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Southwest airlines’ PORTER Five Forces
Transcript of Southwest airlines’ PORTER Five Forces
Southwest’s direct competitors are the seven major low-carriers operating domestically with similar services, such as
Delta Air Lines (DAL)
United Continental Holdings (UAL)
American Airlines (AMR)
US Airways Group (LCC)
JetBlue Airways (JBLU)
Allegiant Travel (ALGT)
AirTran Holdings (AAI)
Threat of New Entrants-MODERATE
-New low cost carriers Airline companies could enter this industry and attract passengers
-Outstanding services and low cost strategy
Bargaining power of
-Planes suppliers: Boeing and Airbus
-Fuel : unpredictable and extremely volatile
-An embargo of gas from the Middle East, as with the 1973 Oil Crisis
Bargaining power of buyer-HIGH
-Most of the low cost carriers offers similar services and limited differentiation
more amenities at no additional charge
Alternative another vehicle, like car, train, Ship but not significant compete with airplane
Threat of Substitute Products-LOW
Airline Industry Market Share in U.S.
Southwest Airline Strategy
-No baggage transfers, first class seating, an leather seat
Limited on plane service
-No meals service, live entertainment
-the boarding passes, and self-service boarding pass kiosks
No assigned seating
-reduced boarding time
Single aircraft type
-Using Boeing 737 for all its flight
-Keep its training costs low and manpower
-Allow for quick turnaround
Planes are flight in the air for 12 hours per day
-Compare to the rival airline, they flight 8hours
-Can flight more times
CEO Herb Kelleher
CEO Herb Kelleher
-“Hire for attitude and train for skills”
-NO HR department, but People Department
-Penchant for laughter and fun
-Celebration: Spirit party, cultural party…
-Activities: Gong show, talent show...
-Lower wages V.S. Competitors
-NO fired employees in financial crises
Key Success Factors
Key Success Factors
Main short flights, no long flights and international flights
--Give each employee to provide a stable work to make money
--become company to family of love for everyone.
Lower fare and Convenience
--Low cost make the ticket prices can compete with the coach
--Every hour has flights
--less flight delays
--no need find seat number, save boarding time
--The main operational second line airports
--more fights make more profit
--open new route
Do streamlining and automation
--use IT to achieve operating efficiencics
Dose "LUV" last
-Founded in 1967
-3400 flights per day
-Run a profit since 1973
Low-cost/ Low-fare Airline
-Attract passengers by flying convenient schedules,
arrive the destinations on time.
-Point to point system.
-Charge fares competitively low.
-Target market: Business travelers and Price-sensitive leisure travelers.
-If it matters to you, it matters to us.
-Excellent customer satisfaction ratings.
-One of the 10 safest airlines in the world in 2012.
-Being the market share leader in domestic air travel.
Point to Point scheduling
Operating of only one type of aircraft(Boeing 737)
25mins average turn around time.
Good strategies in expanding the business.
-No establish alliances with other airlines.
-No international flights.
A big number of passengers welcome low prices.
The development of technology to create the IT innovation.
-Rising costs.(labor, fuel.)
-Competitors provide the similar services.
-Operating the other type of Boeing.
-Still focus on low-cost carrier.
May ally with other airlines.
-Keep promoting to attract the new customers.
-Stabilizing the services.
-Try to cut cost by finding some new suppliers.
- Create “barriers to entry” with
implement innovative strategies.