Southwest Airlines
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The document discusses Southwest Airlines, a major U.S. airline founded in 1967 with headquarters in Dallas, Texas. It provides an overview of Southwest's business model, competitors, and financial performance. It also analyzes trends in the airline industry, such as fluctuating oil prices and increasing international flights, and their impact on Southwest relative to other carriers. While these trends present equal challenges across the industry, the document recommends Southwest partner with international carriers and consider acquisitions to enhance its global reach and market share.
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Airlines industry(3)
The airline industry originated in 1903 and has faced many changes since then. Major US airlines include American Airlines, United Airlines, and Delta Airlines. American Airlines has the largest market share at 14.8%, while United and Delta have market shares of 10.8% and 15.8% respectively. The industry faces challenges from factors like oil prices, mergers and acquisitions, and competition from low-cost carriers like Southwest Airlines. Airlines compete based on service, ticket prices, and frequent flyer mileage programs.
American airlines
American Airlines is the world's third largest airline. It was formed in 1930 through the merger of several smaller airlines. While it struggled with bankruptcy in 2011, it has since recovered and now operates over 300 aircraft to 260 global destinations. Its main competitors are United Airlines and Delta Airlines, and it must navigate a highly competitive industry with powerful suppliers and customers.
Analyzing the potential market for hybrid cars: a survey of car dealers in Ma...
This document summarizes a study analyzing the potential market for hybrid cars in Mauritius. A survey was conducted of car dealers in Mauritius to examine their views. Key findings include:
- The majority of dealers had been in business over 5 years and sold mostly sedans and small cars. Low fuel consumption was the most important factor for customers.
- Most dealers were aware of hybrid cars but few had considered importing them as models were not available as hybrids. Dealers had different approaches to adopting new technologies.
- While some dealers liked to adopt new technologies quickly, others preferred to wait and see if the technologies succeeded to reduce risks for the Mauritian market.
The Airline Industry
This document analyzes the airline industry using Porter's Five Forces model. It finds the industry has medium to high risk of entry due to economies of scale, brand loyalty, and switching costs. Rivalry is intense due to consolidation. Buyers and suppliers have high bargaining power. Substitute products also pose a high threat. Opportunities include expansion and partnerships, while threats include rising fuel costs, terrorism, and increased competition. Social responsibility programs at Southwest and American are discussed. Ethical dilemmas around safety, security, and airfare rates are presented.
The US - American Merger
This document outlines a merger and rebranding strategy for US Airways and American Airlines to become the New American airline. Key points include:
- US Airways and American Airlines merged in 2013 and the new airline will serve over 330 destinations.
- The new strategy aims to redefine the tired brands and create a unified brand that resonates with today's flyer focusing on personalized experiences.
- Tactics proposed include customizing in-flight experiences based on destination, a new app, partnerships, and cause marketing.
- Metrics, budget, and controls are outlined to implement the rebranding strategy and reclaim market leadership within 24 months.
American Airlines international case presentation Group 9
This document summarizes the history and operations of American Airlines, including its entry into the international market in the 1960s, merger with U.S. Airways in 2013, and involvement with government intervention and deregulation. It discusses American Airlines' use of open skies agreements, involvement in 9/11 and subsequent security changes, issues around emissions regulations and fuel costs, and makes recommendations for properly handling its merger.
American Airlines Presentation
This document provides an overview of American Airlines presented by Group 6. It includes sections on the company history, market structure, competitive advantages, game theory/pricing approaches, and industry updates. The presentation covers topics such as American Airlines' founding and expansion in the 1930s-1980s, the impact of deregulation in 1978, their innovation with SABRE and frequent flyer programs, and current industry leaders. It also includes a quiz and bibliography.
American Airlines Business Model Analysis Presentation
The document analyzes American Airlines' business model by evaluating its value proposition, target customer segment, competitors, value chain and costs, revenue model, and critical success factors. It finds that American Airlines' value proposition includes its vast flight network and loyalty program, but it has struggled financially in recent years. However, a merger with U.S. Airways was finalized in December 2013 and aimed to make the combined company the largest airline in the world by addressing American Airlines' financial challenges.
Recommended
Airlines industry(3)
The airline industry originated in 1903 and has faced many changes since then. Major US airlines include American Airlines, United Airlines, and Delta Airlines. American Airlines has the largest market share at 14.8%, while United and Delta have market shares of 10.8% and 15.8% respectively. The industry faces challenges from factors like oil prices, mergers and acquisitions, and competition from low-cost carriers like Southwest Airlines. Airlines compete based on service, ticket prices, and frequent flyer mileage programs.
American airlines
American Airlines is the world's third largest airline. It was formed in 1930 through the merger of several smaller airlines. While it struggled with bankruptcy in 2011, it has since recovered and now operates over 300 aircraft to 260 global destinations. Its main competitors are United Airlines and Delta Airlines, and it must navigate a highly competitive industry with powerful suppliers and customers.
Analyzing the potential market for hybrid cars: a survey of car dealers in Ma...
This document summarizes a study analyzing the potential market for hybrid cars in Mauritius. A survey was conducted of car dealers in Mauritius to examine their views. Key findings include:
- The majority of dealers had been in business over 5 years and sold mostly sedans and small cars. Low fuel consumption was the most important factor for customers.
- Most dealers were aware of hybrid cars but few had considered importing them as models were not available as hybrids. Dealers had different approaches to adopting new technologies.
- While some dealers liked to adopt new technologies quickly, others preferred to wait and see if the technologies succeeded to reduce risks for the Mauritian market.
The Airline Industry
This document analyzes the airline industry using Porter's Five Forces model. It finds the industry has medium to high risk of entry due to economies of scale, brand loyalty, and switching costs. Rivalry is intense due to consolidation. Buyers and suppliers have high bargaining power. Substitute products also pose a high threat. Opportunities include expansion and partnerships, while threats include rising fuel costs, terrorism, and increased competition. Social responsibility programs at Southwest and American are discussed. Ethical dilemmas around safety, security, and airfare rates are presented.
The US - American Merger
This document outlines a merger and rebranding strategy for US Airways and American Airlines to become the New American airline. Key points include:
- US Airways and American Airlines merged in 2013 and the new airline will serve over 330 destinations.
- The new strategy aims to redefine the tired brands and create a unified brand that resonates with today's flyer focusing on personalized experiences.
- Tactics proposed include customizing in-flight experiences based on destination, a new app, partnerships, and cause marketing.
- Metrics, budget, and controls are outlined to implement the rebranding strategy and reclaim market leadership within 24 months.
