Extenal Analyisis Southwest Airlines

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The DEPEST analysis is a great way to understand the external factors which Southwest Airlines is dealing with. Firstly the demographical factor that influence strategies of Southwest Airlines. The aging population in the United States is a big issue. It is known that older people, does not prefer to travel by plane, not for the short or long-haul. They are still too conservative and rather take a bus, train or drive themselves to the places they want to be. Because Southwest Airlines is very customer orientated they are providing low costs and quick movement. This is more for the new generation, people who are also familiar with for example the internet. Everything is moving faster and as a shorter life cycle. The older people within the United States could find it too hard to deal with this. An economical factor that influence Southwest Airlines could be the economical crisis. This crisis is changing the value of money and the perception of customers. Also because of this crisis and because of the internet the customer can become too price sensitive. Because of the fact that labor cost are the highest costs Southwest Airlines has, they need to deal with this. In the economical crisis it is harder to motivate employees and to stimulate lower costs. Southwest Airlines offers a low service to the customer by not offering free beverages and meals, this is just an example that helps in providing such low costs. What about the political factors? In 2006 Southwest Airlines has the average flight of 622 miles and had a duration of 1.53 hours. This is what Kelleher, CEO of Southwest Airlines said: “We’re built for the short-haul markets, and we know that”. Kelleher also says that jumping into the one-thousand-plus miles is a way to deal with the changes in the federal ticket tax. This new tax system replaced a percentage tax with a tax that included a flat, per-segment fee, which hits low-fare carriers harder. Hereby it is shown that Southwest...
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