Breeze Airways Business Model, Route Architecture, And Cost Structure Analysis

About Breeze Airways

In the field of airline business management it is imperative to inculcate sincere actions to ensure that the business dynamics can adopt the ever changing course of the aviation industry. Constructing an appropriate business model and undertaking action according to the scope of the target market would assist the airline organization to get ahead of its competition. The following study revolves around analysing the working function of Breeze Airways and its competition. The study also focuses on evaluating the gravity of route architecture that has been incorporated by the airline along with the cost structure and target demographics of the airline. 

The organization that is taken into consideration in this particular case study is Breeze Airways, which was first established in 2018. The organization is originally headquartered in Cottonwood Heights, Utah. It is an American airline which was founded by David Neeleman. As of now the airline has 14 aircrafts associated with its flight route to be precise. It started its operation back in 31^st July, 2018.One of the characteristic attributes of this airline is that within a short span of time from its inception, the airline has already established connections with 28 destinations. Appropriate pricing strategy undertaken by the management of Breeze Airways have significantly captivated the attention of the target consumer extensively. Cities such as Charleston, New Orleans, Tampa and Hartford are primarily emphasized by the airline. However, it has expanded its operation significantly and established well route connectivity to other metropolises across the United States of America. The airline primarily uses A223 300s airbus for almost all of its routes.    

Figure 1: Breeze Airways Route Map

The aforementioned pictorial representation reflects the initial route map which Breeze Airways have already charted. After meticulously analyzing the airport terminals and the connectivity that has been established from the terminals based on the terminal airport, an inference can be drawn that the route architecture which has been adopted by Breeze Airways can be referred to as ‘point to point’ architecture. The characteristic attribute of point to point architecture is that the total time taken by connect one terminal to another is reduced extensively in this approach. Due to lack of intermediate stops, the efficiency of fuel consumption is also optimized in this manner of route architecture.   

A noteworthy benefit that is particularly associated with this route architecture is that Breeze Airways can capitalize on a great number of nearby metropolises while maintaining the flow of communication in a seamless manner from a central location such as Tampa. Consolidating diverse traffic flow by facilitating and regulating continuous movement of loads with the help of centralized handoffs assists the organization to get ahead of its competitive curve. It also helps Breeze Airways to perform competitive scheduling of flights, which are often attributed with larger aircraft and the network of connectivity is simplified for customer experience. In view of the fact that interconnected destinations help them to move from one terminal to another within a short time span. Additionally, it also directly connects a set of locations which is cost effective for the aircraft.

Breeze Airways Route Architecture

The type of Airbuses that is used to constitute Breeze Airways fleet is Airbus A220 300s, Embracers 190s and Embracers 190. This particular airbus is selected for its speed and swiftness in which it reaches cruising altitude. Additionally, the fuel efficiency factor is also kept in the hindsight while selecting this particular airbus. On top of that, since the cargo hold of Airbus A220 300s opens in the outside direction; it means that more freight capacity can be utilized by British Airways which is definitely a value addition in terms of revenue generation for the airline company. The total number of Airbus is 14, including one A220, 10 Embraer 190s and 4 Embraer 195, which represents the size of the entire Breeze Airways fleet.  

Both tangible and intangible elements are offered by Breeze Airways to its target customer. It plays a quintessential role in revenue generation from the perspective of Breeze Airways. Additionally, the products also enhance customer experience associated with the brand equity of Breeze Airways. Itineraries and consumables are the primary products offered by Breeze Airways to its consumers (Bartle, Lutte & Leuenberger, 2021). 

The total cost that the airline has to incur per flight is around $8,916 which includes labor as well as fuel.

Breeze Airways have accomplished such heights of success within a short time frame because of its exemplary management of distribution. Both the information and monetary resources of the airline are subjected to appropriate management strategies where opportunities that are attributed with untapped market can be capitalized on in the upcoming days by Breeze Airways (Ayasanond, 2019)

There are a plethora of promotional activities that have been undertaken by Breeze Airways. However, word of the mouth strategy has been quite an effective approach which has substantially assisted the organization to generate more revenues. Owing to the fact that the cost associated with individual seat selection is around $10 extra. This is extremely cost-effective in nature in comparison to its potential rivals, which not only helps the airline to promote its quality service; but at the same time the amount of customer the airline captivates with this approach is undeniably significant in nature. For promotional campaigns, individuals who have already experienced the quality services are primarily utilized which is another cost-effective approach by the airline. As of now, the airline has not contracted with any celebrities to promote their airline which is preferred by its target customer extensively (Suwanwong et al. 2018). 

