Analysis Of The South West Airlines

compendium Of The S appearh West skywaysThe South west skyways argon part of the breed duct persistence in U.S.A and are a impression cost air lane located in Dallas U.S.A.An external analysis of the environment in the air lane industry was carried out through a PEST analysis and the 5 forces of the Porters model and the below conclusions were reached.Political environment-the policies that governments swallow come up with. For congressman the UK government and environmental activists that aviation degrades the environment greatly and should in that respectfore be controlled. A government is a rattling index fingerful entity and accordingly it could shell a threat to air duct businesss if it decided to impose regulatory practices on air lanes.Limitations regarding the basis and legal obligations of the airline may ca-ca it backbreaking for the airline.S bumning the political environment in this case, we find that south west airlines sought to make use of the o pportunity created by the airline Deregulation Act passed by the U.S congress in 1978.this law permitted interstate flights. But Southwests attempt to neat an inter-state airline soon faced political obstacles. Southwest wanted to work all its interstate flights from Love Field Airport which was genuinely jam to downtown Dallas. On the other hand, all the other airlines operated from Dallas Fort price Airport, which was far away from the main city. Rival airlines fearing that South west would hold back a larger share of passengers, tried to use their political act to ban operation of flights from Love Field, Congressman Jim wright tried to pass this law. tender environment. These have positively preserveed the industry in that with the introduction of to a greater extent than and more airlines, even divvy up from the middle-class can now get off by air. Beyond that, there has too been more job humans through the establishment of these airlines. An important aspect of t he hearty environment concerns the determine consumers hold. Values mainly revolve around a number of primordial concerns regarding time, quality, total environment, financial conditions and diversity. The ultimate taste of a business is its social relevance. When it entered the airline industry, the social environment for air passengers was discouraging, the fares were too high, flight schedules were non convenient for passengers and the time required for extendling from the city , to park and lease off from the airport was lengthy and tiring. The aptitude of managers of south-west airlines is seen whereby they refuse to die their flight operations from Love Field. This was a clear indication that they were discover the social environment and building their organization against this. With this recognition of the social environment, the southwestward Airlines gained popularity among the citizens and thus attracted more customers.Economic environment. These can take several dimensions, valet de chambre-class how the industries that airlines depend on affect airlines and how the airlines are directly affected by a runrys economy. The changes in the economy have had a tremendous rear on the airline industry. Another thing that the economy is affecting the airline industry is the competing airlines. The bigger airlines can afford lower fares which make it hard for the smaller airlines to compete. Different airlines have plans to expand but will not be able to until the cost of open fire is under control.Fuel price hauls and fluctuations are a major reason for the Southwest for not incurring more profitable operations. (Southwest counters this by strict financial spending on fuel i-e fuel-hedging) For the low carriers who allow advanced booking, they will need to work on a plan to avoid bankruptcy. This will make the airline industry continue to boost prices referable to the fact that oil prices are anticipate to continue rising due to the supply.T raveling by air is twain elastic and inelastic depending on whom it is that is traveling. If a family is planning a catch just to take a vacation and the price of an airline tag is extremely high, more than likely they will decide to wait on the trip until the prices are lower. This shows that the airline industry in considered elastic. However, if a businessman needs to be at a seminar across the country by the next day, he will need an airline slate heedless of the cost. In this example, the airline industry would be considered inelastic because it is a necessity.The present-day(prenominal) market has a big part in the supply and look at in the airline industry. For represent, with the price of oil rapidly increasing, the cost of an airline ticket is also increasing and the demand for leisure travel is decreasing. later the bombing of the World Trade Centre on September 9th 2001, people were afraid there would be another terrorist attack involving a categorical and the de mand decreased. Another factor in the cost of an airline ticket is the date it is purchased. If there is an emergency and near whizz purchases a ticket shutting to the departure date, even though there are unsold pose available the cost will increase.Technological environment. This basically means that some technological advancement has proven, and may in future prove to affect the airline industry negatively thus a decrease in the air travel demand. A good instance would be picture show conferencing which reduces the need for people to eer travel. If not planned for properly, an airline could rear greatly from ignorance to technology. Social networking sites like Facebook and Skype allow for people around the world to share information they may not have been able to before. bingle can chat with a relative and avoiding travelling by air throughout the world.The 5 forces of Porters modelThreats of new entrants. on that point has been a neer ending expansion of the aviation industry with new airlines coming up e genuinely day. Airline managers should therefore ensure that they are prepared and have a strategy on how to deal with new entrants into the industry. This can be clearly portrayed by the way Braniff and Texas international Airlines reacted to the entry of a new airline, Southwest Airlines, they even decided to work together in a bid to destroy the airline even before it started their operations. This would go to show that the treat of new entrants in the airline industry is very high.Availability of substitutes. They exist because there is more than one way of doing anything. For instance when travelling, one can use vehicles, trains bicycles, airplanes, ship and so forth. Apart from alternate(a) methods of transport, technology has gifted us with the gift to do a lot of things without moving. The ease of substitution in the airline industry is surprisingly very high the greatest contribution being from technological advancement. This has led to a drop in the demand for air travel causing airlines to constantly register losses. The ease of substitution in the Airline industry is very high since other alternatives have come up mostly due to technological developments.Degree of rivalry among competitors. How rivalrous is the industry? Is there a dominant airline and many other small airlines or are there many powerful airlines how many other airlines are there in the industry. These are some of the questions that are raised under competition. If theres one dominant airline then the degree of competition is quite low in the industry. The airline industry in the USA is very warring and has a lot of rivalry going on. In the case of southwest airlines, its major competitors, Texas International and Braniff Airlines even joined hands in a bid to destroy the southwest airlines even before they started operations. This goes to illustrate how competitive the airline industry in USA can get, the competitors were threatened by an airline that hadnt even started operations.Bargaining power of suppliers. The talk terms power of suppliers is basically quite low in the industry in that, much bargaining doesnt take place. Suppliers are mostly big shot aviation companies and can only compromise prices with airlines so that during their low period, they are able to negotiate prices with their buyers. It may not be exactly bargaining but it counts for something. And therefore the bargaining power of suppliers will be considered to be low.Bargaining power of customers. The airline industry rarely allows room for customer bargaining, you can any afford to travel by air or not and with more and more new airlines coming up, almost all social classes are catered for. South airlines however havent classified their passengers which reduces discrimination. Through observing the social environment, the Airline has been able to cater for the diverse needs of the customers, this though does not count as bargaining power of the customers towards the airline. The bargaining power of customers in the airline industry is quite low compared to other industries.ConclusionAfter carrying out the PEST analysis and analysing the environment using the Porters Model the following conclusions were reached. at that place are threats and opportunities that affect the Southwest airlinesThreatsThe decreasing demand for air travelFuel price hauls and fluctuations.Terrorist activities make it more of a threat to travel.OpportunitiesThere are dummy up many national and international markets that are still untapped.There are many industrial opportunities for development in the airline industry.It can haul longer flights to cover more expansion.It can also tap the travel business option for the business class passengers, and strait private flights.It can get the latest technology, which would give it a advertize cost effective lead, as well as providing new serve and products.