Skywest Inc. Case Study
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SkyWest, Inc. Airlines
Background Information
SkyWest, Inc. was founded in 1972 by Ralph Atkins in St. George, Utah. The Airline was first used by businessmen flying between Salt Lake City and St. George, Utah. SkyWest partnered with major airlines to service the smaller connecting airports. In 1985 SkyWest partnered with Western Airlines to service the Salt Lake City Hub. In 1987 Delta airlines bought out Western Airlines and formed the SkyWest and Delta partnership that is still in existence today (Thompson, 2010).
SkyWest Inc. has also partnered with United Airlines and Midwest Airlines. In 2005 SkyWest Inc. acquired Atlantic Southeast Airlines (ASA). SkyWest, Inc. Currently operates in 158 Cities and is in 42 States. It also operates in Canada, Mexico and several countries in the Caribbean (Thompson, 2010).
In its first year Sky West only had 256 passengers and had a negative income. In 1976 SkyWest, Inc. had its first profitable year with $ 17,097 in Net Income. In 1979 the airline made some capital investments in some buildings and maintenance facilities. The passenger growth was up 38%, enough to support the capital investments. By the 10th year in operation SkyWest had a net income of $ 123,000 with 81,000 passengers. SkyWest continued growth thru out the 1990s and into 2000s. In 1999 it had over 4 million passengers and a net income of $21,944,000. It had also received numerous awards for operations and customer service (SkyWest, 2012).
SkyWest, Inc. has had a good reputation for safety, on-time arrival and customer service. In 2000 SkyWest was named Top Regional Airline by Professionals Pilots Magazine. In 2002 Air Transport World Magazine named SkyWest, Inc. as Regional Airline of the year and in 2008 SkyWest, Inc. received the Bombardiers reliability award for the Americas (SkyWest, 2012).
Company Strategists
Jerry C. Atkin
Jerry C. Atkin is the Chairman and the Chief Executive Officer of SkyWest, Inc. and its subsidiaries. He joined SkyWest in 1975 as director of finance and shortly after became the youngest president of a regional airline. He led the company from under $1 million in revenues to over $ 3.5 billion a year. He obtained his Master of Business Administration from the University of Utah and worked as a Certified Public Accountant (SkyWest, 2012).
Bradford R. Rich
Bradford R. Rich is the President of SkyWest, Inc. & subsidiaries. Mr. Rich joined SkyWest in 1987. He has served in several positions including controller, CEO, and Treasure. He currently oversees the strategic development and operational and financial performance of all entities and investments associated with SkyWest, Inc. He obtained his bachelor degree from Utah State University and previously practiced as a Certified Public Accountant (SkyWest, 2012).
Michael Thompson
Michael Thompson is responsible for SkyWest Airlines strategic planning, scheduling, pricing, inventory control and production planning. Michael served as the operational analyst in 2001-2005 where he helped create the “Performance Rewards” that rewarded employees for superior performance. He has helped create policies and infrastructure to improve cash flow and operational efficiency. Mr. Thompson holds a Master in Science and a Master in Business from Brigham Young University (SkyWest, 2012).
Current Strategy
SkyWest, Inc. strategy is to stay the nations largest independently owned regional carrier. SkyWest would like to continue its safety record, its service record and its customer service satisfaction. SkyWest is open to acquisitions that are strategically aligned and can benefit the regional carriers growth and income.
Vision
SkyWest, Inc. vision is to be the airline of choice for the consumers and the employees. SkyWest is also visioning itself as the investment of choice (SkyWest, 2012).
Mission
SkyWest has several principles that makeup its mission. The SkyWest website lists the following. www.skywest.com
Health and Safety First
Excellent Service and Quality
Personal and Operational Reliability
Fairness and Consistently
Respect and Teamwork
Personal and Corporate Integrity
Objectives
SkyWests objectives includes developing and maintaining high levels of customer service by properly handle baggage, adjusting flights and optimize scheduling. These service points need to be a high priority for customer service satisfaction. Maximized on-time arrival is an objective that SkyWest has been successful in the past and would like to continue. This will help in the overall customer trust in the organization
SkyWests objective is to maintain a strong safety image. Safety and security are to be place in high importance for the airline. The objective is to limit the number of accidents and stay within the regulations.
SkyWest would also like to acquire new aircraft for the regional flights. They would like to increase the size of the fleets and be able to service longer flights. The new aircraft are needed to expand into new regions.
IV. Analyze Competitive Forces
Rival Sellers
Main rivals for SkyWest include but are not limited to Air Wisconsin, American Eagle, ExpressJet, Mesa Air Group. Although SkyWest held more than a 2:1 advantages in operating revenue 2004-2008 its competitors have been growing as well. Republic holdings acquired both Midwest and Frontier airlines which will greatly increase its market share on potential revenue.
Potential New Entrants
Although the regional air carrier industry is cutthroat with price wars, competition for new routes there is little room for new carriers. Aircraft suppliers would not choose to integrate vertically and by offering flight services on top of building aircraft. The cost of starting a new carrier service might be prohibitive and it is more likely that someone one would takeover or purchase one of the many existing regional carriers many of which have had revenue downturns in recently