American Airlines international case presentation Group 9
This document summarizes the history and operations of American Airlines, including its entry into the international market in the 1960s, merger with U.S. Airways in 2013, and involvement with government intervention and deregulation. It discusses American Airlines' use of open skies agreements, involvement in 9/11 and subsequent security changes, issues around emissions regulations and fuel costs, and makes recommendations for properly handling its merger.
American Airlines Presentation
This document provides an overview of American Airlines presented by Group 6. It includes sections on the company history, market structure, competitive advantages, game theory/pricing approaches, and industry updates. The presentation covers topics such as American Airlines' founding and expansion in the 1930s-1980s, the impact of deregulation in 1978, their innovation with SABRE and frequent flyer programs, and current industry leaders. It also includes a quiz and bibliography.
American Airlines Business Model Analysis Presentation
The document analyzes American Airlines' business model by evaluating its value proposition, target customer segment, competitors, value chain and costs, revenue model, and critical success factors. It finds that American Airlines' value proposition includes its vast flight network and loyalty program, but it has struggled financially in recent years. However, a merger with U.S. Airways was finalized in December 2013 and aimed to make the combined company the largest airline in the world by addressing American Airlines' financial challenges.
Jet Blue Airways Corporation
JetBlue Airlines was founded in 2000 by David Neeleman with an initial focus on routes between New York, Florida, and California. Its mission is to bring humanity back to air travel through superior customer service at low costs. JetBlue utilizes innovative strategies such as leather seats, in-flight entertainment screens, and point-to-point routes to compete in the highly competitive US airline industry. A SWOT analysis finds JetBlue's strengths are its brand and low operating costs, while weaknesses include being a relatively new company and fuel price volatility presents a threat.
Delta
The document discusses several key factors affecting the commercial airline industry, including fuel costs, weather, mergers and acquisitions between airlines, competition among carriers, and customer service. It provides details on various airlines' strategies to improve fuel efficiency, deals with rising fuel prices, and addresses challenges and opportunities presented by industry consolidation through mergers.
Airlines analysis
The document discusses the challenges facing the US airline industry, including rising costs, excess capacity, and increased competition from low-cost carriers. It notes that the industry's financial problems predate 9/11 and that major restructuring will be needed for the legacy carriers to adapt to current market conditions and regain profitability. Code-sharing agreements between carriers are seen as one way to cut costs through increased cooperation.
Capstone Research-Southwest Airlines
This was a research project that our Business Strategy class completed in 2007. This is an evaluation of Southwest Airlines and its position in the market. We evaluated growth and future prospects with a heavily consolidating industry.
TB0333 Rev. 032017Copyright © 2017 Thunderbird School o.docx
TB0333
Rev. 03/2017
Copyright © 2017 Thunderbird School of Global Management, a unit of the Arizona State University Knowledge Enterprise. This
case was written by Professor Andrew Inkpen with research assistance from Chee Wee Tan, Andrew Cohen, Valerie Degroot, Wes
Edens, Prita John, Jairaj Mashru, Sandip Patil, and Arturo Wagner for the sole purpose of providing material for class discussion.
It is not intended to illustrate either effective or ineffective handling of a managerial situation. Any reproduction, in any form, of
the material in this case is prohibited unless permission is obtained from the copyright holder.
Andrew Inkpen
Southwest Airlines
You are now free to move about the country.™
Southwest Airlines (Southwest), the once scrappy underdog in the U.S. airline industry, was one of the largest
U.S. airlines and, based on number of passengers, one of the largest in the world. The company, unlike all of its
major competitors, had been consistently profitable for decades and had weathered energy crises, the September
11 terrorist attacks, and the 2008-09 recession. An insight into Southwest’s operating philosophy can be found
in the company’s 2001 annual report:
Southwest was well poised, financially, to withstand the potentially devastating hammer blow of
September 11. Why? Because for several decades our leadership philosophy has been: we manage in
good times so that our Company and our People can be job secure and prosper through bad times.…
Once again, after September 11, our philosophy of managing in good times so as to do well in bad
times proved a marvelous prophylactic for our Employees and our Shareholders.
Now in its 45th year of service, Southwest was facing some major challenges. Legacy carriers in the United
States had become more efficient, and the mega-mergers involving Delta/Northwest, Continental/United, and
American/US Airways were shaking up the industry. Smaller companies like JetBlue, Alaska, and Spirit were
pressuring Southwest’s cost advantage and low-fare focus. Southwest had the highest labor cost per employee
in the U.S. airline industry. With more than 50,000 employees, the company was a long way from the small
scrappy upstart challenging the industry with its innovative strategy.
The U.S. Airline Industry
The U.S. commercial airline industry was permanently altered in October 1978 when President Jimmy Carter
signed the Airline Deregulation Act. Before deregulation, the Civil Aeronautics Board regulated airline route
entry and exit, passenger fares, mergers and acquisitions, and airline rates of return. Typically, two or three carriers
provided service in a given market, although there were routes covered by only one carrier. Cost increases were
passed along to customers, and price competition was almost nonexistent. The airlines operated as if there were
only two market segments: those who could afford to fly, and those who couldn’t.
Deregulation sent airline fares tumbling.
TB0333 Rev. 032017Copyright © 2017 Thunderbird School o.docx
TB0333
Rev. 03/2017
Copyright © 2017 Thunderbird School of Global Management, a unit of the Arizona State University Knowledge Enterprise. This
case was written by Professor Andrew Inkpen with research assistance from Chee Wee Tan, Andrew Cohen, Valerie Degroot, Wes
Edens, Prita John, Jairaj Mashru, Sandip Patil, and Arturo Wagner for the sole purpose of providing material for class discussion.
It is not intended to illustrate either effective or ineffective handling of a managerial situation. Any reproduction, in any form, of
the material in this case is prohibited unless permission is obtained from the copyright holder.
Andrew Inkpen
Southwest Airlines
You are now free to move about the country.™
Southwest Airlines (Southwest), the once scrappy underdog in the U.S. airline industry, was one of the largest
U.S. airlines and, based on number of passengers, one of the largest in the world. The company, unlike all of its
major competitors, had been consistently profitable for decades and had weathered energy crises, the September
11 terrorist attacks, and the 2008-09 recession. An insight into Southwest’s operating philosophy can be found
in the company’s 2001 annual report:
Southwest was well poised, financially, to withstand the potentially devastating hammer blow of
September 11. Why? Because for several decades our leadership philosophy has been: we manage in
good times so that our Company and our People can be job secure and prosper through bad times.…
Once again, after September 11, our philosophy of managing in good times so as to do well in bad
times proved a marvelous prophylactic for our Employees and our Shareholders.