The target demographic of Breeze Airways are individuals looking to conduct business between important cities such as Tampa, New Orleans, Charleston, San Antonio, Pittsburgh, Providence, Oklahoma City, Hartford, Louisville and Richmond. In addition to that, other cities are also considered as the target demographic (Delgado et al. 2020). However, passengers who belong from the middle income group are primarily considered as the perfect demographic for Breeze Airways. The pricing strategy which is determined by the company reflects that the organization has substantially focused on satisfying the preferences of this demographic (Myroslava & Mariia, 2021).

Types of Airbuses Used by Breeze Airways

According to a recent interview given by David Neeleman, it has been noticed that 80% of Breezer Airways Summer schedule flights are free from competition; which can necessarily be translated into the fact that revenue generated by Breeze Airways from this summer schedule flights are substantial in proportion. This is definitely an impressive number which would spell the recipe for success for the airline. David Neeleman has also pointed out that during the course of starting out the initial route structure. For the reason that metropolises which are really connected by Breeze Airways are primarily concentrated upon. This is the only reason as to why the notion of competition is approximately negligible for Breeze Airways. In such circumstances, profit maximization can be truly actualized. Breeze has consistently prioritized connecting small markets through hub and spoke route architecture; which has completely given it a competitive edge over its potential rivals such as JetBlue, Guardian Flights and Keystone Aviation. Due to amicable customer service, Breeze Airways have always captivated its target customer with respect to its competition (Al?c? & Akar, 2020).

Consistently incorporating small and medium-sized cities in its hub and spoke architecture has assisted the company to generate revenue significantly year after year in a consecutive manner. While Breeze Airways is still considering offering services as cost effective as possible to its target customer, it has significantly priced up its nonstop itineraries during the course of summer schedule operation. With an annual revenue generation of $106.24 million, the company has successfully reported in the last quarter of 2021 to generate more than $200 million funds from appropriately designing its capital structure (?ervinka & Matušková, 2018)

After meticulously analyzing the working function of Breeze Airways it can be inferred that the company has extensively determined the hidden value associated with untapped small markets. For instance, in Charleston after 2018, major airlines such as Jetblue have opted out because of insufficient traffic. In the airline industry inadequate traffic leads to loss of revenue generation. However, with appropriate pricing strategies, Breeze Airways have capitalized on the smaller market such as Charleston. Additionally, the quality service and cost effective fair prices have resoundly assisted the organization to captivate potential consumers in the smaller market. In accordance with David Neeleman, the company is not at all targeting to expand its business horizon in larger markets. However, expansion of the airline in such small markets has already been initiated. Approximately, $200 million of fund accumulation has already been carried forward by the organization in the last quarter of 2021. One of the competitive advantages that are associated with the manner in which Breeze Airways operate is during the course of Summer schedule, the flights under the banner of Breeze Airways have always experienced competition free traffic. Additionally, another aspect of opting Airbus A220 300s for its fuel efficiency is also a notable reason which can be substantiated for Breeze Airways to experience profit. Airbus A220 300s is known for its fuel efficiency which helps the organization in shorter flights extensively. The course of the airline industry across the US is ever changing in nature. However, after going through the strategies that have been chalked out by Breeze Airways, an inference can be drawn that the company has seamlessly adapted the changing course of the airline industry and has a bright future ahead of it (Al?c? & Akar, 2018). 

References:

Al?c?, A., & Akar, A. S. (2020). Macroeconomic Determinants of Air Cargo Demand: A Panel Data Analysis. International Journal of Shipping and Transport Logistics, 20(48), 11-23.

Ayasanond, C. (2019, November). Business Strategies for Enhancing the Competitiveness of Thai Air Cargo Supply Chain Management. In International Academic Multidisciplinary Research Conference In Japan 2019 (pp. 365-373).

Bartle, J. R., Lutte, R. K., & Leuenberger, D. Z. (2021). Sustainability and air freight transportation: Lessons from the global pandemic. Sustainability, 13(7), 3738.

?ervinka, M., & Matušková, S. (2018). Are Low Cost Carriers a problem for the management of regional airports?. Transportation research procedia, 35, 54-63.

Delgado, F., Sirhan, C., Katscher, M., & Larrain, H. (2020). Recovering from demand disruptions on an air cargo network. Journal of Air Transport Management, 85, 101799.

Myroslava, S., & Mariia, H. (2021). The role of the airline as a logistics provider in the passenger travel chains involving air transport. Intellectualization of logistics and Supply Chain Management, (5).

Suwanwong, T., Sopadang, A., Hanaoka, S., & Rodbundith, T. (2018). Evaluation of air cargo connectivity and policy in Thailand. Transport Policy, 72, 24-33.

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