From the Southwest Airline case which it’s been given to analyse the external environment and internal environment, does southwest Airline can survive in the industry, and does the airline industy attractive?

External Analysis

PEST Analysis

Political Conditions - Governmental regulations regarding airlines have been very strict in the areas of passenger security and fuel . There has been an additional burden on the airline industry due to both these factors . In the first case , the problem was the regulations of the government in relation to the older airplanes . In the later case , the fuel costs were seen to be pretty erratic over the years , which made cost estimations difficult

Economic Conditions - United States has been through a severe recession in early 1980s , which

made the operations of airlines to be very unprofitable . Though after this period there was a period of high economic growth , bringing profits to the entire airline industry however sustaining this became difficult due to increasing debts

Social Conditions - Due to increasingly risky conditions in the conditions , the insurance costs for the passengers were at an all time high . In addition , the airlines also had to spend additional amount on providing extra security measures to their passengers

Technological Conditions - While there were many airlines entering the market , there was no corresponding increase in the purchase of airplanes . This could be partly attributed to the fact that the many of the airlines sued to buy the airplanes from companies that went bankrupt

5 Forces (bring some elements from the PEST

Threat of new entrants - Airline industry is essentially perceived to be very lucrative though expensive . Hence , the number of new entrants is less , but the companies that enter usually have a cost-mitigation plan For Southwest , this hold true from one or two main airlines like JetBlue . Their products and pricings are almost similar , and in addition JetBlue offers additional frills to its customers . The other new entrants like WestPac and CALite were huge disasters

Bargaining Power of Suppliers - Southwest usually depends on its staff for most of its tasks , including the ticketing hence reducing the additional costs of agents that would make the process much more expensive

Bargaining Power of Buyers - Airlines usually divide their fare into many segments and make most of their efforts in selling the highest priced segments . Contrary to this the low-priced no-frills airlines like SouthWest provide single slab tickets attracting all types of customers towards them especially in the recession times as mentioned in the previous section

Threats of Substitute products - Many major airlines like United had also tried imitating the model of Southwest are were not successful This was because the model had to be consistent with their existing organizational structure and not a separate rip-off

Rivalry among competing firms - Of all the factors the one that would have really affected Southwest was rivalry . The fellow airlines like Braniff and Texas International did their level best to stop Southwest from entering the market , but were unsuccessful in their attempts . All of these airlines were operating hub-and-spoke systems for their flights which Southwest changes when it brought the point-to-point systems in the market

Key Success Factor - The main factor in the success of Southwest was its...