What's Happening at Southwest?

sou-west Airlines Problem How to respone to Braniffs one-half price practice furtherance for the Dallas-Fort Worth to Houston route from February through March. Issues: Can southwestward assume cutting fares for two months to meet Braniffs promotional material? What would be the put in on short-term and long-term securities industry character if they dont cut prices or what is the effect on the Net Income (Loss) if they do? What nonprice-based alternate(a)s to cutting fares are addressable? How would the publicizing for a price cut or different alternative fit in with current promotions, ad and twelvemonth advertising budget? Industry/Market Analysis side Analysis: oSouthwest is one of three major competitors in a Texas intrastate air service in the midst of Dallas-Fort Worth, Houston and San Antonio. Southwest straightway (Feb 1st, 1973) is second in market share holding almost 41.2% of the bring Market. (See Exhibit 1). oSouthwest is considera bly littler than both of the other competing airlines as far as planes (3 arrive compared to Braniffs 69 and TIs 45 total aircraft) which limited the summation of flights that could be increased in some(prenominal) one route. Break/ notwithstanding: oThe initial B/E for opening operations was reason at a $20 fare for 39 passengers per flight.

This meant Southwest had to produce norm tax income of $780 per flight. oFor 1971, Southwest averaged only 17.6 passengers and for the freshman half of 1972 averaged only 26.6 passengers per flight. (Data taken from Exhibit 9, detailing passengers for unfluctuating and give the axe flights.) oThis forced sout! hwest to alter price in June 1972, raising fares to $26 one way / $50 bust trip. From Exhibit 8 we see that Operations and aid in addition increased $18 so the r counterbalanceue was needed was around $800 per flight. With the new fare, Southwest needed between 31 and 32 passengers per flight for a break even point (fare would be a mix of one-way and round-trip prices.) Routes and tax revenue: oDallas-Houston:...If you deficiency to get a full essay, order it on our website: OrderCustomPaper.com

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