percentage of full-fare purchases” (Southwest Airlines Co., 2009). The world price of crude oil is a

key driver that affects the airline’s industry up and down cycle. “During 2009, the price of crude oil on a

per barrel basis ranged from a high of $81.03 to a low of $34.03, and closed at $79.39 on December 31,

2009” (US Airways Group, Inc., 2009)). These high fuel prices plus the global economic recession have

been major factors behind the airline industry experiencing low revenues. In recent years, Americans have

reduced their spending which has included their total number of domestic trips by airline. In 2008, a

number of airlines had to cease operations, some merged together, and in order to reduce costs, airlines

increased code sharing arrangements (Airlines, 1999-2010). A few airlines, such as Southwest, have made

it through this economic crisis particularly because of strong fuel-hedging strategies (Airlines, 1999-

2010). Lately, airlines have found other ways to become profitable and nickel-and-dime their consumers.

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Stand-by charges, cancellation penalties, and, of course, baggage fees are all in play for airlines now

(Matlin, 2010). Also, because there are less seats of available, consumers who are willing to fly, pay

more.

Question 2: Geographic Area

Due to the fact that we are focusing primarily on the Domestic Airlines industry in the US, the

geographic region that has the largest amount of demand is the United States. This industry has been

declining since 2001. The demand for domestic flights has decreased at an annualized rate of 1.3% over

the past five years (Airlines, 1999-2010). About 7.8% fewer passengers boarded domestic flights in 2009

compared from 2008 (Airlines, 1999-2010). “Domestic travel peaked at 681.9 million enplanements in

2007 before plunging by 4.0% 2008 and 5.1% 2009” (Airlines, 1999-2010). However, the Domestic

Airline industry did experience an 8.3% increase in revenue between 2009 and 2010, ending at $139.24

billion (Airlines, 1999-2010). In the next five years, industry revenue is forecast to exhibit positive

growth, increasing at a rate of 3.0% per year to $161.75 billion (Airlines, 1999-2010). “This recovery will

be driven by Americans regaining employment and thus having higher disposable incomes to pursue

leisure activities, including travel” (Airlines, 1999-2010)

PART III: INDUSTRY ANALYSIS

Question 1: “5-forces” Analysis

In order to implement the best strategy in an attempt gain a sustainable competitive advantage

over rivals, business managers must analyze their industry using Porters Five Forces Model. Five-forces

analysis measures the intensity of competitive forces within an industry against threats to profit of the

average firm with no particular strengths or weaknesses. The competitive forces include suppliers, rivals,

buyers, substitutes, and threat of new entrants.

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 Supplier’s threat to profit in the airline industry is highly intense. According to the 10-k filing of

Southwest airline, item 1a, page 16, “The company is dependent on one sole supplier for aircraft parts. If

the company were unable to acquire adequate support for parts, operations would be materially affected.”

It is reasonable to assume the supplier power for the industry is similar to Southwest airlines threat. There

are only a two major suppliers that compete in the airline supply industry, Bowen and Airbus

(Investopedia). Having only two large manufacturers of aircrafts, airlines are forced to make purchases in

advance, which can significantly hurt profit it future demand falls.

Rivalry amongst competitors in the airline industry is very intense and poses a high threat to

profit. According to the US airways 10-k filing, item 1a, on page 20, “The airline industry is intensely

competitive and dynamic. Our revenues are sensitive to numerous factors and the actions of other carriers

in the areas of pricing, scheduling, and promotions can have an adverse affect on our revenues and the

overall industry.” The airline industry has many competitors that are proportionate in their market share

which poses a high threat, as fixed cost are very high (Airlines, 1999-2010).

Consumers looking to purchase the services provided by the airline industry provide a high threat

to profitability for a company. Stated in the Southwest 10-k filing, item1a, on page 17, “The airlines

industry is affected by many conditions beyond its control, especially changes in consumer preference,

perceptions, spending patterns, and demographic trends.” Customers have the ability to choose among

many different airlines with a low cost of switching (Industry analysis lecture). When buyers have less

money to spend, they use air travel less frequently, which poses a high threat to the profit in the airline

industry.

