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Southwest Essay Question

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Southwest airlines: essay questions

Southwest airlines: essay questions
QUESTION 1
HOW WOULD YOU CHARACTERIZE THE U.S. AIRLINE INDUSTRY IN THE EARLY 1990’S? I would characterize the U.S. airline industry in the early 1990’s as a steak being trimmed of all its fat, the economic climate created a financial calamity of bankruptcies and collapse by major airlines, which in turn created opportunity for smaller more efficient carriers with cost advantages to enter a near oligopoly industry. The economic distress the airlines industry encountered was spawned from recession and a doubling of fuel prices during the Gulf War in 1991. Fuel, the second largest cost to the industry, an uncontrollable cost that raised havoc on this industry, unveiled unforeseen opportunities that allowed new competitors to break through barriers of entry. As a result of this economic climate new carriers were formed with more cost effective business structures and strategies. They took advantage of the cheap supply of aircrafts and personnel grounded by major carriers from 1989 to 1993. The point-to-point route system used by these start-ups were significantly more economical than the spoke-and-hub route system used by the larger carriers, this led to more efficiency to a once inefficient industry.
QUESTION 2
HOW CAN THE “ECONOMICS” OF THE AIRLINE INDUSTRY BE USED TO EXPLAIN THE PERFOMANCE OF INDIVIDUAL AIRLINES AND THE INDUSTRY AS A WHOLE? The economics of the airlines industry has several underlying factors that contribute to the performance of an individual airlines and the industry as a whole. First off a majority of its cost structure are fixed. The larges cost, people, can be controlled to an extent with layoffs and tougher concessions, but this cost reduction strategy is not exactly public relations friendly. It is also heavily reliant on fuel ,which is an uncontrollable

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