The reason why I choose Southwest airline to be my target because it is the most successful corporation in US airline industry and Eva airway it’s also #1 airline corporation in Taipei. In now day, air transport can’t be replaced, it’s necessary for travel other country.
For the first time since 9/11, the airline industry is expected to be profitable worldwide, said Giovanni Bisignani, CEO of the International Air Transport Association (IATA). The IATA is forecasting a $3.8 billion profit for 2007, following six rough years and more than $40 billion in losses across the industry. The Southwest airline industry won’t have anything to do with the turnaround, however, and is fact expected to lose $600 million this year, mostly due to restructuring costs. Five years after 9/11, the US airline industry finally is showing signs of recovery, but with some airlines in much better shape than others. Rising oil prices have hit the industry hard, particularly the already fragile carriers who don’t have oil price hedges. The airlines that aren’t bankrupt have shrunk themselves and raised fares enough that in recent quarters they all managed to show modest profits.
In 1997, CNNMoney.com ranked Southwest Airlines Co. the number one in safety (Peter Keating, 1997, p.1). With its continued emphasis on on-time flight arrivals and proper handling of bags and luggage and efficient service, Southwest Airlines continues to be one of the leaders in the Regional Airline Industry. It is a domestic airline that provides comfortable air transportation service targeting both business and leisure travelers. It boasts of having a profitable, highly efficient and high-quality airline with a schedule that fits the needs of its customers.
Southwest Airlines started in 1971 with just three Boeing 737 aircraft serving three Texas cities – Dallas, Houston, and San Antonio. Now, it is already the eighth largest carrier in the US famous for its frequent departures, low-cost and no-frills flights and operating 520 Boeing 737 aircrafts in 64 airports in 32 states across the United States. It currently offers more than 3,400 flights per day all over the United States.
According to the Department of Transportation, Southwest Air remains to have the best cumulative Customer Satisfaction record among all carriers. This is evident by the fact that Southwest Air continues to come up with ways to improve its service to its customers. Recently, it changed its Customer boarding method which enhanced boarding process, improved customer experience giving the travelers opportunity to be more productive of their time while waiting for their flights without standing in line. Moreover, Southwest has recently completed its Extreme Gate Makeover which includes innovations such as plusher seats, power stations for laptops, additional flat-screen TVs and other electronic equipment to improve its customer experience while traveling with Southwest Air. Southwest also provides rewards to the frequent flyers consisting of automatic check in for their flights and inclusion in the A boarding group. It does not therefore comes as a surprise that its customers increased by 5.8% from 2006 to 2007. Below are the statistics passenger report from 2006 and 2007 indicating the number of paying passengers boarding Southwest Air as table A:
|Consolidated Highlights (Dollars in Millions)||2007||2006||% change|
|Revenue Passengers Carried||88,713,472||83,814,823||5.8 %|
|Revenue Passenger Miles (RPM)s||72,318,812||67,691,289||6.8 %|
|Available seat miles||99,635,967||92,663,023||7.5 %|
|Passenger load factor||72.6 %||73.1 %||(0.5) pts.|
|Passenger revenue yield per RPM||13.08 ¢||12.93 ¢||1.2 %|
|Operating Revenue yield per ASM||9.90 ¢||9.81 ¢||0.9 %|
|Operating expenses per ASM||9.10 ¢||8.80 ¢||3.4 %|
|Size of Fleet at Yearend||520||481||8.1 %|
|Southwest Airline Co. Annual Report 2007|
Just like any other airline industry however, it experienced growth decline for the year 2000. Among the reasons are the soaring prices of crude oil and increasing competition in the airline industry. It must be stressed that the airline industry is a highly competitive industry where players have to compete in the following competitive factors: Fares; Customer Service; Costs; frequency and convenience of scheduling; Frequent flyer benefits; and Efficiency and productivity, including effective selection and use of aircraft. Moreover competition is much stiffer considering that some major airlines have established extensive marketing or codesharing alliances including: including Northwest Airlines/Continental Airlines/Delta Air Lines; American Airlines/Alaska Airlines; and United Airlines/US Airways. It bears stressing that these alliances among its competitors are more extensive that Southwest’s present arrangement with ATA airlines
Below is the comparative data for Total Revenue, Gross Profit, Operating Income/Loss and Net Income for Southwest Air for the past 3 years as Appendix B. It shows that there is substantial improvement on the part of Southwest Air for its operations from 2006 to 2007 as indicated in its income. This could perhaps be attributed to the different ways it had come up to improve efficiency and performance.
|Operating Income or Loss||791,000||934,000||820,000|
Below is the comparative table of historical stock prices of both Southwest Air and EVA Air. It shows that since the year 2001 until 2009, there is substantial decline in the value of stocks of Southwest Air from 31.33 in January of 2001 to 7.03 in January of 2009.
|January 2009||January 2008||January 2007||January 2006||January 2005||January 2004||January 2003||January 2002||January 2001|
|Eva Air||6.26||15.65||14.30||13.45||15.05||16.83||14.58||Values not available||Values not available|
EVA Air Corporation
EVA Airways Corporation, on the other hand, is principally engaged in the business of providing international air transport passenger and cargo services throughout Asia, Europe, America, New Zealand and Australia. Its air transportation services include regular flights and regular and irregular charter flights. It also provides air cargo, mail and package transportation services. It currently flies passengers and cargo to 45 cities around the world. It operates a mix of 52 jets which includes the recent purchase of 15 Boeing 777s. The composition of its aircraft fleet is as follows: B747-400 (4), B747-400 Combi (8), B747-400 Freighter (6), MD-11 Freighter (9), MD-90 (5), B777-300ER (8), A330-200 (11), A320-200 (1).
EVA Air was first founded in March 1989 and made its maiden flight on July 1, 1991. Since then, Eva Air has grown into one of the most competitive airlines in the industry with various alliances with major carriers word-wide that helped EVA Air acquire a far-reaching service network that benefits both passenger and cargo customers. It is a 100% privately owned and a sister company to Evergreen Marine Corporation.
Promotion of safe and punctual flights, providing friendly professional services and maintaining innovative and efficient operations remain its stated missions. Moreover, flight safety remains its top priority as evident with the use of its technologically advanced flight analysis equipment such as Aircraft Condition Monitoring System (ACMS) and Aircraft Communications Addressing & Reporting Systems (ACARS) to track aircraft operations, engine conditions and flight performance.
Below as table D is the comparative table showing the Operating Revenue, Gross Profit, Operating Income, and Net Income for EVA Air from 2004 to 2007. It shows that for the past years, EVA Air has been operating on a loss brought about by its high operating expenses and the slow economic growth.
Below as table F are the Passenger Data of EVA Air for 2007. While the aviation industry suffered a major setback in the past year in view of the soaring oil prices and slow global economic growth, EVA Air managed to stay afloat in the business through aggressive marketing strategies. This has resulted in the increase in the total number of passengers to 5.6% due to demand on European and American routes and an improvement of more than 1% for its loan factor from 77.39% to 75.11%.
|Passenger Data for 2007|
|Number of Passengers Flown||6,181,006|
|Revenue Passenger Kilometer||24,226,325,937|
|Available Seat Kilometer||29,785,040,020|
EVA Air estimates that for 2008 its passenger count shall reach 6.41 Million compared to the 6.18 Million for 2007 or a projected growth of 3.7%. It hopes to achieve their target by introducing new aircrafts in the market which it projects will cause increase in the number of passengers and the strategic deployment of aircraft in key routes to meet market demand. This strategy has been implemented in 2008 by extending its flight network to major cities in Europe, America and Asia. Flights in these areas were also made more frequent and convenient to attract more customers.
Analysis of the foregoing data shows that both Southwest Air and EVA Air expect to rebound from a disappointing 2008 performance. A comparison between the two companies show that they operate in different routes and provides different air transport services. Southwest Air operates domestically while EVA Air operates both domestic and international. Southwest Air only caters to passengers while EVA Air also provides cargo services. They have one thing in common though. They both suffered major setbacks in the past years as brought about by global economic slowdown and rising oil prices which severely affected their performance. Despite the economic difficulty, both companies have managed to weather the storm and remain in business. However, I believe that EVA Air is expected to rebound faster because of its strategic alliance with key corporations. As the economy is projected to improve in the coming years, it is to be expected that both companies will be able to recover in the coming years.
“Company Profile: EVA Air” 2009. Web.
Keating, Peter (1997). “The Best Airlines To Fly Today Our Data Show Southwest is Best at What Matters Most to You.” CNNMoney.com.
“Southwest Airline Co: Income Statement” (2008). YahooFinance.com.
“The Mission of Southwest Airlines” (1988). Web.