Airline Analysis

Essay by gulmai April 2006

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Statement of Problem: SlugAir, a small regional airline, aspires to become a much larger airline. They pride themselves on being an efficient, single-class, on-time and reliable airline. This airline appeals to those who want reliable, get me where I wanna go service whether the passengers be the everyday traveler or a cost-conscious business traveler. Currently, SlugAir serves small locations throughout California and the Western US. SlugAir serves these locations by feeding hubs for the national carriers and servicing routes that avoid the major hubs. This strategy has allowed SlugAir to become a very profitable small no frills airline. Most airlines are organized in what is called hubs and spokes. The hubs are two major cities that all of the airline's flights fly out of to smaller cities called the spokes. In between the hubs is what is considered the airlines main route as the flights in between the hubs are the companies most profitable.

Flights to the spokes make the airline extra money and people on these flights usually have a lay over at the hub and then go onto the smaller city or may even switch planes to get to their final destination. Thus, the airline feeds its own route by flying to their hubs ( main money making cities) on the way to also getting those that want to get to smaller cities to their destinations. In order for SlugAir to become bigger and more profitable it must open a route between two major cities in the west. For efficiency, these cities need to be ones that it currently services in order to allow them to feed their own route. The competitors that we are considering are 1) United 2) Alaska 3) Delta and 4) Southwest. In order to find the best possible route to open we will...