strategic-management

36 MERNOUSH BANTON
EXHIBIT 12 Airline Industry: Leaders in Total Revenue (April 2009)
Company (Symbol) Total Revenue (ttm)
Southwest Airlines [LUV] $ 11.0 B
LAN Airlines SA ADS [LFL] $ 4.5 B
JetBlue Airways Corporation [JBLU] $ 3.4 B
AirTran Holdings, Inc. [AAI] $ 2.6 B
Source: http://finance.yahoo.com.
American Airlines, Inc., provides services to approximately 150 destinations throughout
North America, the Caribbean, Latin America, Europe, and Asia. They also offer a range
of freight and mail services to shippers. AMR Eagle Holding Corporation, another subsidiary
of AMR, and under the name of American Eagle, owns and operates two regional airlines
and provides connecting service from nine of American’s high traffic cities to smaller
markets throughout the United States, Canada, Mexico, and the Caribbean.
On May 2009, American Airlines announced that its traffic fell 4.7 percent during
April. They flew 10.28 billion revenue passenger miles (revenue passenger miles equal one
passenger flown 1 mile) during April, down from 10.79 billion a year ago. The company
reported a profit of $504 million in 2006 versus a loss of $2,071 million in 2008.
Southwest sells frequent flyer credits to those who participate in their Rapid Reward
frequent flyer program. Southwest remains the nation’s leading low-fare carrier and
continues to distinguish itself from other airlines by offering reliable and exemplary customer
service. The company also differentiates itself by not charging the customers for
their first two bags (size and weight limits apply), no additional fees for window or aisle
seat, and continues offering complementary snacks, sodas, and coffee.
What Is Next for JetBlue?
Southwest in mid-2009 announced it would begin offering flights from Boston to Baltimore
for $49.00. A week later, JetBlue began offering the same flight for $39.00. The rivalry
between Southwest and JetBlue has reached an all-time high.
Develop a clear strategic plan for JetBlue.
References
JetBlue Inc., Annual Report, 2008.
http://www.jetblue.com
http://www.airlines.org
http://www.airliners.net
http://finance.yahoo.com
http://www.bts.gov
http:///wsj.com
http://www7.nationalacademies.org
http://www.usatoday.com/money/industries/travel/2008-08-11-rising-airline-fees_N.htm