If there were ever two airines that had different OM strategies, it would be Sou
ID: 386289 • Letter: I
Question
If there were ever two airines that had different OM strategies, it would be Southwest and Delta When you read in Chapter 2 about operations strategy (see Southwests activity map here), note that a major part of Southwest's approsch to achieving low-cost competitve advantage is its standardized fleet of Boeing 737s. This allows for pilot training on one aircraft, reduced maintenance, constant updating of its fleet (only 11 years old on average), and close relations with Boeing. Delta lakes a tolally dilferent-and industry unique-approach. The nation's 2nd biggest carrier, Delta stunned the industry by becoming the first airline to buy an oil refinery, in a bid to trim its highest operaling cost, aviation fuel. I ruris a huge maintearnce subsidiary that tends to ts own planes and does third party work while otner 1rlines nave scaled down or bailed out o that business. But it also has ocused on a asset most airlines void older planes Today Delta's eet is both old and complex t has 10 different modele among its 725 rcraft nd the fleet's average age s over 166 years. Its 19 DC 9s, which came om the merger with Northwest clock na more than 34 ears o Mosl of Della's tivals alreacdy ave fewer aircra types to simplify their fleels because thal reduces the cost of training, maintenarice and spare parts. They also are chasin every inicrermental reductiorn in fuel vosts hat new aircralpromise lo deliver. Dela, by contrast is picking up the aa·ging Boeing 717s at South est is shedding on pla es tinherit in its merger last year with A Tran Southwest w as so an o us to mant in its single plane OM strategy that took a S 137 mil charge to t fit them to Delta Yet even with the planes' higher re and mentenance costs eit t res itis saving at least $1 billion on proc ng thes and other used planes, com red with buying new ones, making them ough y 1 % cheaper to operate per seat than ne 7379 Critical Thinking Questions: 1 Why does Southwest have a standardized eer ot oeing fars? A. It maintains cose reletons with Boeing by being loyal customer. O B. Aircran mainleriance is much sinpler O C. Pilot training is less complex and costly O D. All of the above. 2. Why did Delta choose the operations strategy described above? OA. Itwanted to enter the retinery business to balance its income from passenger flights O B. I wanled an olde, mote reliable Nesl cf planes O C. It wanted to ctterentate itselt trom Soutnwests strategy O D. t sought cost savings in any area possible 3. Why does Delta prefer to purchase, rather than lease, its planes?Explanation / Answer
Answer to question 1 :
Southwest has a standardised fleet of Boeing 737s because it helps in savings through:
a)Pilot training
b)Lower maintenance cost through standardization of maintenance process and spare parts
c)By standardizing on single source i.e. Boeing it helps Southwest to develop close relationship with Boeing
Therefore , correct answer would be “ D. All of the above “
Answer to question 2 :
Following are not the correct answers :
The correct answer therefore is “ It sought cost savings in any areas possible “
Answer to question 3 :
Purchas eof old planes saves in capital cost which in turn reduces operating cost . Leasing of planes would not help to achieve similar operating costs.