1. Brittany Williams
Laura Finney
Danatra Taylor
Lucie Straub
Lorenzo Perez

2. 1
The U.S. Department of
Transportation (DOT)
describes regional airlines as
companies with revenues less
than $100 million that focus
on short-haul flights.
Key Competitors are: Alaska
Air and Southwest Airlines
Intro to the Industry

3. The Industry's Dominant
Economic Features
Number of rivals and their comparative size
 passengers per year
 market share in the industry
Pace of process and technology change
 greater amount of seats for economy class
Ongoing process of reducing costs
 higher flight capacity
 additional fees to travelers
 hedging fuel costs
2

4. Key Drivers of Change
Low cost regional
competition
Globalization
Internet e-commerce
4

5. Five Forces Impact on
Airline Industry
1. Suppliers
2. Buyers
3. Competitive Rivalry
4. Substitutes
5. Entrants (brand recognition of
established airlines)

6. Companies in the
Strongest/Weakest Positions
6
Market Cap in
Billions
Net income in
Millions
10
20
8
4
300
150
S
W
T
A
L
K
P
I
N
S
W
T
S
W
T
P
I
N
A
L
K
A
L
K
P
I
N
SOUTHWEST ALASKA AIR PINNACLE
Revenue in
Billions

7. Companies in the
Strongest/Weakest Positions
Cont’d
Revenue/employees Market Cap/employees Net income/employees
200k
400k
200k
100k
20k
10k
S
W
T
S
W
T
P
I
N
P
I
N
A
L
K
S
W
T
A
L
K
A
L
K P
I
N

8. Return on Assets/
Return on Equity
Southwest ROA ROE
2009 .70% 1.90%
2010 3.09% 7.85%
2011 1.06% 2.71%
Alaska Air ROA ROE
2009 2.47% 15.85%
2010 5.02% 25.40%
2011 4.79% 21.46%

9. Leading: Alaska Airlines
 Service to key locations in the NW
 Solid cost structure
Moderately Successful: Southwest
 Great brand recognition
 Established
 Model followed by competitors
Struggling : Pinnacle
 Bankrupt
 Cost Structure and Business Model- main reasons

10. Key Success Factors
Cost Structure
Brand
Recognitions/Promotion
Route Systems
10

11. Analysis
Will competitive forces strengthen?
 Yes because the power of the five
forces are high.
Will driving forces increase/decrease
profitability.
 It will decrease profitability
How firms can tackle the unattractive
forces in the industry? Efficient cost
structure.
11

12. Recommendations
The industry is not attractive.
 Long term profitability may not be
attainable industry wide. (except for well
established companies)
 Operating conditions have been declining
 Profitability has been unstable since 2007
How do you become a millionaire? Start as a
billionaire, and buy an airline! -Richard
Branson
12

13. Q/A