Southwest :: essays research papers

Changes in apostrophize and efficiencyThe situation today in the airline exertion is basically a price/ court war. Companies ar battling to cut and keep their operate cost low in decree to remain competitive in an industry that is strongly driven by price. The principal cost factors that drive the industry be take and fuel. In terms of labor Neeleman, Jetblues CEO, said that The biggest problem in the industry isnt pay, its work rules. Labor cost accounts for the 38% of the overall operating cost of an airline compevery. Depending on the musical arrangement that a company uses, its labor cost and labor necessity will vary. The point-to-point systems requires less(prenominal) personnel and the aircraft is less time on the ground, and more in the air, being able to passage more times that those aircrafts flying under the hub-and-spoke system system. The first system is widely used by the new low-cost carriers, while the hub-and-spoke is very typical of the traditional airli nes (Appendix 1). Moreover, labor cost is rising, which increases the overall cost per seat (Wright, September 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 gazillion a year (Tang, C. April 11, 2005). Moreover, in the future, the price of fuel is expected to wait increasing, what will tighten even more profit margins. What other companies pass water done to lower 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 demoralise it on board.