Now in its 45th year of service, Southwest was facing some major challenges. Legacy carriers in the United
States had become more efficient, and the mega-mergers involving Delta/Northwest, Continental/United, and
American/US Airways were shaking up the industry. Smaller companies like JetBlue, Alaska, and Spirit were
pressuring Southwest’s cost advantage and low-fare focus. Southwest had the highest labor cost per employee
in the U.S. airline industry. With more than 50,000 employees, the company was a long way from the small
scrappy upstart challenging the industry with its innovative strategy.
The U.S. Airline Industry
The U.S. commercial airline industry was permanently altered in October 1978 when President Jimmy Carter
signed the Airline Deregulation Act. Before deregulation, the Civil Aeronautics Board regulated airline route
entry and exit, passenger fares, mergers and acquisitions, and airline rates of return. Typically, two or three carriers
provided service in a given market, although there were routes covered by only one carrier. Cost increases were
passed along to customers, and price competition was almost nonexistent. The airlines operated as if there were
only two market segments: those who could afford to fly, and those who couldn’t.
Deregulation sent airline fares tumbling ...
Micro Essay.docx
The US airline industry can be characterized as an oligopoly market structure, with a few major players dominating the market. American Airlines, Southwest Airlines, Delta Air Lines, and United Airlines combined control over 50% of the domestic market. Entry of new airlines is difficult due to high capital requirements and costs, inability to access major airports, and established loyalty programs. Airlines engage in competitive pricing strategies and output decisions in response to one another to maintain market share. Expanding the scope to Europe's transportation system would also likely result in an oligopolistic market structure across major modes of transport.
Continental Company Analysis and Generation of New Solutions
Continental Airlines was founded in 1934 and has gone through periods of growth, bankruptcy, and mergers over the decades. It focuses on business travelers with international flights to over 270 destinations worldwide. While it has strengths like customer service and international presence, it also faces challenges like high debt and costs. It sees opportunities in expanding to Asia and a potential merger with United, but threats include economic conditions, fuel costs, and technology substitutes for travel.
4 John Heimlich
The document summarizes the challenges facing the US airline industry, including rising fuel costs, lack of pricing power, heavy losses, and weak passenger revenue. It notes major carriers have cut capital expenditures and headcount significantly to reduce costs while improving productivity, but breakeven load factors remain higher than actual levels, making profitability difficult to achieve in the current environment. Fuel hedging has kept jet fuel prices below spot rates but costs are still expected to surpass 2004 record levels in 2005.
Strategic Planning on Airline attack
- The airline industry faced many challenges both before and after 9/11, including revenue drops, bankruptcies, and high leverage.
- 9/11 had a devastating immediate impact, grounding all flights for 3 days and causing long-term declines in travel due to fears.
- Both major airlines and low-cost carriers struggled in this new environment of high fuel costs, economic downturns, and less flying. The industry faced pressure to consolidate and restructure to improve long-term sustainability.
Competition in the US Airline Industry FINAL
The document analyzes competition in the US airline industry using Porter's Five Forces model. It determines that the industry is an oligopoly, with four major carriers (Delta, Southwest, United, American) dominating the market. Airlines compete on pricing, using dynamic pricing strategies like yield management to adjust prices based on demand, time of booking, and other factors. This allows airlines to practice forms of price discrimination. While competition is present, barriers to entry are high for new airlines due to industry regulations, scale requirements, and brand dominance of the major carriers.
Southwest
The document provides an overview of Southwest Airlines, including its history, operations, target markets, key success factors, and competitive position within the US airline industry. Southwest is the largest low-cost carrier in the US, with a focus on short-haul, point-to-point routes. It aims to provide safe, comfortable air travel at low prices. The airline's strengths include its low costs, operational efficiency, and customer service culture.
1 The Commercial Airline Industry October 17t.docx
1
The Commercial Airline Industry
October 17th, 2014
Ben Cohen
Z23106977
Global Strategy and Policy
Man 4720
Professor Harry Schwartz
Finance Major
2
In this paper, a Porter’s analysis will be conducted on the commercial airline
industry. The Porter analysis is a means of measuring the intensity of the competitive
forces associated with an industry. The competitive forces consist of threat of new
entrants, rivalry among existing firms, threat of substitute products or services,
bargaining power of buyers, bargaining power of suppliers, and relative power of other
stakeholders. Each of these 6 competitive forces will be analyzed and rated high, medium
or low in strength based on their intensity.
Threat of New Entrants: Low
Companies that are considering or attempting to enter the airline industry will
have extreme difficulty, as a result of the many entry barriers they will encounter. These
entry barriers are why the threat of new entrants in the commercial airline industry is
considered low. Airline companies operating in today’s industry have a large inventory of
aircrafts and offer many flight availabilities. They are able to use economies of scale to
effectively provide flexibility to travelers. The existing airline companies will capitalize
on their economies of scale as a competitive advantage and entice travelers with their
low-cost fares for the same service. This is why in the airline industry many companies
seek to gain strategic alliances with other companies. Forming strategic alliances allows
companies to add new routes and increase sales revenue, without substantially increasing
their capital investment. An example of this is the joint venture agreement between Delta
Air lines and Virgin Atlantic Airways Ltd. This agreement allowed them to form a “fully
integrated joint venture that will operate on a “metal neutral” basis with both airlines
sharing the costs and revenues, from all joint venture flights” (Delta Air Lines, 2012).
This agreement will allow these two airlines to provide a seamless network between
North America and the U.K. for their customers. These alliances have changed the
dynamic of the industry.
Another barrier to entry into this industry is the extremely high capital
requirements. It takes a large amount of initial capital to buy inventory of large
commercial aircrafts. However, it is not just the initial capital that is crucial; it is also the
steady capital needed to maintain these aircrafts. “Domestic carriers spent $11.6 billion
3
last year on capital improvements. Over the past five years U.S. airlines have retired
nearly 1,300 planes” (Mayerowitz, 2014). This is substantial evidence of the financial
intensity associated with entry into this industry.
Another barrier to entry is government policy. Government policy in the past
played a much larger role, how ...
Jet Blue
JetBlue Airlines is a low-cost airline founded in 1998 that focuses on point-to-point travel between major metropolitan areas. It uses innovative strategies like leather seats instead of cloth, personal televisions, and secondary airports to reduce costs. JetBlue faces external threats like rising fuel prices and competition from major carriers, but maintains a strong brand through high customer satisfaction. The document analyzes JetBlue's business strategies, strengths, weaknesses and recommends expanding internationally and into new domestic markets to continue its success.
