Risk Of Entry By Potential Competitors Essay

1409 Words Oct 23rd, 2016 6 Pages
Risk of entry by potential competitors. The airline industry is a revolving door for airlines. The question is not who the next competitor will be but when will the next competitor enter an already congested industry. While many established companies view the entry of potential competitors as a threat to their profitability, Southwest Airlines has superbly utilized economies of scale by fuel hedging and utilizing one aircraft type to keep airfares low. Southwest Airline’s passengers are brand loyal and would prefer to fly Southwest Airlines than any other airline. What also differentiates Southwest Airlines from other carriers, is the culture which has been embedded in the organization and in its employee’s. Southwest views the risk of entry by potential customers low and has maintained its profitable competitive advantage for over 45 years to prove it. Bargaining power of buyers. In the airline industry, buyers are individual passenger’s, shipping customers or aircraft leasing clients. The power of buyers relates to how simple it is for buyers to force prices either up or down (Hill & Jones, 2010). Southwest Airlines provides lower airline fares with open seating and two free checked bags. Delta Air Lines, Inc. and American Airlines offer customers more amenities for a higher price. Jet Blue offers different that other low-cost carriers don’t provide (Cederholm, T. 2014). Southwest Airlines has been able to manage the bargaining power of buyers by providing lower…

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