Introduction
Silver Airways is a completely independent small airline in the United States. The airline is owned by Versa Capital and its affiliates and is headquartered in Fort Lauderdale. It fills a unique niche in the regional airline business, with the main route created specifically for vacationers flying from Florida to the Bahamas and the Caribbean. It offers an average of 125 flights each day to 18 Florida locations, including hubs in Fort Lauderdale, Orlando, Tampa, and the Bahamas (Silver Airways, n.d.b).
The company also operates regional cargo flights from Fort Worth, Texas, using five ATR-500 aircraft. Silver Airways aspires to deliver the finest service to its clients by offering competitive fares and expanding its flying destinations. The company’s ambition of becoming a major US airline requires strategic research and planning.
SWOT analysis helps define an organization’s future trajectory by evaluating its strengths, weaknesses, opportunities, and threats. The insights inform the development of strategic goals that build on internal strengths and address external challenges. This will improve the company’s performance, leverage market possibilities, reduce risks, and enhance competitiveness in the aviation industry.
SWOT Analysis of Silver Airways
Table 1 – SWOT Table
Strengths
First, Silver Airways is a market leader in the region it operates, which gives it the ability to influence service prices. It has used this position to expand existing and identify new destinations, and foster strong ties with clients who visit its many locations (Silver Airways, n.d.a). Secondly, the company has strong partnerships with local and regional airlines, expanding its reach to millions of potential customers through code-sharing and loyalty programs.
Silver Airways’ codeshare relationships enable travelers to fly on routes operated by the airline, providing seamless connections across multiple networks. The codeshare allows passengers to book a single ticket with luggage transfer between airlines to several Silver Airways destinations. Passengers from Silver destinations can utilize the partner’s network. Silver Airlines codeshares with American, United, JetBlue, Avianca, Delta, and Copa Airlines (Business Wire, 2019). It also has interline collaborations with Alaska Airlines, Air Canada, All Nippon Airways, Bahamas Airlines, Azul, Emirates, and Hahn Air.
Another strength of Silver Airways is its aircraft upgrade program. The airline recently announced a historic arrangement by signing an agreement letter to renew and extend its fleet with up to 50 additional ATR-600 series aircraft. This is a major strategic victory for the airline, with a transaction valued at up to $1.1 billion (Business Wire, 2018). The initial purchase order is for 20 ATR-42-600 aircraft, and the contract allows Silver to upgrade to the larger ATR-72-600 series. The ATR-600 series aircraft are powered by advanced turboprop engines, comfortable, and reasonably priced, giving the impression of a steady and flourishing company that will continue to expand in the coming years.
Weaknesses
Silver Airways’ first weakness is that it serves fewer destinations. The company primarily operates aircraft between Florida, the island of Bahamas, Puerto Rico, and other Caribbean and Southern US holiday spots (Silver Airways, n.d.a). Given that management’s goal is to transform the company into a major U.S. airline, a limited business focus is a disadvantage compared to other airlines such as United or American Airlines. The company’s reliance on partners for ticket sales and advertising limits its ability to foster client loyalty (Business Wire, 2019).
Client loyalty is important in the aviation industry for maintaining profitability and competition. Airlines try to encourage passenger loyalty by fostering strong emotional ties, which lead to repeat business and favorable referrals. Client loyalty also increases revenue streams and protects companies against competition pressures and market volatility. Silver Airways may miss out on collecting the feedback needed to continually improve its services and satisfy changing traveler needs and preferences.
Silver Airways recently replaced its fleet with ATR-600 aircraft; however, it has reduced seating capacity as a result. The company’s flexibility is substantially limited by its reliance on a single comparatively small model that can accommodate fewer than fifty passengers (Business Wire, 2018). It will be unable to compete with corporations offering similar services, operating planes with larger seating capacities, or using other aircraft sizes that can be customized to the number of travelers.
Opportunities
Silver Airways will have numerous opportunities to expand and grow its business in the years ahead. A recent example is bringing Seaborne Airlines on board for further commercial collaboration, including a possible merger, to support the overarching goal of becoming an integral regional airline. Seaborne, headquartered in San Juan, Puerto Rico, serves locations across Puerto Rico, the U.S. Virgin Islands, and other Caribbean countries. It is also the most important link between St. Croix and St. Thomas (Seaborne Airlines, n.d.). This provides more opportunities to reach a larger market, since both airlines share the goal of delivering tropical, secure excursions for U.S. customers.
Given that Silver Airways primarily serves holiday destinations and has a good reputation, it would make sense to expand into South American or U.S. coastal regions. These regions have a variety of vacation resorts that Americans would aspire to explore each year. The airline may contemplate adding lines to the U.S. West Coast and Hawaii if it has sufficient financial resources.
Another opportunity is to partner with a different aircraft builder, potentially from the U.S., rather than relying entirely on the current ATR-600 makers in France and Italy. This may reduce the aircraft’s engineering and manufacturing expenses while increasing seat capacity (Dolganova et al., 2022). Silver Airways can benefit from local expertise and easier access to parts and technical assistance.