Case Study Topic Handling a Public RelationsPublicity CrisisA.docx
Case Study Topic: Handling a Public Relations/Publicity Crisis
As mentioned in class, Marketing/PR Departments at companies of all sizes are faced with publicity crisis on a regular basis. Many appear in case studies like those we covered in class. Cyber attacks, product recalls, product malfunctions, etc. How companies respond to adversity is critical to their success in overcoming the crisis as well as to their long term image to their public (customers, employees, stockholders, community, etc.).
For this final case study, students are to select a company that has been in the news recently for dealing with a publicity crisis related to their company/organization. Some examples include: Cyber security issues at companies like Chili’s, Yahoo, Target, Michaels, EBay, Spotify, PF Changs, etc., videotaped footage of United Airlines security dragging a passenger off of one of their planes,Tesla’s self-driving car that was involved in a fatal crash or a basketball game brawl at a recent NCAA game.
Some questions/comments you may want to consider are:
· Describe the publicity issue that the company you selected had to go through. How did they address the issue? In your opinion, what did they do right? What did they do wrong?
· What ramifications happened as a result of the negative publicity?
· How much damage (financial, employees, customers) did this PR issue cause?
· What was the SWOT for the company before the PR issue?
· What was the SWOT of the company after the PR issue?
· Should customers be weary of shopping/doing business with this company post PR issue?
· What do you recommend the company do now (post PR issue) from a public relations standpoint?
Approach this case study in the same way as the case studies you have done in class. While there is no universal way to write a case study, make sure you cover the basics of a case study including:
1. Brief background/Situational Analysis of the company
2. Problem Statement/Key Issues
3. Competitive Situation/SWOT
4. Alternatives/Options
5. Recommendations
A couple of paragraphs on each topic should suffice with the major emphasis placed on what you’d recommend they do from a marketing perspective.
UNITED AIRLINES BAD WEEK COST BUFFETT AND OTHER INVESTORS MILLIONS
Background
Although each airline is structured differently, and it is difficult to assess and quantify the performance of an entire airline, Delta Airlines, and the United airlines have stayed in a steadfast competition for the last 5 years. In the year 2014, United airlines was seen lacking behind Delta airlines and was struggling to keep up with the pace, however, in the last 3 years, airlines have become a strong competitor for Delta airlines where the competition can be seen side to side. The United Airlines is the world's third-largest airline and has gained significant value in the last years, where Warren Buffett is considered the largest investor for the airlines. One of the most crucial and critical part of m.
Case Study Topic Handling a Public RelationsPublicity CrisisA.docx
Case Study Topic: Handling a Public Relations/Publicity Crisis
As mentioned in class, Marketing/PR Departments at companies of all sizes are faced with publicity crisis on a regular basis. Many appear in case studies like those we covered in class. Cyber attacks, product recalls, product malfunctions, etc. How companies respond to adversity is critical to their success in overcoming the crisis as well as to their long term image to their public (customers, employees, stockholders, community, etc.).
For this final case study, students are to select a company that has been in the news recently for dealing with a publicity crisis related to their company/organization. Some examples include: Cyber security issues at companies like Chili’s, Yahoo, Target, Michaels, EBay, Spotify, PF Changs, etc., videotaped footage of United Airlines security dragging a passenger off of one of their planes,Tesla’s self-driving car that was involved in a fatal crash or a basketball game brawl at a recent NCAA game.
Some questions/comments you may want to consider are:
· Describe the publicity issue that the company you selected had to go through. How did they address the issue? In your opinion, what did they do right? What did they do wrong?
· What ramifications happened as a result of the negative publicity?
· How much damage (financial, employees, customers) did this PR issue cause?
· What was the SWOT for the company before the PR issue?
· What was the SWOT of the company after the PR issue?
· Should customers be weary of shopping/doing business with this company post PR issue?
· What do you recommend the company do now (post PR issue) from a public relations standpoint?
Approach this case study in the same way as the case studies you have done in class. While there is no universal way to write a case study, make sure you cover the basics of a case study including:
1. Brief background/Situational Analysis of the company
2. Problem Statement/Key Issues
3. Competitive Situation/SWOT
4. Alternatives/Options
5. Recommendations
A couple of paragraphs on each topic should suffice with the major emphasis placed on what you’d recommend they do from a marketing perspective.
UNITED AIRLINES BAD WEEK COST BUFFETT AND OTHER INVESTORS MILLIONS
Background
Although each airline is structured differently, and it is difficult to assess and quantify the performance of an entire airline, Delta Airlines, and the United airlines have stayed in a steadfast competition for the last 5 years. In the year 2014, United airlines was seen lacking behind Delta airlines and was struggling to keep up with the pace, however, in the last 3 years, airlines have become a strong competitor for Delta airlines where the competition can be seen side to side. The United Airlines is the world's third-largest airline and has gained significant value in the last years, where Warren Buffett is considered the largest investor for the airlines. One of the most crucial and critical part of m.
Imc 615-final Creative Strategy & Execution for American Airlines
American Airlines was founded in 1930 and has since grown to become the 3rd largest airline in the US. It underwent bankruptcy in 2011 due to financial losses from the 9/11 terrorist attacks and rising fuel costs, but merged with US Airways in 2013. The summary aims to convince millennials and Gen X business travelers that American Airlines offers a comfortable and productive travel experience through an energetic, hopeful advertising campaign that appeals to all senses and creates a positive brand association. The tone should empower flyers and convey that flying American is only the beginning of their ability to make a difference through their work.
Jet blue airlines power point
JetBlue was founded in 1999 with a mission to bring humanity back to air travel. Over the next decade, JetBlue grew rapidly by focusing on point-to-point routes rather than hubs, offering amenities like satellite TV and extra legroom, and implementing technology like online booking. By 2011, JetBlue had partnered with other airlines to expand its international routes while continuing to prioritize low costs, high customer satisfaction, and a strong brand.
Read Case 10 Southwest Airlines. Answer questions 1-4 in a three.docx
Read Case 10: Southwest Airlines. Answer questions 1-4 in a three to five page APA style paper, and supported with the concepts outlined in your text and from your previous classes.
1. Describe the current state of the airline industry and analyze what an airline can do to be successful in the current industry climate.
2. Perform a SWOT analysis for Southwest Airlines.
3. Assess the competitive position of Southwest Airlines by completing a competitor profile for Southwest airlines and at least two of its major competitors.
