Management

Southwest Airlines

Airline industry in America has experienced slow growth in the last decade as compared to the 1990s. However, it has remained to the most preferred means of transport especially by business individuals. The preference has been attributed to its cost effectiveness as well as its time saving features. The causes of slow growth in the airline industry can be traced back to 1978 when air transport was deregulated. Deregulation caused fares to stumble allowing many airline companies to enter into the industry. Deregulation effects could be understood by looking at the external environment of airline industry taking southwest Airlines As the case study (Cento, 2009).

Porter’s Five Forces Model

Competition

Southwest Airlines has three main competitors, namely: JetBlue Airlines, AMR, Inc and Delta Airlines. JetBlue Airlines is the newest Airline that has created stiff competition Southwest Airlines’ market. This company offers a single class service and flies to more than 20 U.S destinations as we as Puerto Rico. AMR, Inc has been dubbed as number one American carrier through its main subsidiary, American Airlines. It serves more than 160 Destinations in the Americas, the Pacific and Europe. Delta Airlines has been ranked the third American Airline. It flies to about 220 U.S destinations and more than 120 overseas (Cento, 2009). This shows that Southwest Airlines operates highly competitive ground.

Threat of new entrant

New entrants into market expect to gain market share from the market that has already been occupied by older firms. This threat does not affect established firms. The older established firms act as obstacles that prevent new firms from entering the market. Where such barriers are less significant, the threat is considered to be high. The airline industry has many barriers including heavy governmental regulation and its nature as a capital incentive. Other barriers to new entrants in the industry are brand identification as well as...