The efficiency and convenience of air travel is tough to imitate by other forms of transportation

although there are other travel options customers can substitute for air travel. As there are other options, I

believe the magnitude of the substitute threat is moderate. According to IbisWorld airline industry

analysis, under competitive landscape, “Customers may substitute car, train, bus, or sea transportation

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instead of air transportation. But the convenience and competitive price for air travel experiences low

competition with these ground and sea transportation.” This reveals that industry analyst admit there’s

competition from substitutes, but don’t see it as high threat to profit. The 10-k filing from Southwest and

US airways leads me to assume there is a higher threat to profit then analyst might think. Both companies

believe that increased unemployment and lower discretionary spending has led more consumers to travel

on the ground instead of in the air. Using this evidence, I believe a moderate threat to profit exist from

substitutes to the airline industry.

The airline industry is very tough to enter because of numerous firms already existing and start up

exhausts a lot of capital. According IbisWorld industry analysis, “Cost to purchase aircrafts and specialist

machinery, hanger and other airfield space, skilled labor and to satisfy stringent safety requirements are

very high and make entry very hard. Existing companies may have network alliances and a wide network

of industry contracts where it would make it very tough for new entrants to win business even after

massive capital outlays.” New entrants with the capital to enter the market, major airlines can use

economies of scale by consistently undercutting smaller players on price and delivery speed (Airlines,

1999-2010). Therefore, I strongly believe the threat of new entrants to profitability of an existing firm is

very low.

Question 2: Profitability

After an in-depth analysis of Porters Five Forces using IbisWorld, Southwest Airlines 10-k filing,

and US airways 10-k filing, I found the airline industry to have one low threat to profit, from new

entrants. According to the Industry Analysis lecture notes, the higher the collective power of the five

competitive forces, the lower the expected profitability of the average rival with no particular strength or

weakness. As four of the five competitive forces are high threats, a reduction in average profit is expected

for a firm with no particular strengths or weaknesses on key success factors. I believe the expected

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profitability of an average competitor in the airline industry with no particular strengths or weaknesses on

all key success factors will be less than their cost of capital.

Question 3: Key Success Factors

Businesses should operate to gain a sustainable competitive advantage and a superior profit over

the competition by having distinctive competency with specific skills needed for success (Competing

Resources Lecture). These skills needed for success and superior profitability is what industry analyst call

Key Success Factors (KSF). A key success factor is specific resources or activities any competing

company must be good at if they are to be profitable satisfying demand and defending against hi-power

threats (Analysis Fundamentals Lecture). Examples of KSF include particular strategy elements, products

attributes, resources, competencies, capabilities, and market achievements (Analysis Fundamentals

Lecture). Businesses that are good implementing their industries key success factors will be seek

profitability and success in that industry.

The airline industry has six important Key Success Factors that rivals must be good at in order to

have superior profitability. Most of these key success factors focus on efficiency as the airline industry

has high fixed cost and low margins. In the calculation of certain KSF I will be using figures used solely

for the airline industry. An airlines Revenue passenger-miles (RPM) is the total number of passengers

enplaned, multiplied by the average distance flown (Corridore, 2009). RPM is a good measure of the total

traffic on an airline. The Available seat-miles (ASM) for an airline are calculated as aircraft miles flown,

multiplied by the number of seats available for revenue passengers use (Corridore, 2009). ASM provides

a good measures the number of seats available when planes are in flight. The six KSF for the airline

industry are the following:

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Optimum Capacity Utilization: Is the ability of airlines to utilize every seat on the aircraft before

departure without delaying the flight (Corridore, 2009). The more seats that are filled on a flight, the more

profitable the flight will be for the company. This is hard for rivals to imitate because it is based on

performance. Measuring this KSF is easily done with the load factor ratio. This KSF increases

profitability because it increases sales quantity and average price. The calculation for Load Factor=

RPM/ASM.

Effective Fuel Cost Control (Fuel Efficiency): This is airlines ability to utilize fuel consumption

efficiently compared to other rivals. Using fuel efficiently is important to profitability because of the

volatility of fuel prices. Utilizing the newest fuel-efficient aircrafts and having maximum enplanements

allows airlines to use fuel efficiently. According to the S & P Industry Survey, fuel cost consumed 24.6

percent of revenues for the nine largest airlines in the United States. We can measure fuel efficiency with

the ratio of fuel cost per Available Seat-Miles. This KSF makes a company more profitable because it

decreases cost. The calculation for Fuel Efficiency= Total Fuel Cost/ ASM.

Effective Labor Cost Control (Labor Efficiency): Airlines that can control labor cost have the ability to

gain superior profit compared to competitors. According to the S&P Industry Survey, the airline industry

averaged 26.2 percent of revenue on labor during 2009. Airlines effectively implementing technological

improvements will increase worker productivity and decrease labor cost (Airlines, 1999-2010).

