Case: _______Southwest Airlines 2002___________ Name____Kacey Kurtz__________________________
Southwest Airlines is currently competing in the airline industry. The company’s currency strategy is to carefully advertise its image so that consumers can clearly differentiate Southwest Airlines from other airlines. Southwest Airlines does this by being the only low fare, high frequency, short-haul, and point-to-point carrier in America. Southwest Airlines low fares creates brand equity, because consumers want low fares, and Southwest Airlines is one of the only major airlines that offers this attribute to consumers. Southwest Airlines was also the first airline to offer the frequent flyer program where flyers get credit for the number of trips taken and not the number of miles flown. Since Southwest offers low fares and short travel customers may see that flying is a better alternative than traveling in a car.
Some outside conditions that affected Southwest Airlines was deregulation which made the airline industry much more competitive. Everything dealing with air travel is regulated by the government now. Airlines operate in a highly competitive environment where fixed costs are very high and this made it one of the toughest industries to compete in without a lot of airlines going bankrupt. Fuel cost were outrageous that were out of airlines control. Airlines had to fund a lot more towards security since the 911 crisis to keep passengers protected and they also had to deal with a tremendous drop in airline demand from the 911 crisis.
There are five forces that have an impact on how attractive or unattractive an industry will be and they consist of rivalry among competitors, threat of new entrants, bargaining power of suppliers, bargaining power of buyers, and threat of substitute products. Rivalry among competitors is very high in the airline