Date of Defense

12-10-2015

Date of Graduation

12-2015

Department

Aviation

First Advisor

Felix Esquibel

Second Advisor

Gil Sinclair

Abstract

Shareholders in the airline industry invest in a service industry that is met with high fixed costs, capital, and external factors such as customer satisfaction and fluctuations in crude oil prices. On one end of the airline spectrum in the United States lie the full-service airlines, such as Delta Air Lines, American Airlines, or United Airlines adopting a product differentiation approach to capture a competitive advantage by providing greater benefits, comfort, and experience to the customer. This approach attracts customers that value the experience more so than simply the price of the fare, but is often met with high operating costs such as training, and maintenance inventory in addition to the complexity of having a diverse fleet of aircraft. On the other end of the spectrum lie the low-cost and ultra-low cost carriers which include Spirit Airlines, Southwest Airlines, and JetBlue Airways. The latter of the three airlines, Spirit Airlines, operates as an ultra-low cost approach where any extras are charged to the customer in the form of ancillary fees at the extreme end of the cost leadership approach. While Southwest Airlines and JetBlue Airways are still considered low-cost carriers, the former is known for its free checked baggage, the latter operates a hybrid low cost-product differentiation approach with its premium seating on its transcontinental flights in efforts to gain a competitive advantage. Achieving a competitive advantage and increasing market share is among other performance indicators for enticing shareholders to invest in an airline. This will be discussed in more detail in this thesis and whether a full-service airline or low-cost carrier is better positioned to attract shareholders.

Access Setting

Honors Thesis-Open Access

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