Outsourcing certain operating functions can also improve labor efficiency. Labor efficiency can be

measured by a ratio of total labor cost per Revenue Passenger-Miles. Being successful on this KSF will

increase profit by decreasing operating cost. The calculation for Labor Efficiency= Total Labor

Cost/RPM.

Effective Maintenance Capabilities (Jet Utilization): According to the S&P Industry Survey, the faster a

carrier can get its aircraft back into revenue service, the more profitable it will be. Jet utilization is the

number of hours the aircraft is in service, but this is not a comparable measure across the industry because

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of inconsistencies with short-haul flights and long-haul fight (Corridore, 2009). A better measure of the

airlines ability to keep aircrafts in flight is their capability to repair aircrafts when there is a problem.

According to the 10-k reports of Southwest and US Airline, both companies keep an inventory of spare

parts, have maintenance facilities, and employ workers to manage the fleet. I believe a good measure of

this capability is a ratio of total maintenance material and repair cost per revenue passenger-mile.

Companies successful on this KSF can increase sales quantity by reducing repair time and increasing

number of flights. This can be calculated by Maintenance capability ratio= Total maintenance and

repair cost/RPM.

Prompt Delivery to Market: As the airline industry is highly competitive, the ability to deliver services on

time will reduce the loss of customers to rivals (Airlines, 1999-2010). The Department of Transportations

Air Travel Consumer Report, released November 2010, ranks airlines based on number of flights that

arrive on time compared to number of total flights. This is very important for companies because

customers can use this report to see which airlines are most likely to be delayed. A BussinessWeek article

quoted a United Airline worker, “We make decisions on a variety of factors, the most important being

how quickly we can get our customers to their destinations...” The frequency and reliability of flights are

critical factors for competing airline companies (Corridore, 2009). We can measure this KSF with a

simple ratio of on time flights compared to total flights. This KSF builds brand loyalty, which increases

sales quantity and profit. The calculation for percentage of on time flights= Number of Flights arriving

on time/Total Departures

Customer Service and Satisfaction: Customer service and satisfaction includes ratios to measure

mishandled baggage, customer complaints, delayed flights, and overbooking flights. According to the US

Airways 10-k filing, item1A, risk factors, “ If we incur problems with any of our third-party regional

operators or third-party service providers, our operations could be adversely affected by a resulting

decline in revenue or negative public perception about our services.” To differentiate themselves from

other competitor’s airlines may strive to build brand loyalty through good customer service (Corridore,

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2009). Airlines are ranked annually in the Airline Quality Rating report, which uses an equation to

produce rankings based on mishandled baggage, complaints, delayed flights and overbooking. According

to a CNN article, airline industry customer service performance is rising, primarily due to airlines

recognizing customer service matters to consumers. The Centre for Asia Pacific Aviation believes

customer service ranks as a top concern for many travelers. Therefore the ability to provide good

customer service builds brand loyalty. We can measure this KSF by using the percentage of mishandled

baggage, number of customer complaints, percentage of on time flights, and number of overbooking’s on

a flight. Using these five statistics we can input the figures into the equation developed by Dr. Brent D.

Bowen and Dr. Dean E. Headley, to measure which airline is superior in customer service. We can

measure each statistic with the following calculations:

Mishandled Bags (MB) =Total Baggage reports/ (Total Passengers emplaned/1000)

Denied Boarding (DB)= Involuntary Denial/ (Enplaned passengers/10000)

Customer Complaints (CC)=Total Complaints/(Total enplanements/100,000)

On time flights (OT)= Arrival delays/ Total flight operation

We can then input these individual statistics into the equation developed by the producers of the Airline

Quality Rankings, to see who has the best customer service and satisfaction.

Equation used in the Airline Quality Rankings:

=(8.63x OT)+(-8.03xDB)+(-7.92xMB)+(-7.17xCC) / (8.63+8.03+7.92+7.17)

Question 4: KSF Protecting Profit

The high power threat of rivalry in the airline industry means that rivals are likely to be

competing intensely on price, frequency and capacity, and service quality (Airlines, 1999-2010). This

essentially means that airline companies frequently discount prices and are likely to take on additional

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cost for increased customer service and reliability. In the business model profit=(Quantity x average

price)-cost, meaning if airlines lower prices and take on added costs profit could to be negatively affected.

The best way to protect profit from intense rivalry is to be good on the capacity utilization key success

factor. Optimum capacity utilization for an airline will increase sales quantity without reducing the

quality of service or decreasing frequency and reliability. If airlines are not able to utilize every seat on

the aircraft the cost per passenger increases without an increase to sale quantity or average price. The

increased price per passenger will result in a lower profit for the airline.

