Southwest Airlines
A Basic Description of the Airline Industry Industry - The nature of the service The Airline Industry is a service industry but due to all the equipment and facilities involved in transportation, it is easy to lose sight of that fact. Airlines perform a service for their customers-transporting them and their belongings (or their products, in the case of cargo customers) from one given point to another for an agreed price. The objective is to provide a service at a price that people are willing to pay and to keep costs below that price so that a profit can be made. Industry - Information about Customers and Channels of Distribution There are several types of airlines, defined by the type of service they offer, annual revenues and the type of aircraft they use. All federal safety requirements are pegged to aircraft size. Major Airlines earning revenues of $1 billion or more annually in scheduled service. They generally provide nationwide and in some cases worldwide service. There were 12 major U.S. airlines in 1997: Delta, United, American U.S. Airways, Southwest, Northwest, Continental, Trans World, American West, Alaska, Simmons, and Reno. National carriers are scheduled airlines with annual rev . . .
That will lead to more air service, more competition, and lower fares on many routes Industry - Adoption of New Governmental Regulations Affecting the Industry Among the functions shifted to other parts, the government was the responsibility for awarding landing rights and other privileges in foreign countries to U. Southwest was able to negotiate a compromise called the Wright Amendment, that allowed flights from Love Field to the four states contiguous to Texas. Airlines through the years have earned a net profit between one and two percent compared to an average of five percent for U. These systems help airlines and travel agents keep track of fare and service changes, which occur much more rapidly today than they did when the government controlled such things. SWA – Characteristics – culture, size in sales, number of employees, total assets, geographical locations, age, etc. Thin Profit Margins The bottom line result of all of this is razor thin profits, even in the best of times. The peaks and valleys in travel patterns result in airline revenue also rises and falls significantly through the course of the year. Threats in the Industry Industry – Entry of Lower-Cost Foreign Competitors International markets hold the greatest potential for growth and this can become very attractive to potential foreign investors, where regulations maybe less stringent than U. Dallas Love Field, where Southwest began, is close to downtown Dallas, could not geographically expand at the very time when air traffic was increasing. International markets, due to the expansion of world trade and rapid economic growth , are predicted to have great growth potential. Like travel agents, freight forwarders are an independent sales force for airline services, in their case working for shippers. 1992 infiltrated Cleveland, Ohio and began offering 11 flights per day. United, the market leader, quit flying the San Diego-Sacramento and Ontario-Oakland routes where Southwest had rapidly built up service.
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