Southwest Airlines Company and Industry Analysis Essay examples

1039 Words Apr 21st, 2012 5 Pages
Southwest Airlines is a major airline company operating in the United States. The company was founded in 1967 in Houston, Texas by Herb Kelleher and Rollin King. The company’s vision was a low-cost, no-frills airline that was safe, affordable, and fun. Out of that vision, and following and arduous inception, the company has become one of the largest U.S, airlines, getting more travelers to their destinations than any other U.S. airline, and making a profit while doing it. Southwest Airlines was founded and based out of Houston at a time when the city was seeing a growth in commercial and industrial business. The founders of Southwest Airlines believed there was a demand for convenient and consistent flights between large cities, …show more content…
Furthermore, through the company’s rigorous fuel hedging tactic, Southwest has saved billions of dollars in fuel costs while operating one type of airplane, which has simplified and improved the airline. All of the aforementioned factors have consistently contributed to lowering Southwest’s operating costs and increased its profitability. Competitor rivalry is a strong force, as there are a lot of similar sized competitors with little differentiation in products and customers are price sensitive. The threat from new entrants is weak due to the high startup costs and high competition that is already in the industry. The bargaining powers of substitutes are weak, traveling by trains and busses means more time than air travel. The bargaining power of buyers is high since the buyer switching cost is low and customers are price sensitive. Also, since customers can book tickets through websites like Expedia or Orbitz, which searches through all available flights and offers customized low prices. Suppliers have a strong bargaining power in the airline industry. In markets today, there is often a concept that price and value are inversely related. As part of its key success factors, Southwest Airlines sought to overcome this notion by focusing on adding worth in the form of exceptional

Related Documents