Five Force Analysis of Southwest Airline Essay

1. The bane of new entrants.In terms of economies of scale, sou-west fleet grew to 537 Boeing 737 aircraft providing value to 64 cities in 32 states throughout the United States, with 397 metropolis pairs being served nonstop, by the end of 2008, thus has reached sufficient economies of scale. And souwest Airline gains its hail advantage through the implementation of affordable strategy. It not only flew planes point-to-pointshort-haul flights bypassing the pricy hub-and-spoke operations besides likewise chose less popular, less congested airports to bring home the bacon quicker turnarounds which enabled the air passage to operate with fewer planes and gate facilities than would early(a)wise have been necessary. be consciousness has been a part of its culture. culture people for technical skills is possible but imitating SWA culture is out of question.The noble sign investments and fixed appeals to enter the airway industry makes it difficult to compete financially with profitable southwesterly for entrants. When comp ared with key competitor, southwesterly Airline got the orotund-mouthedst net income(TTM) and EPS(TTM) in 2009(Exhibit 5). Since Southwest Airline was the starting line major airline to introduce ticketless pass and one of the first to put up a meshwork site and offer online booking, it has won the full(prenominal) harvest-home antitheticaliation. As a open of junior-grade- appeal strategy, SWA has set up its reputation and won a big(p) number of loyal customers. However, SWA has no finicky control over distribution channels. On the other hand, since the publication of in 1978, in that respect is low barrier to set up airline company in the US.2.The affright of substitutes.Southwest Airline focuses on the short-haul flight, so customers are likely to switch to other transportation means, such as train. And the low-cost airline has been a emerging industry. in that respect are more choices for customer which post s high threat for SWA. To reduce the threat, Southwest provides low price or time-optimized tickets, good service to their customers. Price for trains, or gasoline cost for self-driving are comparable to the price of Southwest ticket for the same route, not untold cheaper. Moreover, the switching costs for customers to train or car for the Southwest routes requires more travel times,cause a lot of inconvenience.The company so farcreated the Southwest effect, an explosion in the number of people traveling by plane, including many who would have gone by car before.3.Rivalry among existing firms.There are many new airline with setback strategies with Southwest Airline. They offered far more agreeable service, such as leather place and in-flight entertainment systems, for almost the same fare.With the ontogenesis of living standard, people prefer soothe to low-cost. The loyalty of Southwests customers forget be questioned. And due to the expensive and passing specialized equipm ents, the high barriers for exit leads to the whitened competition.4.Bargaining power of buyers.Travel agents buy large volumes, in that locations a dousing of buyers, indeed their switching to a different supplier might have bigger impact on the profits. As for somebody buyers have almost no bullocky bargain power. And switching to an alternative product is relatively simple and is not link up to high costs. The airline is not of strategical importance for the customer because there are many other short outdistance transportation means.5.Bargaining power of suppliers.The market is predominate by a few large airplane suppliers including Southwest Airline. As for the catering, feed services and other indirect materials, there are many fragmented sources and therefore their power is of almost no significance. The cost of switching from Boeing 737 to Airbus A320 is very high. Apart from purchase price, the company should pay for the training of employees and the livelihood of new airplanes. The suppliers customers are fragmented, so their bargaining power is low.