Southwest Airlines

I. Environmental Factors Affecting the Airline Industry

A. Social Factors

Opportunities

1. An increasing number of people are traveling during peak periods such as on holidays.#

2. The average age of U.S. adult travelers rose five years, from 39 to 44, in 2010.#

3. More baby boomers are traveling.#

4. Travel spending by people in their 20s to mid-30s rose 20% in 2010.#

5. Travelers are more disciplined in their spending behavior.#

a. Every major purchase is heavily researched and considered.

6. Many consumers want the option to purchase airline tickets through their mobile devices.#

Threats

1. Fewer people are traveling during non-peak periods.#

2. Airline customer satisfaction has declined after two years of improvement.#

3. Today’s travelers are less interested in brand loyalty.#

4. Invasive pat-downs for passengers who refuse to go through certain security lanes and X-ray machines have generated a nationwide outcry.#

5. Many travelers are using social media to express their dissatisfaction with their air travel experiences.#

6. Environmental activists have complained over the carbon dioxide emissions of airlines.#

B. Economic Factors

Opportunities

1. The 5 major players in the airline domestic market are:#

a. Delta Airlines (16.3% market share)

b. United Airlines (15.6% market share)

c. Southwest Airlines (15.0% market share)

d. American Airlines (12.9% market share)

e. US Airways (8.1% market share)

2. The barriers to entry are high because the airline industry requires a lot of capital to enter the market and operate effectively.

3. The threat of substitutes in the airline industry is low because other substitutes can’t offer the same speed of transportation as an airplane.

a. The substitutes are cars, trains, and buses.

4. The top 10 US airlines earned $4.0 billion in 2011 and $3.7 billion in 2010.#

a. The results are positive after the top 10 airlines lost $5 billion in 2009 and $4 billion in 2008.

b. The...