The regional airline industry is characterized mainly by short haul flights that serviced small communities which would mainly be unable to support larger aircrafts since they had very small airports. In most of the cases, the regional airlines thrived in partnership with the few major carriers who provide most of the business. This has ensured that the regional airlines have a greater reach and the ability to serve a larger geographical set up.
The growth of the regional airlines is also anchored on the development of the regional jets, which were mainly quite convenient as they could be flown faster, and would be fully loaded in a short while due to their smaller capacities.
One other economic characteristic of the regional airline industry is that the major airlines would reimburse them the full direct costs, as well as a markup for the routes that had been outsourced to them by larger airlines.
Driving forces impacting the industry.
One of the most significant forces driving the regional airline industry is the ability of the individual airline, to get into partnerships with the major airlines. This is because, getting into such a partnership required stringent measures to be met.
Such requirements included the development and maintenance of a high level of customer service. It must be remembered that the regional airlines were famed for having the worst customer service and therefore,the development and maintenance of a vibrant customer service was key to the development of the partnerships with the major airlines.Other requirements included the development and maintenance of a safe image, otherwise customers would be hesitant to fly in an unsafe environment. Lastly, is the ability to keep strict timelines as well as being able to purchase new aircrafts. This therefore meant that the regional airlines had to have the ability to raise capital without affecting their current operations
The last of these forces is the competition that characterizes the regional airlines. Competition for both customers as well as the competition for partnerships with the major airlines is a very key factor driving the airline industry. Such competition resulted in better services, better discipline among the players in terms of customer services as well as investments in fixed assets to better their position in the industry.
Industry key success factors
The regional airlines’ ability to hire and maintain a high level caliber of staff, with the right training especially cabin crew and bookings is an important success factor in the industry. Information obtained in the case study indicates that there have been rampant cases overselling seats, poor customer service etc. Having a well trained and disciplined human capital is an important factor that would lead to attraction of clients even from the other players.
– Service Product/Promotions
The services offered by the industry is also another major factor to be considered.The aircraft seating space,, type of aircraft, class of service booking is important for the success of the airline industry.For instance the choice of the regional jet as opposed to the turboprop was seen as a major competitive strategy as such an aircraft was seen to have better features as compared to others.
– Route System
The regional airlines were generally not quite geographically spread and served mainly smaller communities in shorter distances. This essentially means that the revenues would be significantly reduced. The routes are therefore an important success factor in the industry since they directly affect the revenues
Analysis of Skywest Inc
Identification of the company’s current strategy,
Out of the generic strategies proposed by Michael Porter, Skywest Airline seems to be employing the focus strategy. According to this strategy, a firm concentrates on a narrow segment and then attempts to maximize on the cost and differentiation advantage within the particular segment. This often leads to very high customer loyalty, thus enabling a party to beat competition.
In this strategy, firms are able to tailor their products and strengths in an industry or segment that they pretty know well. Looking at the case of Skywest, then the below can be inferred. The company has a focus on the regional airlines segment of the airline industry, in which she has created a niche for herself by entering into many partnerships that have enabled her to get fully entrenched in the market.The company has also acquired a number of players in the industry thus growing her reach in the particular market segment.
The acquisition of Atlantic South East Airlines as well as partnerships with Delta Airlines,and the many airlines that operate under the umbrella of the delta airlines such as United Express, Midwest connections among others definitely gave Skywest an upper hand in the regional airlines business. This is because Skywest was able to operate quite many routes that were outsourced to her by her partners and this makes her a regional leader in the business.
Having good human resources policies that endeared her to the invaluable human capital, maintaining a high level of safety standards as well as a fleet of aircrafts, and especially the low cost turboprops ensured that the company is able to operate at relatively low costs in the segment, and therefore attain a competitive edge over the other players In the industry.
A SWOT analysis of Skywest airlines indicates that the company is quite strong in a number of aspects. In the first instance, the company has consistently recorded a growth of just above 29%, which was mainly as a result of the many partnerships that the company has entered into over the years, as well as the expansion of the existing airlines to include quite a number of routes.
The possession of a large fleet of aircraft as well as the regional presence as a result of the many years that the company has been in operation is reason enough for the company to continue with the current growth abilities.
Other strengths of the company include the great reputation as a result of the safety standards that have been put in place, as well as a relatively accident free period of operation. It must be remembered also that after the 9/11 incident, people preferred to fly the regional airlines that were considered to be safer.
Weaknesses that are inherent in the business of Skywest airlines include of course the fact that entering into the partnerships places a lot of responsibility for the management of the company, so as to ensure that the business is successful as per the contracts of agreements. Inability to expeditiously deliver on the said agreements.
Many opportunities are presented to Skywest airline, in this fast growing regional airlines industry. In her strong financial and regional presence, the company will be able to take advantage of any opportunities that may present to the industry.
Key among these are the impending partnerships with companies such as The US airlines,southwest and Jet blue airlines. These impeding opportunities can quickly be utilized to bring Skywest airlines to a great position, one that would enable her to compete with the other top players in the industry.
The most important threat that the company faces is of course the ever increasing competition that characterizes the regional airlines business. With many players in the industry competing for the few partnerships as well as operating routes, the company is threatened with competition for the limited resources and therefore a lot has to be done to ensure that the company continues to develop even larger capacity to be able to fight it out with competitors for the market share.
Lohman, A (2010) Skywest Inc, and the regional airline industry in 2009. California state university.