1. SkyWest, Inc.California State University StanislausMelanie EmbryManagement 4900Dr. Marjorie ChanDesarae EmerickSpring 2012 Ebony Mims

2. SkyWest, Inc. Introduction 316 aircraft More than 11,000 aviationprofessionals More than 1,700 flights each day 159 destinations throughout NorthAmericahttp://www.skywest.com/about-skywest-airlines 3. SkyWest, Inc. Introduction A leading air service provider offering global access to millions of people each month Partners with United Airlines, Delta Air Lines, US Airways and Alaska Airlines Known for its industry-leading workforce, exceptional leadership team, and continued solid operational and economic performancehttp://www.skywest.com/about-skywest-airlines 4. Question #1Discuss the five forces of competition inthe regional airline industry. 5. Competitive Rivalry Competition is intense A regional carrier has to: Develop and maintain high levels ofcustomer service Develop and maintain a strong safetyimage Maximize on-time arrivals Have the ability to acquire new aircraft 6. Threats of Potential New Entrants New entrants are always a threat toexisting airlines A few airlines are making an attemptto enter the American domestic airtravel industry Many foreign competitors to the UnitedStates international airlines arestarting to look into the possibility ofextending flight operations onAmerican soil 7. Power of Substitutes With increased efficiencies in modes oftransportation, greater threats to theairline industry present themselves: Railway Oceangoing Vessels Motor vehicles Consumers price-performanceevaluation and the industry wide priceelasticity have led to a more complextravel industry 8. Power of Suppliers Two main suppliers (92%): Boeing andAirbus Little rivalry and a lack of industryintensification Vertical integration with Boeing orAirbus 9. Power of Buyers Overall bargaining power of buyers isweak to moderate Switching ones ticket from one airline toanother is fairly high Airlines set ticket prices without allowingconsumers to barter on price Websites such as Travelocity andKayak receive ticket information fromall airline websites Nearly all consumers search on price 10. Question #2Discuss the driving forces in the regionalairline industry. 11. The Driving Forces Operating Constraints and problems Over booking flights Not allowing enough time to load andunload passengers and luggage Flight cancellation Outsourced routes from major airlinepartners Pressure to cut cost 12. Question #3Discuss the key success factors in theregional airline industry. 13. KSFs Strong Management Capable workforce Service promotions and In Flightservices Non Stop Flying Financial Management Efficient Management of Cost Route system 14. Question #4Discuss SkyWests strategy. 15. SkyWests Strategy is To be the airline of choice Employer of choice The investment of choice Expand current partnershipand geographic growth 16. Questions #5Discuss the following for SkyWest:A. Internal strengthsB. Internal weaknessesC. External opportunitiesD. External threats 17. Internal Strengths Branding- Skywest has Sole Operator Routes-operated a reliable Skywest is the sole permittedconventional airline service to airline operator on theall of Western AustraliasCoastal Networkmajor regional airports for Resource and Miningmore than 45 years. Industry- The robust mining Stability of earnings-boom in Western AustraliaCurrently more than 59% ofhas led to significantSkywests earnings areopportunities for Skywestderived through air charter Geographic- Westernservices to the miningAustralia is the largest state inindusrtyAustralia 18. Internal Weaknesses Relies heavily on United and Delta Ranked near the bottom of the list of16 airlines for overall customer service Acquired a company that had one ofthe worst customer service records inthe industry and also had a unionizedworkforce Generic mission/vision as stated in its2004 annual report 19. Weakness Cont. weaknesses include increased multiple-stopdestinations, minimal flight attendants per flight,increased plane turnaround times and short-term unioncontracts. 20. External Opportunities SkyWest can now compete for morebusiness. SkyWest does not have anypartnerships with low-cost airlines The IATA predicted that worldwidepassenger revenues would rise by 5% More business travelers are nowtraveling on low-cost airlines 21. External Threats Competition is fierce Very sensitive to the state of theeconomy More demand of fuel Increased government regulations Labor unions More major carriers 22. Question #6Assess SkyWests financial performance. 23. Operating Profit Margin (%)2004 2005 20062007200812.5211.2210.89 10.21 7.30 -1.30-0.33 -0.68 -2.91 Measurement of what proportion of acompanys revenue is left over afterpaying for variable costs Gives analysts an idea of how much acompany makes on each dollar of salesCrafting and Executing Strategy: The Quest for Competitive Advantage Concepts and CasesInvestopedia.com 24. Net Profit Margin (%)2004200520062007 20087.095.724.684.72 3.23-1.37 -1.04 +0.04 -1.49 Measures how much out of every dollarof sales a company actually keeps inearningsCrafting and Executing Strategy: The Quest for Competitive Advantage Concepts and CasesInvestopedia.com 25. Return on Total Assets (%)200720083.992.81-1.18 Measures earnings before interest andtaxes against its total net assets Indicator of how effectively a companyis using its assets to generate earningsbefore contractual obligations must bepaidCrafting and Executing Strategy: The Quest for Competitive Advantage Concepts and CasesInvestopedia.com 26. Return on Equity (%)2007 200812.788.85 -3.93 Amount of net income returned as apercentage of shareholders equity Measures a corporations profitabilityby revealing how much profit acompany generates with the moneyshareholders have investedCrafting and Executing Strategy: The Quest for Competitive Advantage Concepts and CasesInvestopedia.com 27. Current Ratio200720083.043.16+0.12 Measures a companys ability to payshort-term obligations Gives an idea of the companys abilityto pay back its short-term liabilitieswith its short-term assetsCrafting and Executing Strategy: The Quest for Competitive Advantage Concepts and CasesInvestopedia.com 28. Debt-to-Assets Ratio (%)2007 200843.4241.89 -1.53 Measures a companys financial risk bydetermining how much of thecompanys assets have been financedby debtCrafting and Executing Strategy: The Quest for Competitive Advantage Concepts and CasesInvestopedia.com 29. Debt-to-Equity Ratio (%)2007 20081.39 1.31 -0.08 Measures a companys financialleverageCrafting and Executing Strategy: The Quest for Competitive Advantage Concepts and CasesInvestopedia.com 30. Question #7What recommendations would you maketo SkyWests management to strengthenthe companys competitive position andimprove its financial performance? 31. Recommendations Continue to add new partnerships andexpand its current ones to include newroutes and additional Look into expanding its operationsoutside the United States Continuing to seek approval of scopeclause liberalizationCrafting and Executing Strategy: The Quest for Competitive Advantage Concepts and Cases 32. Works Cited About. (n.d.). Retrieved May 6, 2012, from SkyWest Airlines: http://www.skywest.com/ about-skywest-airlines Gamble, J.E., Peteraf, M.A., Strickland III, A., &Thompson, A.A. (2012). Crafting and ExecutingStrategy: The Quest for Competitive Advantage Concepts and Cases (18th ed.). New York, NewYork, United States of America: McGraw-Hill/Irwin. (n.d.) Retrieved May 6, 2012, from Investopedia:http://www.investopedia.com E.L. & C. Baillieu Research. Skywest Airlines Limited. March 30, 2010, from www.bailleu.com.auMBA Lectures. Key Success Factors of Airline Industry. November 1, 2011, from mbalectures.com