A CASE ANALYSIS ON NORTH SOUTH AIRLINES

Southwest Airlines is a company that is known for its low ticket prices and profitability despite the highly risky industry in which it operates. This essay examines the cost behavior, cost volume profit (CVP), activity based costing (ABC), budgeting process, costing and decision making policies of the firm. The essay will discuss how the airline integrates these concepts in its daily operations.

9. Refer to the model and estimates in the previous question. Ceteris paribus, according to these

(iv) Do the model estimates in (3.2) seem reasonable - or do the results provide evidence that it is a poor model? Explain. (2 marks)

Given your previous estimate from 1 and 2, estimate the total cost of driving the hybrid model for one year. Also estimate the total cost of driving the non-hybrid model for one year. Calculate the savings offered by the hybrid model over the non-hybrid model.

Given these points, Bombardier Canadian transportation company being the leading company has brought down the aviation market along with the labor market affecting other factors. The key economic points proven with this current event are how shifts affect the price and quantity consumers want to purchase and are willing to pay price. Yet, the Bombardier company is struggling to gain back the buyers and their willingness to pay the value for aircrafts in order to increase their demand of aircrafts market and labor

Continental Airlines has been experiencing turbulent times in recent quarters and without material changes to the company’s operations it may have worse times ahead. Using the results from my regression analysis, as well as cost estimation, I have forecasted what Continental can expect for revenue, costs, and profit in 2009. Table 2 is shown below, which shows the financial summary of Continental Airlines, based on reduced flight capacity and the projections I have been provided with.

Delta airlines began operations in the 1920s and since then has grown in size merging

As a legacy carrier in existence since 1930, it might be expected that American Airlines has an older fleet of aircraft than the younger Southwest Airlines. American Airlines has a large variety of aircraft models, has acquired airplanes from other legacy airlines as a result of mergers, and has been slower to replace older airplane models. However, due to this aging fleet there may have been a more recent replacement with newer models which could bring the average age of their fleet significantly lower.

Due to the current economic climate business costs are on the increase. Gardner Aerospace is looking at ways to tighten and reduce general expenditure across the business whilst improving its operational procedures. Gardner wants to do this so that the business does not have to pass increased costs

Fuel has consistently been one of the largest expense categories for domestic airlines, ranking second only to personnel expenses. During 2003, fuel costs represented, on average, over 16% of the total operating expenses for all U.S. domestic airlines studied by Richard Cobbs and Alex Wolf (2004). Moreover, airlines are generally unable to increase fares to offset any significant increase in fuel costs. From 2001 to 2003, these same airlines experienced a 25.9% compound annual increase in jet fuel costs while average airline pricing decreased by 0.1%, as measured by revenue per available seat mile (Cobbs and Wolf, 2004). Jet fuel costs have substantially risen over the past several years putting consistent pressure on airlines to maintain positive cash flows. Any saving in fuel costs works out to profit earned.

Knowing the variable and fixed per flying hour costs associated with each of ABC's 10 airframes is extremely useful. Fixed costs are straight forward. Variable costs are

As the new century unfolded, Delta Air Lines continued exponential growth becoming one of the largest airlines in the country. A merger with Western Airlines in 1987, the acquisition of Pan Am’s transatlantic routes in 1991, and a final merger with Northwest Airlines in 2008 meant Delta now had routes all over the world. Delta like many other airlines faced very difficult times post 9/11 and during the recession. The airline made significant cost improvements across its operation and the merger with Northwest Airlines ended up pushing the airline back into profitable business.

Airlines must operate within a low-margin, high-fixed-cost environment, making profitability particularly sensitive to decreases in volume, either from environmental factors (e.g., the September 11,2001 attacks) or from competition. Moreover, the airline business is labor-intensive. Labor costs as a percentage of revenues ranges from a low of about 25 percent for the low-fare airlines to almost 50

fixed costs in the airline industry. As the aviation fuel price is closely linked to the oil price, the

Classic Airlines consists of 375 aircraft that travel to 240 cities more than 2300 times per day with a workforce of 32,000 personnel. Classic Airlines’ revenue was in excess of $8.7 billion last year bringing in a $10 million dollar profit and establishing the airline as the fifth largest air travel company in the world. Despite good sales and profits, Classic Airlines has been receiving harsh criticism from their customers resulting in a 10% decrease in profit shares, reduction in customer loyalty, 19% drop in rewards customers, 21% reduction in flights and the lowest morale seen in recent years. Classic Airlines remains optimistic about customer flight travel but must find