PART IV: STRENGTH ASSESSMENT

Question 1: Calculation of Key Success Factors

Optimum Capacity Utilization is a Key Success Factor that IBIS World found for the airline

industry in their September 2010 report. To find the Optimum Capacity Utilization the Revenue

Passenger Miles Flown (RPM) is divided by Available Seat-Miles (ASM). (Airlines, 1999-2010) These

numbers are found on the Standard & Poor’s Airline Industry Survey. The latest data that can be used to

calculate the Optimum Capacity Utilization is from 2009, at which time Southwest Airlines had a RPM of

74,456,710,000 and an ASM of 98,001,550,000. (Southwest Airlines Co., 2009)This results in their

Optimum Capacity Utilization of 75.98%. In 2009, US Airways had a RPM of 68,459,000,000 and an

ASM of 85,092,000,000 which resulted in 80.45% for their Optimum Capacity Utilization. (US Airways

Group, Inc., 2009)

Effective Cost Controls are vital to the airline industry. Two major costs which airline companies

have to endure on a daily basis are labor and fuel costs according to the Standard & Poor’s Industry

Survey. US Airways was referenced in the S&P Survey having only 20.7% labor costs to revenues while

Southwest Airlines Co. is on the high end of the US airline industry at 33.5% of labor costs to total

revenues. (Corridore, 2009) The calculation used for the key success factor was fuel cost divided by

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ASM. Using the 10K from each company’s investor relation’s sections of their websites the numbers

were found with a result of 2.91% for US Airways (US Airways Group, Inc., 2009) and 3.09% for

Southwest Airlines (Southwest Airlines Co., 2009).

Fuel prices also have the same trend with the two competitors with US Airways’ costs at 17.9%

of revenues while Southwest is at 29.4% of revenues using the S&P Survey. (Corridore, 2009) Using the

10-K information and the key success factor calculation US Airways was found to have a 2.54% (US

Airways Group, Inc., 2009) fuel costs while Southwest was found to have a 3.54% (Southwest Airlines

Co., 2009) costs.

Effective maintenance capacity is also known as the amount of jet utilization. This key success

factor is calculated by taking the total direct maintenance costs and divides them by the revenue passenger

miles. The RPM amount for both US Airways (US Airways Group, Inc., 2009) and Southwest Airlines

(Southwest Airlines Co., 2009) are found in their 10K annual reports on their investor relation’s sections

of their websites. The total direct maintenance costs for each are found on the RITA website. (U.S.

Department of Transportation) The result was 1.37% for US Airways and 1.17% for Southwest Airlines

for effective maintenance capacity.

Customer service and satisfaction can be found using the standard ranking equation called the

AQR equation. (U.S. Department of Transportation) This equation is used by every major airline in the

industry in order to see their rank between their competitors. The actual AQR equation is:

AQR= (8.63 x OT) + (-8.03 x DB) + (-7.92 x MB) + (-7.17 x CC)

(8.63+8.03+7.92+7.17)

Each unknown variable is found using these equations:

OT=Delays in Arrival= Arrival Delays/ Total Flight Operation US= .1772 SW= .1406

DB= Denied Boarding= Involuntary/ (Enplaned Passengers/10,000) US= .0141 SW= .0129

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MB= Mishandled Bags= Total Baggage Reports/ (Passengers Enplaned/ 1,000) US= .0303 SW= .0343

CC= Customer Complaints= Complaints/ (Total Enplanements/ 100,000) US= .0131 SW= .0021

The result of the AQR equation was 3.41% for US Airways and 2.59% for Southwest. (U.S. Department

of Transportation)

Prompt delivery to markets is found using the percent of flights on time. (Airlines, 1999-2010)

The percent of flights on time can be found by using the number of flights on time during the 2009

calendar year divided by the total flights in 2009. Both of these numbers for both US Airways and

Southwest Airlines were found on the RITA website. The percent of flights on time was 80.87% for US

Airways and 83.00% for Southwest Airlines. (U.S. Department of Transportation)

