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JetBlue vs. Southwest Airlines, Research Paper Example

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Situational analyses are important when considering aspects of rival companies. This is especially true when analyzing the airline industry, as well as JetBlue and SouthWest Airlines specifically. However, before these companies can be compared, it is beneficial to understand the history of the airline industry as a whole. This leads into an explanation of key external factors affecting the passenger airline industry. Following this, the author has explained the major airline marketing segments of segmentation, targeting, and positioning. The paper concludes with a comparison of JetBlue and SouthWest Airlines, including their target marketing and positioning strategies.

History of the Airline Industry

The airline industry has been booming for decades and is expected to continue to expand as technology expands. However, the first flight took place in 1903. Thus, a revolution in travel capabilities was built and “air travel has emerged as a crucial means of transportation for people and products” (Harris). Until approximately 1925, air travel was not common. At this time, two Acts assisted to increase air travel. The Air Mail Act allowed for the postal service to utilize the services of private companies to deliver mail and other packages. The Air Commerce Act followed the Air Mail Act. This Act “gave the Secretary of Commerce power to establish airways, certify aircraft, license pilots, and issue and enforce air traffic regulations” (Harris). Further regulations were established in 1938. For instance, the Civil Aeronautics Board was established, serving two crucial functions: “determining airlines’ routes of travel and regulating prices for passenger fares” (Harris). Significantly, in 1958, the Federal Aviation Administration was established. Despite these regulations, airlines in Britain began reducing their rates, prompting US airlines to follow suit. As a result, Congress passed the “Airline Deregulation Act of 1978, ushering in an era of unencumbered free market competition” (Harris). With regulation gone, fares dropped and passengers increased. However, a strike stunted airline growth between the 1980s and 1990s. When the attacks of 2001 occurred, the industry felt the effects until 2006. Losses were reported due to loss of revenue and increased operating costs. During 2010 and 2011, regulations were issued that mandated “that the airlines provide adequate modifications for passengers in extenuating circumstances” (Harris). Since this time, changes have been made and the airline industry has continued growing.

Key External Factors Affecting the Passenger Airline Industry

There are several key external factors that affect the passenger airline industry. External factors are those that are beyond the company’s control. Therefore, key external factors include economic instability, political instability, passenger expectations, weather and natural disasters, safety and security cost increases, or threat of terrorism. The following table explains these in detail:

Economic Instability	If another financial recession or depression occurs, it is likely that the airline industry could suffer. For instance, there are times that passengers fly for recreational activities. When financial instability comes as the result of economic instability, it is likely for recreational activities to be curtailed. Therefore, economic instability could have a tremendous impact on the airline industry, especially if it occurs suddenly and lasts for an extended period of time.
Political Instability	Political instability often comes hand in hand with economic instability. This means that the political system of the country is unstable. Thus, it may be dangerous to travel, or other factors may prohibit air travel entirely, such as political uprisings.
Passenger Expectations	Airlines do not always know what passenger expectations are. They can try to anticipate expectations, but unless the passenger voices his/her expectations, the airline may not be able to meet them. For instance, some passengers expect a lavish seat while in coach. However, they are not always willing to pay the price necessary to obtain this. Ultimately, most passengers expect to get more and pay less. Therefore, airlines need to be sensitive to this expectation and be fluid in order to meet them effectively.
Weather and Natural Disasters	The airline industry cannot control the weather and natural disasters. The best that can be done is planning ahead and preparing for potential issues.
Safety and Security Cost Increases	The airline industry is required by law to maintain certain safety and security implementations. Therefore, in order to meet these requirements, airlines must be prepared to pay a higher. However, they cannot predict when these costs will increase, nor can they predict why they will increase.
Threat of Terrorism	The airline industry cannot predict when terrorists will attack. All that can be done is ensuring preventative measures are in place.

Major Airline Market Segments

In order to best explain the major airline industry market, it is important to understand the marketing concepts of segmentation, targeting, and positioning. Segmentation involves the market into individual groups based on needs, demands, and wants. Within the airline industry, segmentation is often done by the individual airlines. This is because they often have different classes of aircraft. For example, different airlines have different amenities offered with the flight. What may constitute business class quality on one airline may be coach quality on another airline. Targeting refers to the selection of a customer base. This is done by determining what customers want and advertising these services particularly towards that customer base. Positioning refers to the attempt to influence customers to view one brand over the other. This is especially true for competing companies. For example, one airline may advertise that their airplanes are more comfortable than a competitor’s airplane.

JetBlue vs. SouthWest Airlines

JetBlue focuses on providing lower costs. It marketed its product and service to those that are financially conscious. Thus, the company does not focus on high-paying market. Instead, it elects to provide services to those that are open to those passengers that value fair pricing as well as quality service. As a result, it positions itself between other bigger airlines and serves those customers that are in the middle. In contrast, SouthWest focuses on providing fun while travelling. Furthermore, it focuses on establishing that it is the only low-fare airline available. This is done by comparing its costs to other airlines and offering the lowest rate. Furthermore, SouthWest offers services that are targeted to the extremely financially conscious passenger. Thus, it is positioned as a discount airline. As a result, it has become extremely cost efficient in order to meet the needs of the passengers.

References

Harris, A. (n.d.). The History of Airline Industry. Retrieved from USA Today: http://traveltips.usatoday.com/history-airline-industry-100074.html