Southwest Airlines is competing against other airline companies for customers. That is why it is essential that Southwest Airlines enforces strategies that allows them to outperform other airline companies. This gives them a competitive advantage, which is defined in the textbook as the achieved advantage over rivals when a company’s profitability is greater than the average profitability of firms in its industry. (Hill, Schilling, & Jones, 2017) The higher the profitability levels are of Southwest Airlines along with the higher the profit growth of Southwest Airlines when compared to other airline companies, will see if they have a competitive advantage over their rival competitors. In order to have high profitability levels than their competitors,
Jetstar would need to invest heavily in infrastructure and advertising. The other critical issue which could be a cause of failure in the international routes is “straddling”. Given the fact that the airline industry entry barriers are quite low for existing players, bigger airlines could easily copy the “Jetstar business model” and Jetstar would have to accordingly adapt its strategy through non profitable “positioning trade-offs” which could hurt its profitability in the long
Where an airport has significant market power incentive-based regulation is the only price regulation that will deliver efficiency gains. Airports usually have high credit ratings and can bear risk more easily than airlines. Regulation should be designed to facilitate this. Standards Poor passenger experience with check-in and security processes is another factor leading to a commoditization of the airline product and a low customer willingness to pay. Standards being introduced and proposed by the fast travel and checkpoint of the future programs and others could play an important role in improving passenger experience and willingness to
Competition is essential in any market as it avoids a high market concentration which consequently almost leads to higher ticket prices to be cheaper and always causes prices to increase and consumer surplus which is defined as the difference between the total amount that consumers are willing and able to pay for a good or service and the total amount that they actually pay to decrease. Economic issues arise in a massive merger like in the US Airways and American Airlines merger. The question that I will attempt to answer is whether or not the antitrust laws that were out in place by the US government were effective in avoiding a monopoly and gaining consumer welfare in the airline market. In January 2012 U.S. Airways Group expressed interest in merging with AMR Corporation. This merger would add 1.5 billion dollars in revenue, reduce competition in various cities and create one of the largest airlines in
They want more! Competition is at its peak and airports are realizing that they need to find more innovative and mind captivating ways of making sure that passengers continue to travel through them and airlines find it beneficial to create a partnership with them. The production concept was the first to be implemented; airports believed that if they had more airlines and inexpensive flights then more passengers would come. Hence, they placed more focus on airlines and getting them to bring in more fleets of aircraft and dropping fare prices. It was realized soon after that the concept was no longer working; thus, the product concept was introduced.
SWOT Analysis One strength of Southwest Airlines is the strong fleet base, which enhances the company ability to deliver services effectively. The airline has one of the biggest fleets of Boeing aircraft globally, with multiple models of the aircraft, which helps with the effectiveness of their services. Other strengths are the revenue-increase using point-to-point service strategy, and the low-price strategy, which helps to maintain the volume of the passengers. The point-to-point services save time in the form of direct flights and provides better asset utilization for the company. Southwest Airlines’ business model allows the lower priced flights by saving money on fuel at large hubs, and in short turnaround time.
The airline market is controlled by these suppliers. If EasyJet decide to purchase a new model of an airplane, it must use only this model of an airplane, because the cost of switching to another model by the same supplier would be very expensive. Nevertheless, if switching to an another supplier, the costs will be more expensive, because the company will need to retrain pilots as well as it will need to reorganize the whole supply chain for spare parts. Other important suppliers are airports. Because some LCCs try to avoid high fees from big airports, nevertheless EasyJet uses large airports, but it flies at off-peak times to reduce its
High Bargaining Power of Seller, as fuel suppliers essentially control the cost spent on each flight, and the only two suppliers of JetBlue (namely Airbus and Boeing) have a wide customer base, which makes JetBlue replaceable. High Threat from Substitutes since there are low switching costs and multiple airline companies available. Low Threat of New Entrants from high costs/capital required for entry, difficulty in differentiating, difficulty in building brand image and loyalty when competing against large airlines. High Rivalry Among Existing Competitors from the numerous existing competitors such as Delta, United, and American
Every successful company like Micheal Kors has expensive and luxurious products for the higher income and for the lower income, they offer affordable product that can still be consider as luxury. Go Pro needs to follow this methodology to resolve the lack of market and increase revenue. Go pro also has more pros rather than cons so; it will continue to hold itself up in this highly competitive
In addition, market share in this segment is fragmented, which is why it not that easy to snatch market share from existing employees. • Threat of substitute goods: Threat of substitute good is high in this industry. If a private company or government introduces any fast road transportation services in the United States, then traveling through airline can reduce. Air travel is somehow costlier than road transport. If the same kind of leisure will be provided in public transport with greater speed, then the share of airline industry can decline.