Southwest :: essays research papers

Changes in greet and efficiencyThe situation today in the air lane sedulousness is basically a price/cost war. Companies are battling to cut and bound their operating cost low in order to remain warlike in an industry that is strongly driven by price. The principal cost factors that drive the industry are confinement and fuel. In terms of comminute Neeleman, Jetblues CEO, said that The biggest problem in the industry isnt pay, its puzzle out rules. Labor cost accounts for the 38% of the overall operating cost of an airline company. Depending on the system that a company uses, its exertion cost and labor necessity will vary. The point-to-point systems requires less personnel and the aircraft is less time on the ground, and more in the air, being able to flight more quantify that those aircrafts flying under the hub-and-spoke system. The first system is widely apply by the new low-cost carriers, while the hub-and-spoke is very exemplary of the traditional airlines (Appendi x 1). Moreover, labor cost is rising, which increases the overall cost per seat (Wright, family line 8, 2003). In terms of labor efficiency, low-cost carriers are reducing labor or either by e-ticketing or by doing what Southwest states on their contracts, any qualified employee can perform any function (load, unload, cleaning, etc) as needed (Thompson.2005). The second, most important factor that determines the cost structure in the industry is fuel cost. It is said that for one-dollar increase in the price of a fuel barrel, is costs the industry a billion a family (Tang, C. April 11, 2005). Moreover, in the future, the price of fuel is expected to continue increasing, what will concentrate even more profit margins. What other companies have done to abase their cost is to eliminate meals. Instead, in short flights, snacks are served to the passengers, and in long-distance ones, costumers are allowed to bring food with them or buy it on board.