September 1, 20--
Airlines: American vs. Southwest.
American Airlines is considered to be one of the "legacy" carriers. They have been around since 1930 and follow the traditional "hub and spoke" airline model. They have hubs in several major cities, and their aircraft have 2 classes (First and Economy). American clearly followed the strategy of being one of the first in a new market, air travel. In 2012 American Airlines bad management decisions lead to questions about airline maintenance program and overall operations (American Airlines, 2008).
Several airplanes were grounded because of improper installation of passenger seats at a time when the airline was doing layoffs. American was able to use draconian decreases in pay and tightening work rules to wrangle ratification. With this they were able to make agreements from its flight attendants, ground staff and maintenance employees. The strategy American’s executives used in 2011 they filed bankruptcy and in the end they had to start selling their routes to Latin American. They used bankruptcy to avoid having to merge with US Airways Examiner (2012).
Southwest followed a completely different strategy. They began operations in 1971. They were definitely a late-entrant into the air travel market. Their competitive advantage was going to be in cost. They used short, point to point, flights, and had a simple fare structure. They also have only 1 class of service, and they use the same type of plane for all their flights. So, not only are their fares lowers, but so is their maintenance and supply chain costs as well (Kelly, 2013).
Southwest and Republic were trying to acquire Frontier at the same time. The bankruptcy court ruled in favor of Republic Airways due to the disputes between Southwest’s and Frontier’s pilot unions. Southwest wanted to phase out Frontier’s brand, while Republic Airways planned on keeping the Frontier brand alive. Southwest wanted Frontier’s employees to go to the bottom of the seniority list, which meant they would be the first to be laid off. Southwest’s decisions to make changes, the moves they made with employees were what damaged them (Mouawad, 2010).
Despite this small set back Southwest airlines bounced back because they continued their low cost. They then decided to fly outside of Texas and decided to buy…