Airtran 5 Forces Analysis

Topics: Airline, Southwest Airlines, Low-cost carrier Pages: 2 (557 words) Published: July 28, 2012
AirTran 5 forces analysis
New Entrant
* The 1978 deregulation of the U.S. airline industry
* The increasing of fuel price and labor costs
* High competition
* Brand loyalty
The 1978 deregulation of the U.S. airline industry has attracted many new entries of low-cost airlines. However, as the competition in low-cost airline industry is very high, as well as the price of jet fuel and labor costs, many airline companies declared bankruptcy. Moreover, consumers start to have brand loyalty and are familiar with the existing airline companies. For these reasons, there is a high barrier entrant over new competitors. Rivalry

* Delta
* JetBlue
* Southwest
The competition among competitors is extremely intense as all Delta, JetBlue, Southwest and AirTran are major airlines listed by the U.S. Department of Transportation. Moreover, JetBlue, Southwest and AirTran are using the same strategy which is low-cost airline. Customers tend to look at the most attractive prices that are offered by each low-cost company. Therefore, the company has to make sure that their price and product are able to convince the customers to purchase and create a high switching cost. To conclude, there is a high bargaining power among competing firms. Customer

* Business and leisure travelers
* Smart travelers
Bargaining power of customers is relatively high towards the airline industry. As one of the mission statements of AirTran focuses on the service quality and the safety of the customers, AirTran is trying to create brand loyalty and increase customer satisfaction. Due to the fact that the competition environment is very intense, low-cost airline companies are competing in order to gain repeat business and satisfy their customers. AirTran needs to diversify their products as the company only offers eastern destinations. This may lead to a low switching cost for customers when they seek for western route destinations as well. Substitute

* Other low-cost...
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