Threats
Pandemics, such as the coronavirus pandemic, substantially impact the airline sector. Many businesses that could not endure the COVID-19 pandemic were forced into bankruptcy. Silver Airways may have survived, but it may suffer in the future due to the high level of emergency susceptibility in the airline industry (Silver Airways, n.d.a). Another related threat is shifting consumer tastes and preferences. Silver Airways’ primary target market consists of U.S. citizens (Silver Airways, n.d.a). Americans may become hesitant to spend large sums on vacation travel, preferring business trips or visiting relatives locally rather than vacationing overseas.
Fuel prices also pose a substantial risk to Silver Airways since they directly affect its operational costs. The company relies on smaller, less fuel-efficient aircraft than the larger jets used by major airlines. As gasoline prices rise, so do operating expenses, putting pressure on the company’s relatively low profit margins (Kang et al., 2021).
These higher expenses might result in higher airfares, fewer routes, or even service reductions, making it difficult for the airline to remain competitive and commercially sustainable. Reliance on fewer routes with lower passenger volumes also means Silver Airways may struggle to cope with fuel price fluctuations compared to larger airlines with a broader range of destinations and greater financial backing.
Goals and Objectives
Strategic Goal 1
Silver Airway’s first strategic goal is to establish its credibility as an independent airline offering top-notch and all-encompassing services. Travelers are unfamiliar with the company as it relies heavily on business partners for bookings (Business Wire, 2019). There is a need to ensure that the company attains autonomy to enhance recognition among potential clients.
Objective 1
The company must build or purchase the software required for booking. It must be convenient, straightforward, dependable, quick, and delightful. Marketing will also be needed to help the public become more acquainted with the updated booking system and its functionality.
Objective 2
Silver Airways needs to deploy displays and fliers in national U.S. airports to promote beach vacations as a desirable aim. This entails promoting the Caribbean’s more open, sunny beaches as a safe and healthy alternative to cities.
Strategic Goal 2
Silver Airways should expand its operations into several regions of Latin America and the Western U.S. The recent partnership with Seaborn Airlines enabled travelers to fly south, and further consultations to add popular Latin American destinations may be valuable (Seaborn Airlines, n.d.). California may also be designated as a viable holiday destination for domestic travelers.
Objective 1
Silver Airways must work with local authorities and tourist attractions in areas like Mexico and Nicaragua to add their attractive holiday locations to the existing routes. Many Americans would like to enjoy scuba diving in Cancun and explore the islands surrounding Nicaragua. Seaborn Airlines could include such locations, but flight times will likely increase.
Objective 2
Silver Airways should contact California’s tourism and travel departments to discuss the feasibility of flights to the West Coast. Santa Monica and Malibu beaches are prominent surfing and sunbathing destinations that should be promoted to reach the desired target population.
Strategic Goal 3
Silver Airways must identify an alternate aircraft manufacturer in the U.S. According to Dolganova et al. (2022), a local manufacturer would be preferable for ease of access to parts and technical assistance.
Objective 1
Silver Airways must choose an American plane designer and builder for future operations. Adding airplanes to the current fleet is costly and time-consuming, so the company must begin work immediately to prepare for new routes and increased passenger traffic.
Objective 2
The organization must determine the number of seats and services consumers will require. This could be accomplished by surveying and evaluating passenger and potential client data throughout the year.
Conclusion
Silver Airways aims to grow into a larger regional airline, and the SWOT analysis helped identify ways to achieve the overarching objective. The company is well-positioned to capitalize on existing opportunities by leveraging its strengths, especially as a growing leader in regional air travel services. The weaknesses and threats can be handled through the identified strategic goals and objectives. The strategic goals are to become a more independent airline, expand the route network, and identify an alternative U.S. aircraft manufacturer for future operations. The strategies can be realized given the company’s potential for the ambitious and profitable development of the vacation travel business.
References
Business Wire. (2017). Silver Airways announces major strategic growth developments and new leadership.
Business Wire. (2018). Silver Airways acquires Seaborne Airlines to create leading independent airline serving the Caribbean, Bahamas, Florida, and Beyond.
Business Wire. (2019). Silver Airways and American Airlines announce codeshare partnership.
Dolganova, I., Bach, V., Rodl, A., Kaltschmitt, M., & Finkbeiner, M. (2022). Assessment of Critical Resource Use in Aircraft Manufacturing. Circular Economy and Sustainability.
Kang, W., Perez de Gracia, F., & Ratti, R. A. (2021). Economic uncertainty, oil prices, hedging and U.S. stock returns of the airline industry. The North American Journal of Economics and Finance, 57.
Seaborne Airlines. (n.d.). Our story.
Silver Airways. (n.d.a). Silver Airways announces achievement of major strategic initiatives.
Silver Airways. (n.d.b). Silver Airways – Company information.