Growth Strategies Case Study

AirTran Airways: Leonard's Future Growth Plan

OR

Abstract:
AirTran Airways was the second largest low cost, lowfare airline in the US (after Southwest) and was one among the few that was profitable even after September 11. While the majors collectively lost $5 billion in 2003, AirTran increased its profits from $10 million in 2002 to $100 million in 2003. Unlike most other prominent Low Cost Carriers (LCC) such as Southwest and JetBlue, AirTran targeted business travellers with business class seats, and operated via a hub and spoke system.

Pedagogical Objectives:

• To discuss the genesis of the airline, the strategies employed for growth, and the future amid increasing competitive pressures
• To discuss the following points: (1) the unique model employed by AirTran for its growth and the difference between its model and that of the majors and the LCC; (2) the product development strategy used by AirTran to attract business travellers; and (3) the challenges that might be faced by AirTran due to its fast growth and the nature of competition.

Keywords : AirTran; US airline industry; ValuJet; Restructuring / Turnaround Strategies Case Study; Joseph Leonard; Low Cost Carriers; Point-to-point flights; Hub and spoke model; Deep discount fares; A-Plus rewards programmes; Product improvements

Contents : 
Introduction
From ValuJet Airlines to AirTran Airways
AirTran under Joseph Leonard
New Planes and Cost-cutting
Stimulating Demand and Developing the Network
Improving the Product
Challenges Ahead
AirTran Airways: Operating Expenses
AirTran Airways Route Network