Southwest AirlinesExternal Environment

Ryan Taylor, Todd Rosenhagen, Dan Norton, & Wes Messing

Economy•Southwest Airlines will eliminate 57 existing flights that are not in high demand, so that they may adopt 40 new flights that are in higher demand.

•Although SWA is one of the few US Airlines that are consistently profitable, the slow economy is forcing them to drop their planned capacity growth from about 10% this year to about half that at 4-5%.

•Although Southwest Airlines is feeling the effects of the bad economy, they are still looking to expand by participating in an auction to buy Frontier Airlines.

Southwest Policies

• Screening and Identification• Baggage Allowance• Excess Baggage• Weight and Size Allowance• Liability• Claims• Conditional Acceptance

Technology•Southwest is currently in production with wireless internet throughout their planes

•The technology is expected to allow passengers the opportunity to access the Internet via laptops, iPhones, and Wi-Fi enabled smart phones

•As part of its offering to passengers, Southwest has partnered with Yahoo to create a homepage relevant to each flight, so passengers can access destination information while also tracking the flight’s progress.

Issues Facing Southwest Airlines

•Rising Gas prices•Southwest has been growing about 8 percent a year by adding planes and serving more cities, but due to rising gas prices, they wont be seeing the revenues they’ve been accustomed to in the previous years

•The Economy• Our weakening economy has hurt travel demand and

undercut the airline’s ability to raise fares. In addition, Southwest’s costs are rising, making it extremely difficult to expand.

Major Competition

• Delta Airlines - Net loss of 8.922 Billion

• American Airlines - Net loss of 2.071 Billion

• United Airlines - