Airtran

Mission Statement:

Innovative people dedicated to delivering the best flying experience to smart travelers. Every day.

Suggested Mission Statement:

Innovative, vital, impervious, and customer oriented firm striving to service smart travelers. Every day.

Case statement:

Our mission is to maintain our profitability in face of rising competition and fuel cost.

Background:

“AirTran Airways, a subsidiary of AirTran Holdings (NYSE: AAI), is a low-fare airline designed for business travelers, offering Business class, new planes with XM Satellite Radio and EasyFit Overhead Bins, assigned seats, and our accommodating frequent flier program A+ Rewards. AirTran Airways' mix of low fares and an affordable Business Class with excellent customer service and one of the world's youngest all-Boeing fleets has continued to strike a chord with the public.” (www.airtran.com)

Internal Factor Evaluation Matrix

Weight Rating Weighted Score

Strengths

1. Remaining Profitable .18 4 .72

2. High Service Quality .14 4 .56

3. High Plane Utilization .11 4 .44

4. Large Airport Presence .07 3 .21

5. Young Airline Fleet .03 3 .09

Weaknesses

1. High Operating Cost per ASM .18 1 .18

2. Concentrated to East US .10 2 .20

4. Low Ratings in Select AQR Categories .04 2 .08

5. Highly Dependent on Fuel .06 2 .12

Strengths

• AirTran needs to remain profitable, both to survive but more importantly to keep investor interest and confidence.

• High service quality is key for AirTran to keep a recurring customer-base healthy.

• Especially important in AirTran’s low-cost strategy, utilizing planes to their fullest potential is key.

• AirTran has a high airport presence throughout eastern United States.

• AirTran benefits from a young airplane fleet through cost savings, quality and marketing efforts.

Weaknesses

• A major weakness of AirTran is its high operating cost per available seat mile compared to other low-cost providers like Southwest and JetBlue.

• Through increased competition, especially Southwest, AirTran is only available mainly in the eastern United States. Customers needing to travel to the western US probably will choose another airline that could create brand loyalty for another airline.

• Even though AirTran received a high position in airline quality rating (AQR) there are still areas that AirTran lags in, like on-time performance and denied boardings performance.

• Although mainly out of AirTran’s control, their income and costs are highly associated to the cost of fuel.

AirTran is doing fine overall with respect to its internal strengths and weakness. Key areas to improve are its high operating cost per available seat mile (ASM), domestic and internal presences and other minor areas.

External Factor Evaluation Matrix

Weight Rating Weighted Score

Opportunities

1. Decrease Operating Cost per ASM .18 2 .36

2. Increase US Presence .15 3 .45

3. Increase International Presence .11 1 .11

4. Increase Select AQR Ratings .05 2 .10

5. Add Consumer Technologies to Fleet .03 2 .06

Threats

1. Increased Competition .2 3 .6

2. High Fuel Costs .14 3 .42

3. Increasing Labor Costs .06 2 .12

4. Political Policies .04 4 .16

5. Labor Strikes .04 4 .16

1.00 2.54

Explanations

Opportunities

1. A major opportunity for AirTran to drastically increase income would be to decrease their operating cost per available seat mile (ASM).

2. AirTran has a major opportunity to expand drastically its US presence by moving airport terminals westward.

3. As noted in the milestones, AirTran is beginning service to Cancun, a popular vacation destination, but with increased competition AirTran needs to diversify its offerings.

4. One major opportunity to gain and keep loyal customer is to continue to improve its airline quality rating (AQR). Even though AirTran is currently rated number 2 there are still areas that could use improvements.

5. One way to gain customer loyalty through increased competition is to offer more consumer technologies and luxuries. AirTran is already incorporating XM Satellite radio into each plane, but other technologies could include iPod hookups for each seat and even in-cabin internet access (wired or wireless) for laptops.

Threats

1. The largest threat to AirTran is the increased competition with the low-cost sector and the industry itself.

2. AirTran is highly dependent on the fluctuations of fuel costs. Since fuel is one of the largest costs to AirTran a slight adjustment can mean the difference between a loss and a profit.

3. Along of fuel, labor costs are one of the largest costs to AirTran and a slight adjust can mean the difference between a loss and a profit.

4. Political policies enforced by the US and other