4. What alternatives does Southwest Airlines face to address the problem of declining financial performance?
Southwest Airlines 2008
1 In 2008, Southwest Airlines (Southwest), the once scrappy underdog in the U.S. airline industry, carried more domestic passengers than any other U.S. airline. The company, unlike all of its major competitors, had been consistently profitable for decades and had weathered recessions, energy crises, and the September 11 terrorist attacks. In the first quarter of 2008, the company was profitable and experienced record first quarter revenue and a record pas- senger load factor (percentage of available seats sold). However, the earnings release made it clear that the “threat of volatile and unprecedented jet fuel prices” was a major issue that threatened future growth. Operating expenses were rising, and Southwest announced that it would cut 2009 growth in available seats to less than 3%. Over the previous decade, growth had been about 5–10% a year. This cut in planned growth was consistent with previous responses to difficult environments. An insight into Southwest’s operating philosophy can be found in the company’s 2001 Annual Report:
Southwest was well poised, financially, to withstand the potentially devastating hammer blow of September 11. Why? Because for several decades our leadership philosophy has been: We manage in good times so that our Company and our People can be job secure and prosper through bad times. . . . Once again, after September 11, our philosophy of managing in good times so as to do well in bad times proved a marvelous prophylactic for our Employees and our Shareholders.
THE U.S. AIRLINE INDUSTRY
The U.S. commercial airline industry was permanently altered in October 1978 when Presi- dent Carter signed the Airline Deregulation Act. Before deregulation, the Civil Aeronautics Board regulated airline route entry and exit, passenger fares, mergers and acquisitions, aattract and retain the world’s top talent have combined to create a combination of path-dependent resources that are very difficult for even the wealthiest software and Internet companies worldwide to easily emulate, acquire, or accelerate. It will take years for any competitor to develop the expertise, infrastructure, reputation, and capabilities to compete effectively with Google. Coca-Cola’s brand name, Gerber Baby Food’s reputation for quality, and Steinway’s exper- tise in piano manufacture would ta ...
Southwest Brand Audit Ppt 12/14/11
This is a recent brand audit some classmates and I did on Southwest. It\'s always interesting to dig into a brand you know and respect. We found some interesting insights about where the airline has been and where they are going.
More Related Content
Similar to Southwest Airlines
Jet Blue Airways Corporation
JetBlue Airlines was founded in 2000 by David Neeleman with an initial focus on routes between New York, Florida, and California. Its mission is to bring humanity back to air travel through superior customer service at low costs. JetBlue utilizes innovative strategies such as leather seats, in-flight entertainment screens, and point-to-point routes to compete in the highly competitive US airline industry. A SWOT analysis finds JetBlue's strengths are its brand and low operating costs, while weaknesses include being a relatively new company and fuel price volatility presents a threat.
Delta
The document discusses several key factors affecting the commercial airline industry, including fuel costs, weather, mergers and acquisitions between airlines, competition among carriers, and customer service. It provides details on various airlines' strategies to improve fuel efficiency, deals with rising fuel prices, and addresses challenges and opportunities presented by industry consolidation through mergers.
Airlines analysis
The document discusses the challenges facing the US airline industry, including rising costs, excess capacity, and increased competition from low-cost carriers. It notes that the industry's financial problems predate 9/11 and that major restructuring will be needed for the legacy carriers to adapt to current market conditions and regain profitability. Code-sharing agreements between carriers are seen as one way to cut costs through increased cooperation.
Capstone Research-Southwest Airlines
This was a research project that our Business Strategy class completed in 2007. This is an evaluation of Southwest Airlines and its position in the market. We evaluated growth and future prospects with a heavily consolidating industry.
TB0333 Rev. 032017Copyright © 2017 Thunderbird School o.docx
TB0333
Rev. 03/2017
Copyright © 2017 Thunderbird School of Global Management, a unit of the Arizona State University Knowledge Enterprise. This
case was written by Professor Andrew Inkpen with research assistance from Chee Wee Tan, Andrew Cohen, Valerie Degroot, Wes
Edens, Prita John, Jairaj Mashru, Sandip Patil, and Arturo Wagner for the sole purpose of providing material for class discussion.
It is not intended to illustrate either effective or ineffective handling of a managerial situation. Any reproduction, in any form, of
the material in this case is prohibited unless permission is obtained from the copyright holder.
Andrew Inkpen
Southwest Airlines
You are now free to move about the country.™
Southwest Airlines (Southwest), the once scrappy underdog in the U.S. airline industry, was one of the largest
U.S. airlines and, based on number of passengers, one of the largest in the world. The company, unlike all of its
major competitors, had been consistently profitable for decades and had weathered energy crises, the September
11 terrorist attacks, and the 2008-09 recession. An insight into Southwest’s operating philosophy can be found
in the company’s 2001 annual report:
Southwest was well poised, financially, to withstand the potentially devastating hammer blow of
September 11. Why? Because for several decades our leadership philosophy has been: we manage in
good times so that our Company and our People can be job secure and prosper through bad times.…
Once again, after September 11, our philosophy of managing in good times so as to do well in bad
times proved a marvelous prophylactic for our Employees and our Shareholders.
Now in its 45th year of service, Southwest was facing some major challenges. Legacy carriers in the United
States had become more efficient, and the mega-mergers involving Delta/Northwest, Continental/United, and
American/US Airways were shaking up the industry. Smaller companies like JetBlue, Alaska, and Spirit were
pressuring Southwest’s cost advantage and low-fare focus. Southwest had the highest labor cost per employee
in the U.S. airline industry. With more than 50,000 employees, the company was a long way from the small
scrappy upstart challenging the industry with its innovative strategy.
The U.S. Airline Industry
The U.S. commercial airline industry was permanently altered in October 1978 when President Jimmy Carter
signed the Airline Deregulation Act. Before deregulation, the Civil Aeronautics Board regulated airline route
entry and exit, passenger fares, mergers and acquisitions, and airline rates of return. Typically, two or three carriers
provided service in a given market, although there were routes covered by only one carrier. Cost increases were
passed along to customers, and price competition was almost nonexistent. The airlines operated as if there were
only two market segments: those who could afford to fly, and those who couldn’t.
Deregulation sent airline fares tumbling.
TB0333 Rev. 032017Copyright © 2017 Thunderbird School o.docx
TB0333
Rev. 03/2017
Copyright © 2017 Thunderbird School of Global Management, a unit of the Arizona State University Knowledge Enterprise. This
case was written by Professor Andrew Inkpen with research assistance from Chee Wee Tan, Andrew Cohen, Valerie Degroot, Wes
Edens, Prita John, Jairaj Mashru, Sandip Patil, and Arturo Wagner for the sole purpose of providing material for class discussion.
It is not intended to illustrate either effective or ineffective handling of a managerial situation. Any reproduction, in any form, of
the material in this case is prohibited unless permission is obtained from the copyright holder.
