Effects of Quality Management on Domestic Competition
Southwest Airlines, an American Airline whose headquarters are in Dallas, offers domestic flight services and has been operational since 1971 prior to which it was operating as Air Southwest Co. With over five hundred fleet, the destinations of the Southwest Airlines flights cover approximately seventy U.S. states. According to the number of domestic passengers it carries in a day and the more than three thousand flights it makes daily, it becomes the biggest airline in the U.S.
On the contrary, Lufthansa is an international airline that plies the global market. Lufthansa is a German-based airline whose headquarters are in Cologne, Germany. Lufthansa was founded in 1953. Being an international airline and with a fleet size of over seven hundred, its flight services cover America, Europe, Asia and Africa continents with the flight destinations totaling over two-hundred and fifty destinations. Based upon the passengers that it carries in general, it is placed at number four among the world’s largest airlines.
One of the things explicit about the two airline companies is that the two have grown and extended their flight coverage through subsidiaries and acquisition. The Southwest Airlines has several subsidiaries namely AirTran Airways, ATA Airlines, Morris Air and Muse Air Corp. The Southwest acquired Airtran in 2011 at an acquisition valued at $ 1.4 billion in the form of cash and stock. The deal was sealed by the board of directors from the two airlines. The deal gave Southwest Airlines the competitive advantages of launching new routes and it will surpass Delta Airlines as the world’s biggest airline. After the global recession that saw a decline in air travel, the merge will boost the airline’s profitability. The Southwest Airlines will also be at advantage because it will give it the advantage of non-stop destinations. It also heralded overseas airline routes.
Southwest Airlines acquired Morris Air in 1993 in a del worth $134 million. Following the acquisition, the Southwest Airlines took control of Morris Air’s destinations and had the competitive advantage of plying a route that it didn’t before. When Muse Air was bankrupt in 1985, Southwest Airlines acquired it in a deal worth $60.5 million and following the acquisition, it was renamed TranStar Airlines. Later, it was to be sold to Texas Air in 1987 following business rivalry of fare. Southwest Airlines acquired ATA Airlines in 2008 in a deal valued at $7.5 million, although, the deal excluded its fleet and workers. The Southwest Airlines had the advantage-of which was its main objective in acquiring the company-of accessing the operating authentication.
On the contrary, Lufthansa has subsidiaries where it either wholly owns them or a part of them. In 1999, Lufthansa acquired 26% of Air Dolomiti and doubled it to 52% to become the controller and Air Dolomiti was absorbed and became a constituent of Lufthansa Regional. This gave Lufthansa a competitive advantage of spreading its routes in the European bloc. In November 2008, Lufthansa acquired 2% of Austrian Airlines and bought it in September, 2009. Lufthansa bought out the shareholders at approximately $523,000 to buy 42% controlling stake and then paid approximately $237 million to buy out the rest. Lufthansa acquired JetBlue Airways and bought 19% stake; 13% controlling stake form Luxair; 50% controlling stake from SunExpress; 25% stake from Jade Cargo International; and 49% stake from Eurowings. Subsidiaries that are wholly owned by Lufthansa are Lufthansa Cargo where Lufthansa control 100% stake, 100% stake in Lufthansa CityLine among many others.
There are several reasons on how quality management affects the position of the two airline companies in the domestic and global market. Southeast Airlines: One is that Southwest Airlines has a fleet of aircraft that is one type. Thus, the airline saves a lot of capital in maintenance and training of its crew. Also there aren’t unnecessary reconfigurations and expensive disruption in fliights coverage. Two is an uncomplicated in-flight service (Schulz et al., 2008). Southeast Airlines doesn’t have assigned passenger seat as does most of its competitors and doesn’t offer meals save for the beverages, drinks and other forms of refreshments. Thus, there isn’t time wasted when restocking the aircraft or when the passengers are boarding other flights. This efficacy in services enables the airlines to make additional flights daily.
Third is a satisfied labor force. Since the employees, over 85%, are union members which represents their dissatisfactions, it gives job efficacy since there are-and has never been-workers’ strikes. Thus, the contented workforce gives smooth services (David & Stanley, 2009). Fourth is that the Southeast Airliners offer a non-return tickets which give it an advantage since intricate fare structures are costly to manage. Thus the airline proves to their customers that they get the best out of their money. Fifth, the Southeast Airlines saves on its money on fuel through fuel-hedging practices, cushioning itself against skyrocketing fuel prices that have mete out a mighty blow to the airline business without sparing its competitors.
Two, is Lufthansa. One of the quality management and how it affects the position of Lufthansa in the global market is its involvement with travel agents who promotes their face and brand. The travel agents act as representatives. Two is alliance under the name Star Alliance, an alliance consisting of over twenty five airlines. This offer flight services to places worldwide. Three is that its subsidiaries such as Contact Air, ply on point-point destinations and consequently hook up passengers to international flights as a representative of Lufthansa (Anonymous n.d). Four is the advantage of the partnerships it has with airlines from different parts of the world which ensure mutual collaboration. Fifth is that Lufthansa is extensively involved in sports sponsorship through which its brand is marketed by reaching a wider audience.
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