Southwest Airlines has been making changes over the past few years that helped them become the largest low-cost carrier in the United States. Most other airlines have been struggling to make it through this economy, but Southwest has found a way to thrive. The airline has dropped their prices and eliminated fees for extras that have allowed them to fill up most flights. One cost they continue to struggle with is offsetting the increasing fuel prices. This has caused some airlines to merge or sell the company to competitors. Introduction:
This document will be using Porter’s Five Forces Model and a Political, Economic, Social, and Technological (PEST) analysis to conduct an external analysis on Southwest Airlines. Porter’s Five Forces can be used to review the competition within the industry and assess the competitiveness of the airline industry. Americans have preferred air transportation over anything else because it is time saving and cost-effective. Some countries use railroads to get around, but the United States is not efficient with trains and has become a very costly way to travel. Airlines have been competing with each other and most chose a certain path of pleasing customers. Some have chosen low fares while others try to win customers with luxury. No matter the path, Southwest Airlines has been successful in standing out from its competitors. Porter’s Five Forces:
Threats of Entry (low)- There are many airlines to compete with but Southwest Airlines has proved they can compete with them with their lower prices and no baggage fee. JetBlue is an airline company that started up operations in 2000 and has been steadily grown in the United States. They have cheap flights just like Southwest which kind of makes them a rival. The only reason why they are not labeled as a threat is because they do not have as much coverage as Southwest. They have only been around for twelve years while Southwest has been around since the...
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