Andrew Inkpen
Southwest Airlines
You are now free to move about the country.™
Southwest Airlines (Southwest), the once scrappy underdog in the U.S. airline industry, was one of the largest
U.S. airlines and, based on number of passengers, one of the largest in the world. The company, unlike all of its
major competitors, had been consistently profitable for decades and had weathered energy crises, the September
11 terrorist attacks, and the 2008-09 recession. An insight into Southwest’s operating philosophy can be found
in the company’s 2001 annual report:
Southwest was well poised, financially, to withstand the potentially devastating hammer blow of
September 11. Why? Because for several decades our leadership philosophy has been: we manage in
good times so that our Company and our People can be job secure and prosper through bad times.…
Once again, after September 11, our philosophy of managing in good times so as to do well in bad
times proved a marvelous prophylactic for our Employees and our Shareholders.
Now in its 45th year of service, Southwest was facing some major challenges. Legacy carriers in the United
States had become more efficient, and the mega-mergers involving Delta/Northwest, Continental/United, and
American/US Airways were shaking up the industry. Smaller companies like JetBlue, Alaska, and Spirit were
pressuring Southwest’s cost advantage and low-fare focus. Southwest had the highest labor cost per employee
in the U.S. airline industry. With more than 50,000 employees, the company was a long way from the small
scrappy upstart challenging the industry with its innovative strategy.
The U.S. Airline Industry
The U.S. commercial airline industry was permanently altered in October 1978 when President Jimmy Carter
signed the Airline Deregulation Act. Before deregulation, the Civil Aeronautics Board regulated airline route
entry and exit, passenger fares, mergers and acquisitions, and airline rates of return. Typically, two or three carriers
provided service in a given market, although there were routes covered by only one carrier. Cost increases were
passed along to customers, and price competition was almost nonexistent. The airlines operated as if there were
only two market segments: those who could afford to fly, and those who couldn’t.
Deregulation sent airline fares tumbling ...
Micro Essay.docx
The US airline industry can be characterized as an oligopoly market structure, with a few major players dominating the market. American Airlines, Southwest Airlines, Delta Air Lines, and United Airlines combined control over 50% of the domestic market. Entry of new airlines is difficult due to high capital requirements and costs, inability to access major airports, and established loyalty programs. Airlines engage in competitive pricing strategies and output decisions in response to one another to maintain market share. Expanding the scope to Europe's transportation system would also likely result in an oligopolistic market structure across major modes of transport.
Continental Company Analysis and Generation of New Solutions
Continental Airlines was founded in 1934 and has gone through periods of growth, bankruptcy, and mergers over the decades. It focuses on business travelers with international flights to over 270 destinations worldwide. While it has strengths like customer service and international presence, it also faces challenges like high debt and costs. It sees opportunities in expanding to Asia and a potential merger with United, but threats include economic conditions, fuel costs, and technology substitutes for travel.
4 John Heimlich
The document summarizes the challenges facing the US airline industry, including rising fuel costs, lack of pricing power, heavy losses, and weak passenger revenue. It notes major carriers have cut capital expenditures and headcount significantly to reduce costs while improving productivity, but breakeven load factors remain higher than actual levels, making profitability difficult to achieve in the current environment. Fuel hedging has kept jet fuel prices below spot rates but costs are still expected to surpass 2004 record levels in 2005.
Strategic Planning on Airline attack
- The airline industry faced many challenges both before and after 9/11, including revenue drops, bankruptcies, and high leverage.
- 9/11 had a devastating immediate impact, grounding all flights for 3 days and causing long-term declines in travel due to fears.
- Both major airlines and low-cost carriers struggled in this new environment of high fuel costs, economic downturns, and less flying. The industry faced pressure to consolidate and restructure to improve long-term sustainability.
Competition in the US Airline Industry FINAL
The document analyzes competition in the US airline industry using Porter's Five Forces model. It determines that the industry is an oligopoly, with four major carriers (Delta, Southwest, United, American) dominating the market. Airlines compete on pricing, using dynamic pricing strategies like yield management to adjust prices based on demand, time of booking, and other factors. This allows airlines to practice forms of price discrimination. While competition is present, barriers to entry are high for new airlines due to industry regulations, scale requirements, and brand dominance of the major carriers.
Southwest
The document provides an overview of Southwest Airlines, including its history, operations, target markets, key success factors, and competitive position within the US airline industry. Southwest is the largest low-cost carrier in the US, with a focus on short-haul, point-to-point routes. It aims to provide safe, comfortable air travel at low prices. The airline's strengths include its low costs, operational efficiency, and customer service culture.
1 The Commercial Airline Industry October 17t.docx
1
The Commercial Airline Industry
October 17th, 2014
Ben Cohen
Z23106977
Global Strategy and Policy
Man 4720
Professor Harry Schwartz
Finance Major
2
In this paper, a Porter’s analysis will be conducted on the commercial airline
industry. The Porter analysis is a means of measuring the intensity of the competitive
forces associated with an industry. The competitive forces consist of threat of new
entrants, rivalry among existing firms, threat of substitute products or services,
bargaining power of buyers, bargaining power of suppliers, and relative power of other
stakeholders. Each of these 6 competitive forces will be analyzed and rated high, medium
or low in strength based on their intensity.
Threat of New Entrants: Low
Companies that are considering or attempting to enter the airline industry will
have extreme difficulty, as a result of the many entry barriers they will encounter. These
entry barriers are why the threat of new entrants in the commercial airline industry is
considered low. Airline companies operating in today’s industry have a large inventory of
aircrafts and offer many flight availabilities. They are able to use economies of scale to
effectively provide flexibility to travelers. The existing airline companies will capitalize
on their economies of scale as a competitive advantage and entice travelers with their
low-cost fares for the same service. This is why in the airline industry many companies
seek to gain strategic alliances with other companies. Forming strategic alliances allows
companies to add new routes and increase sales revenue, without substantially increasing
their capital investment. An example of this is the joint venture agreement between Delta
Air lines and Virgin Atlantic Airways Ltd. This agreement allowed them to form a “fully
integrated joint venture that will operate on a “metal neutral” basis with both airlines
sharing the costs and revenues, from all joint venture flights” (Delta Air Lines, 2012).
This agreement will allow these two airlines to provide a seamless network between
North America and the U.K. for their customers. These alliances have changed the
dynamic of the industry.
Another barrier to entry into this industry is the extremely high capital
requirements. It takes a large amount of initial capital to buy inventory of large
commercial aircrafts. However, it is not just the initial capital that is crucial; it is also the
steady capital needed to maintain these aircrafts. “Domestic carriers spent $11.6 billion
3
last year on capital improvements. Over the past five years U.S. airlines have retired
nearly 1,300 planes” (Mayerowitz, 2014). This is substantial evidence of the financial
intensity associated with entry into this industry.
Another barrier to entry is government policy. Government policy in the past
played a much larger role, how ...
