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Continental Airlines

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Purchasing Power Growth of U.S. Hispanic and Latin American Market Segment ... American Airlines, February 24, 2006. 2005 Annual Report. ... – PowerPoint PPT presentation

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Title: Continental Airlines


1
Continental Airlines
  • Customer Analysis

Chris Dwyer, Meghan Murphy, Kassonga Mwamba
2
Overview
  • Industry Trends
  • Product Markets
  • Domestic vs. International
  • Types of Passengers
  • Market Opportunities/Strategies
  • Potential Problems
  • Future

3
Trends Airline Industry
  • Rapid Growth in International Demand
  • Steady Growth in Domestic Demand
  • Increased On-Line Distribution
  • Decrease in Airline Capacity (due to bankruptcy)
  • Increase Price per Flight
  • Continued Pressure from LCCs in Domestic Market
  • Alliance Agreements

4
Positive Growth2
  • Continued Growth for 32 of the past 35 years
  • 1991 Desert Storm
  • 2001-2002 9/11 Terrorist Attacks
  • Continued Economic
  • Growth
  • Continued Increase in
  • World Trade

Boeing ? Current Market Outlook ? 2005 ?
Demand for Air Travel
See Source 2
5
Product Markets
  • Domestic
  • Point to Point Routes
  • Short-Haul Flights
  • Highly Price Sensitive customer segment
  • Increased Competition From LCCs
  • Lower RASM
  • International
  • Network-Hub Routes
  • Long-Haul Flights
  • Less Price Sensitive Customer Segment
  • Less Industry Competition
  • Higher RASM

6
Domestic vs. International
  • 2004 International Growth Increased 13.9 vs.
    Domestic Growth 4.812
  • Majors Shifting to More Profitable
    International Segments
  • Typically Less Competition for International
    Travel
  • Growing Demand in Latin American, Atlantic,
    Pacific Segments
  • International Yields Higher RPSM

Data taken from 05-02 10K reports See Sources
1,5,6,10,14
See Source 12
7
Types of Passengers
  • Leisure Traveler
  • Preferences
  • Lower Price
  • Willing to Sacrifice Service
  • Limited Route Needs
  • Business Traveler
  • 34 of Domestic Revenue in 2000 (Only 10 of
    Capacity)11
  • Preferences
  • Price Sensitivity Driven by Economic Conditions
  • Higher Class of Service
  • Seeing Shift Towards LCCs

See Source 11
8
Frequent Flyer (FF) Demographics3
  • A person that takes AT LEAST 4 flights per year
    (17 Million Americans)
  • Average FF takes 9 flights per year
  • Only 18 of Total Airline Travelers BUT Account
    for 58 of ALL Flights Taken
  • 68 of FF have College or Graduate Degree
  • 75 are Employed Full or Part-time
  • Majority are Male Accounting for 58 of all FF
  • 61 of those are between the ages of 25-54 years
    of age

See Source 3
9
Frequent Flyer Programs
  • American Airlines
  • AAdvantage Miles
  • Continental Airlines
  • OnePass
  • United Airlines
  • Mileage Plus
  • Southwest Airlines
  • Rapid Rewards

10
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11
Market Opportunities
  • International Segments
  • Pacific/Asia
  • Latin America
  • Atlantic/Europe
  • Frequent Flyer Programs
  • Travel Industry Alliances
  • Miles Auctions
  • Higher Level of Service
  • Concierge

12
International Opportunities
  • Continental Has More International Exposure than
    any of the Other Majors13
  • Current Hub and Spoke System Ideal for
    International Expansion
  • Houston Latin America
  • Newark Serving Richest DMA in the U.S. Europe
    and Asia/Pacific
  • Purchasing Power Growth of U.S. Hispanic and
    Latin American Market Segment
  • International Revenues Grew 29 in 200513

See Source 13
13
International Strategies
  • Continental Plans to Expand International Routes
    by 15 Over the Next Several Years vs 2-4
    Expansion in Domestic Market13
  • European Routes to Lower-Traffic European
    Airports8
  • Chinese Routes to Beijing and Hong Kong Serving
    Economically Expanding China Market
  • Launch of Spanish-Language Web Site