Key Success Factors US Airways Southwest Airlines

1. Optimum Capacity 68,459,000,000/85,092,000,000= 74,456,710,000/98,001,550,000=
Utilization 80.45% 1 75.98% 2
(RPM/ASM) 10K 10K
2. Effective Fuel Cost 2,476,320,000/85,092,000,000= 3,027,360,000/98,001,550,000=
Control 2.91%1 3.09% 2
(Fuel Cost/ASM)
3. Effective Labor Cost 1,740,423,000/68,459,000,000= 2,637,294,000/74,456,710,000=
Control 2.54%3 3.54%3
(Labor Cost/ RPM)
4. Effective Maintenance 938,569,000/68,459,000,000= 869,818,000/74,456,710,000=
Capacity 1.37%3 1.17%3
(Total Direct
Maintenance
Costs/RPM)
5. Customer Service and (8.63 x .1772) + (-8.03 x .0141) + (8.63 x .1406) + (-8.03 x .0129) +
Satisfaction (-7.92 x.0303) + (-7.17 x .0131) / (-7.92 x .0343) + (-7.17 x .0021) /
(AQR Equation see 31.75= 31.75=
above) 3.41%3 2.59%3

6. Prompt Delivery to 80.87% 3 83.00%3

Markets
(% of Flights on Time=

1
(US Airways Group, Inc., 2009)
2
(Southwest Airlines Co., 2009)
3
(U.S. Department of Transportation)

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 # of Flights on
Time/Total Flights)

Question 2: Distinctive Competency Scores

After calculating the optimum capacity utilization for both airline competitors, US Airways came

out with a higher percentage than Southwest Airlines. Therefore, the distinctive competency scores were

given with a 5 for US Airways and a 1 for Southwest.

Effective cost controls for fuel were calculated and found that US Airways had lower costs than

Southwest Airlines. Therefore, US Airways was given a 5 and Southwest was given a 1 for the

distinctive competency scores.

Effective labor cost control was calculated the same result as fuel costs was found with US

Airways lower than Southwest. Hence, US Airways was given a 5 and Southwest was given a 1.

Jet utilization or effective maintenance capacity was found with US Airways being more effective

than Southwest. However, since the ratios were so similar, US Airways was given a 4 while Southwest

was given a 3.

Customer service and satisfaction resulted in US Airways ranking higher than Southwest using

the AQR equation. US Airways was given a 5 in the comparison while Southwest was given a 1.

The percentage of flights on time happened to have Southwest trumping US Airways. This

resulted in Southwest’s first 5 and US Airway’s first 1.

Key Success Factors US Airways Southwest Airlines

1. Optimum Capacity
Utilization
(RPM/ASM)
5 1
2. Effective Fuel Cost

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 Control 5 1
(Fuel Cost/ASM)
3. Effective Labor Cost
Control
(Labor Cost/ RPM)
5 1
4. Effective Maintenance
Capacity
(Maintenance material
4 3
and repair cost/RPM)
5. Customer Service and
Satisfaction
(Passenger Service
5 1
Cost/Total Operating
Expense OR Total
Revenue)
6. Prompt Delivery to
Markets
(% of Flights on Time=
1 5
# of Flights on
Time/Total Flights)
Average 4.17 2.00

Question 3: Average of Distinctive Competency Scores

The average for the distinctive competency score for US Airways was 4.17 while the average was

2.00 for Southwest Airlines. Average scores can be seen in the table above.

Question 4: Company with the Competitive Advantage

After the key success factors have been calculated and given distinctive competency scores, the

company that most likely creates and sustains a competitive advantage against the other is US Airways.

US Airways was given higher competency scores for five of the six key success factors. The only

category they weren’t competitive compared to Southwest was the percent of on time flights. US

Airways is able to be more efficient regarding maintenance, fuel and labor costs as well as customer

service and satisfaction.

According to a recent Wall Street Journal Article called “A Big Jump in Gripes about Airline

Service”, this year has resulted in more customer complaints since the 2009 results above. This could be

16
due to the “steps the department took to make it easier to file complaints online and heightened attention

to airline performance”. Although there haven’t been any differences in performance, the customer

complaints have rose 32% this year compared to last. These will cause a significant change in customer

service and satisfaction rates. However, because it is industry wide, there may not be a difference once

compared against competitors and US Airways will probably still come out as the company with the

competitive advantage. (McCartney, 2010)

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Raleigh, NC: Greg Young, 2010. 18. PowerPoint.
Young, Greg. "Competing on Resources." Lecture Notes. Ed. Greg Young. Raleigh, NC: Greg Young,
2010. 2-7. PowerPoint.
Young, Greg. "Industry Analysis." Lecture Notes. Ed. Greg Young. Raleigh, NC: Greg Young, 2010. 8-9.
PowerPoint.

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