Jet Blue
JetBlue Airlines is a low-cost airline founded in 1998 that focuses on point-to-point travel between major metropolitan areas. It uses innovative strategies like leather seats instead of cloth, personal televisions, and secondary airports to reduce costs. JetBlue faces external threats like rising fuel prices and competition from major carriers, but maintains a strong brand through high customer satisfaction. The document analyzes JetBlue's business strategies, strengths, weaknesses and recommends expanding internationally and into new domestic markets to continue its success.
Case Study Topic Handling a Public RelationsPublicity CrisisA.docx
Case Study Topic: Handling a Public Relations/Publicity Crisis
As mentioned in class, Marketing/PR Departments at companies of all sizes are faced with publicity crisis on a regular basis. Many appear in case studies like those we covered in class. Cyber attacks, product recalls, product malfunctions, etc. How companies respond to adversity is critical to their success in overcoming the crisis as well as to their long term image to their public (customers, employees, stockholders, community, etc.).
For this final case study, students are to select a company that has been in the news recently for dealing with a publicity crisis related to their company/organization. Some examples include: Cyber security issues at companies like Chili’s, Yahoo, Target, Michaels, EBay, Spotify, PF Changs, etc., videotaped footage of United Airlines security dragging a passenger off of one of their planes,Tesla’s self-driving car that was involved in a fatal crash or a basketball game brawl at a recent NCAA game.
Some questions/comments you may want to consider are:
· Describe the publicity issue that the company you selected had to go through. How did they address the issue? In your opinion, what did they do right? What did they do wrong?
· What ramifications happened as a result of the negative publicity?
· How much damage (financial, employees, customers) did this PR issue cause?
· What was the SWOT for the company before the PR issue?
· What was the SWOT of the company after the PR issue?
· Should customers be weary of shopping/doing business with this company post PR issue?
· What do you recommend the company do now (post PR issue) from a public relations standpoint?
Approach this case study in the same way as the case studies you have done in class. While there is no universal way to write a case study, make sure you cover the basics of a case study including:
1. Brief background/Situational Analysis of the company
2. Problem Statement/Key Issues
3. Competitive Situation/SWOT
4. Alternatives/Options
5. Recommendations
A couple of paragraphs on each topic should suffice with the major emphasis placed on what you’d recommend they do from a marketing perspective.
UNITED AIRLINES BAD WEEK COST BUFFETT AND OTHER INVESTORS MILLIONS
Background
Although each airline is structured differently, and it is difficult to assess and quantify the performance of an entire airline, Delta Airlines, and the United airlines have stayed in a steadfast competition for the last 5 years. In the year 2014, United airlines was seen lacking behind Delta airlines and was struggling to keep up with the pace, however, in the last 3 years, airlines have become a strong competitor for Delta airlines where the competition can be seen side to side. The United Airlines is the world's third-largest airline and has gained significant value in the last years, where Warren Buffett is considered the largest investor for the airlines. One of the most crucial and critical part of m.
Case Study Topic Handling a Public RelationsPublicity CrisisA.docx
Case Study Topic: Handling a Public Relations/Publicity Crisis
As mentioned in class, Marketing/PR Departments at companies of all sizes are faced with publicity crisis on a regular basis. Many appear in case studies like those we covered in class. Cyber attacks, product recalls, product malfunctions, etc. How companies respond to adversity is critical to their success in overcoming the crisis as well as to their long term image to their public (customers, employees, stockholders, community, etc.).
For this final case study, students are to select a company that has been in the news recently for dealing with a publicity crisis related to their company/organization. Some examples include: Cyber security issues at companies like Chili’s, Yahoo, Target, Michaels, EBay, Spotify, PF Changs, etc., videotaped footage of United Airlines security dragging a passenger off of one of their planes,Tesla’s self-driving car that was involved in a fatal crash or a basketball game brawl at a recent NCAA game.
Some questions/comments you may want to consider are:
· Describe the publicity issue that the company you selected had to go through. How did they address the issue? In your opinion, what did they do right? What did they do wrong?
· What ramifications happened as a result of the negative publicity?
· How much damage (financial, employees, customers) did this PR issue cause?
· What was the SWOT for the company before the PR issue?
· What was the SWOT of the company after the PR issue?
· Should customers be weary of shopping/doing business with this company post PR issue?
· What do you recommend the company do now (post PR issue) from a public relations standpoint?
Approach this case study in the same way as the case studies you have done in class. While there is no universal way to write a case study, make sure you cover the basics of a case study including:
1. Brief background/Situational Analysis of the company
2. Problem Statement/Key Issues
3. Competitive Situation/SWOT
4. Alternatives/Options
5. Recommendations
A couple of paragraphs on each topic should suffice with the major emphasis placed on what you’d recommend they do from a marketing perspective.
UNITED AIRLINES BAD WEEK COST BUFFETT AND OTHER INVESTORS MILLIONS
Background
Although each airline is structured differently, and it is difficult to assess and quantify the performance of an entire airline, Delta Airlines, and the United airlines have stayed in a steadfast competition for the last 5 years. In the year 2014, United airlines was seen lacking behind Delta airlines and was struggling to keep up with the pace, however, in the last 3 years, airlines have become a strong competitor for Delta airlines where the competition can be seen side to side. The United Airlines is the world's third-largest airline and has gained significant value in the last years, where Warren Buffett is considered the largest investor for the airlines. One of the most crucial and critical part of m.
Imc 615-final Creative Strategy & Execution for American Airlines
American Airlines was founded in 1930 and has since grown to become the 3rd largest airline in the US. It underwent bankruptcy in 2011 due to financial losses from the 9/11 terrorist attacks and rising fuel costs, but merged with US Airways in 2013. The summary aims to convince millennials and Gen X business travelers that American Airlines offers a comfortable and productive travel experience through an energetic, hopeful advertising campaign that appeals to all senses and creates a positive brand association. The tone should empower flyers and convey that flying American is only the beginning of their ability to make a difference through their work.
Jet blue airlines power point
JetBlue was founded in 1999 with a mission to bring humanity back to air travel. Over the next decade, JetBlue grew rapidly by focusing on point-to-point routes rather than hubs, offering amenities like satellite TV and extra legroom, and implementing technology like online booking. By 2011, JetBlue had partnered with other airlines to expand its international routes while continuing to prioritize low costs, high customer satisfaction, and a strong brand.
Read Case 10 Southwest Airlines. Answer questions 1-4 in a three.docx
Read Case 10: Southwest Airlines. Answer questions 1-4 in a three to five page APA style paper, and supported with the concepts outlined in your text and from your previous classes.