See Source 13 See Source 8
14
FF Opportunities11
  • Frequent Flyers Make Up Significantly Large
    Portion of Flight Segments
  • Show High Level of Brand Loyalty
  • Focus on Online Booking

See Source 11
15
FF Strategies
  • Forming Alliances with Other Airlines
  • Increase Route Availability
  • Allow Usage of FF Miles in Network
  • Decreases Need for FF to Go Outside Network
  • Enhance Web Site Booking System for FF
  • Checking Points/Miles Status
  • Booking Capabilities
  • Miles Auctions

16
Service Opportunities
  • Differentiation with High Service Levels
  • Adding Service When Other Airlines Cutting
    Service Costs
  • U.S. Economic Growth Trends Promising for
    Increased Service Requirements for Business
    Travelers
  • Segmentation of Top-Tier passengers

17
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18
Service Strategies
  • Additional Focus on Top-Tier Customers and
    Business Travelers
  • Enhancing In-Flight Reports for Flight
    Attendants4
  • Corporate Hosting of Discussion Groups for
    Frequent Travelers
  • Gathering Complaints and Suggestions for Improved
    Service11

See Source 4 See Source 11
19
Potential Problems
  • Increased Globalization
  • Liberalization of International Regulation
  • Domestic LCCs
  • Potential Terrorists Attacks

20
Future Strategy
  • Enhance/Expand Transcontinental Routes
  • Continued Customer Service Focus
  • Strengthen Alliances for Customer Convenience
  • Focus on Top Revenue Producing Segments

21
References
  • American Airlines, February 24, 2006. 2005
    Annual Report. on-line http//www.shareholder.c
    om/aa/edgar.cfm?DocTypeAnnualSECYearAll citg
    April 2, 2006.1
  • Boeing, 2005. Current Market Outlook 2005.
    on-line http//www.boeing.com/commercial/cmo/pdf
    /cmo2005_OutlookReport.pdf citg April 2, 2006.
  • Bouvard, Pierre and Williams, Diane. August
    2005. The Arbitron Airport Advertising Study.
    on-line http//www.arbitron.com/downloads/Arbi
    tron_Airport_Study.pdf citg March 21, 2006.
  • CIO Magazine, February 15, 2004. Getting To Know
    Them. on-line http//www.cio.com/archive/021504/
    customers.html citg April 3, 2006.
  • Continental Airlines, February 24, 2006. 2005
    Annual Report. on-line http//www.continental.c
    om/company/investor/reports.asp citg April 2,
    2006.2
  • Delta Airlines, March 27, 2006. 2005 Annual
    Report. on-line http//investor.delta.com/edgar
    .cfm citg April 2, 2006.3

1. Same site used for 2003 Annual Report 2.
Same site used for 2003 Annual Report 3. Same
site used for 2003 Annual Report
22
References
  • Donofrio, Susan. Cathay Financial, January 27,
    2006. Continental Airlines Initialing with
    Outperform Due to Low Costs Strong
    International Presence.
  • Keeton, Ann of Dow Jones Newswires. March 31,
    2006. US Airlines Seek Revenue From More
    International Flights. on-line MorningStar.com.
  • Lindsay, Greg. Airworld Part 7 The Demon
    Customers Inside the FlyerTalk Community. Ad
    Age Magazine, September 20, 2005.
  • Northwest Airlines, March 16, 2006. 2005 Annual
    Report. on-line http//ir.nwa.com/phoenix.zhtml
    ?c111021pirol-sec citg April 2, 2006.4
  • Standard Poors Industry Surveys Airlines,
    March 28, 2002. Cited from The Center for
    Hospitality Research at Cornell University case
    study. Can Continental Airlines Continue to Work
    Hard, Fly Right Fund the Future.
  • Standard Poors Industry Surveys Airlines,
    May 19, 2005.
  • Standard Poors Stock Report, April 1, 2006.
    Continental Airlines. The McGraw-Hill Companies.
  • United Arilines, March 31, 2006. 2005 Annual
    Report. on-line http//ir.united.com/phoenix.zh
    tml?c83680pirol-sec citg April 2, 2006.5
  1. Same site used for 2002 Annual Report
  2. Same site used for 2003 Annual Report
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