acute crisis, capacity, capacity cost, capacity management, crisis management, executional cost driver, Gary C. Kelly, Herb Kelleher, John V. Shank, risk management, smoldering crisis, strategic cost management, structural cost driver
Today’s headline from San Francisco Business News heralds the coming of intense airline competition in the western United States:
Flying into unfriendlier skies: United tries to stay aloft as the Bay Area’s dominant air carrier while rivals circle
Things seem to be heating up again. CJ McNair-Connolly and I provide a look at some of the intense airline competition in the US during the last couple of decades in our latest: “An Effective Response:…” [Cost Management, Nov/Dec 2017] (If you are interested in how managerial accounting can serve to guide organizations through crises, then you may be interested in the subtitle. Airline aficionados find the swordplay entertaining.)
By January 1995, United was operating flights in 14 markets with Shuttle by United, its self-declared “airline within an airline,” which was designed specifically for the head-to-head competition with Southwest and similar airlines in the western United States.“‘Shuttle by United will be a catalyst for change,’ declared Gerald Greenwald, chairman and CEO of UAL Corporation, parent of United Airlines.” Herb Kelleher, president and CEO of Southwest Airlines, took an openly aggressive stance, declaring:
They are proposing to take on the airline with the best balance sheet, the best customer service record, and the lowest operating costs in the industry. Now, that’s their business judgment to make, but I would suggest that it’s not necessarily the right one. If anyone thinks our people aren’t lusting and thirsting for war with them, they are making a serious mistake. Our people are ready for it, and they will enjoy it.
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