1. Describe the current state of the airline industry and analyze what an airline can do to be successful in the current industry climate.
2. Perform a SWOT analysis for Southwest Airlines.
3. Assess the competitive position of Southwest Airlines by completing a competitor profile for Southwest airlines and at least two of its major competitors.
4. What alternatives does Southwest Airlines face to address the problem of declining financial performance?
Southwest Airlines 2008
1 In 2008, Southwest Airlines (Southwest), the once scrappy underdog in the U.S. airline industry, carried more domestic passengers than any other U.S. airline. The company, unlike all of its major competitors, had been consistently profitable for decades and had weathered recessions, energy crises, and the September 11 terrorist attacks. In the first quarter of 2008, the company was profitable and experienced record first quarter revenue and a record pas- senger load factor (percentage of available seats sold). However, the earnings release made it clear that the “threat of volatile and unprecedented jet fuel prices” was a major issue that threatened future growth. Operating expenses were rising, and Southwest announced that it would cut 2009 growth in available seats to less than 3%. Over the previous decade, growth had been about 5–10% a year. This cut in planned growth was consistent with previous responses to difficult environments. An insight into Southwest’s operating philosophy can be found in the company’s 2001 Annual Report:
Southwest was well poised, financially, to withstand the potentially devastating hammer blow of September 11. Why? Because for several decades our leadership philosophy has been: We manage in good times so that our Company and our People can be job secure and prosper through bad times. . . . Once again, after September 11, our philosophy of managing in good times so as to do well in bad times proved a marvelous prophylactic for our Employees and our Shareholders.
THE U.S. AIRLINE INDUSTRY
The U.S. commercial airline industry was permanently altered in October 1978 when Presi- dent Carter signed the Airline Deregulation Act. Before deregulation, the Civil Aeronautics Board regulated airline route entry and exit, passenger fares, mergers and acquisitions, aattract and retain the world’s top talent have combined to create a combination of path-dependent resources that are very difficult for even the wealthiest software and Internet companies worldwide to easily emulate, acquire, or accelerate. It will take years for any competitor to develop the expertise, infrastructure, reputation, and capabilities to compete effectively with Google. Coca-Cola’s brand name, Gerber Baby Food’s reputation for quality, and Steinway’s exper- tise in piano manufacture would ta ...
Southwest Brand Audit Ppt 12/14/11
This is a recent brand audit some classmates and I did on Southwest. It\'s always interesting to dig into a brand you know and respect. We found some interesting insights about where the airline has been and where they are going.
Similar to Southwest Airlines (20)
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TB0333 Rev. 032017Copyright © 2017 Thunderbird School o.docx
TB0333 Rev. 032017Copyright © 2017 Thunderbird School o.docx
TB0333 Rev. 032017Copyright © 2017 Thunderbird School o.docx
Continental Company Analysis and Generation of New Solutions
Continental Company Analysis and Generation of New Solutions
1 The Commercial Airline Industry October 17t.docx
1 The Commercial Airline Industry October 17t.docx
Case Study Topic Handling a Public RelationsPublicity CrisisA.docx
Case Study Topic Handling a Public RelationsPublicity CrisisA.docx
Case Study Topic Handling a Public RelationsPublicity CrisisA.docx
Case Study Topic Handling a Public RelationsPublicity CrisisA.docx
Imc 615-final Creative Strategy & Execution for American Airlines
Imc 615-final Creative Strategy & Execution for American Airlines
Read Case 10 Southwest Airlines. Answer questions 1-4 in a three.docx
Read Case 10 Southwest Airlines. Answer questions 1-4 in a three.docx
Southwest Airlines
- 1. Rachel Marr Andrew Mullis Brett Sledge Ethan Witty
- 2. Southwest Airlines Major U.S. airline Founded in 1967 Headquarters in Dallas, TX Officially Southwest Airlines in 1971 Current CEO Gary Kelly
- 3. Cont. Ticker symbol is LUV Current share price $40.50 (12/2/14) Industry: Regional Airlines Competitors include: American Airlines, Delta, JetBlue, Regional Airlines
- 5. Possible issues Government regulations on plane maintenance (currently happening) Competition with other airlines on prices Fuel pricing in the future (had a future with fuel price’s set)
- 7. Rivalry High rivalry Many competitors in the industry Direct competitors include: Delta, United Continental, American Airlines, US Airways, JetBlue, Allegiant, AirTran
- 8. Threats to Entry Moderate Costs to enter can be high Relatively easy for companies to emerge with similar business model Low price and customer service strategy
- 9. Supplier Power High Minimal airplane suppliers (Airbus and Boeing) Cost of fuel fluctuates (can change at any given time)
- 10. Buyer Power High Since the recession & terrorist attacks, consumers have power Majority of airline consumers are price sensitive Various airlines to choose from
- 11. Threat of Substitutes Low Car, Train, Boat are the only close substitutes None of these are quite as fast as an airplane Currently, no real substitutes
- 12. Changes in Airline Industry 3 major trends affecting airline industry Oil prices Airbus vs. Boeing Increase in international flights
- 13. Oil Prices OPEC’s not cutting production Jet fuel price down 18% Fuel 1/3 of airline costs Drop in fuel prices + increase air travel = strong pricing power
- 15. Airbus vs. Boeing High cost, high service (Delta, United, American Airlines) switching to Airbus Low cost, low service (Alaska Airlines, JetBlue, Southwest) remaining Boeing customers Boeing losing interest to Airbus; shares fell 3.5% this year Airbus edged out Boeing in 2013 market share “In each category, the customer tends to select the slightly bigger aircraft.” – Fabrice Bregier
- 17. International Flights Airlines adding international flights American Air & Delta: Philadelphia to London (2014) Delta & Virgin expanding partnership between US & UK (2015) United: New York to Italy, Chicago to Dublin, 2nd Washington to Paris (Summer 2015) Southwest focusing on Latin America (July 2014-?) United expanding in Pacific Market (2014-?) Asia-Pacific expected to be growth engine in next 2 decades
- 19. Impacts on Southwest Oil Prices: variable, unpredictable, equal effect for industry Airbus vs. Boeing: no change, separated by strategic groups International flights: loss, future in Asia-Pacific, Southwest expanding in Latin America Rewards programs: gain, customers switching to Southwest
- 20. Major Threats? Threats effect Southwest similarly to other airlines in same strategic group/industry Similar adaptations to threats, no major loser or benefactor No major threats
- 21. Recommendations Southwest is dominating in industry To remain having a competitive advantage, they will need to change as the market changes Partnering with international carriers to enhance global reach (For example: LaGuardia and LAX) Southwest should also consider acquisition of rival firms to capture market share
- 22. Questions?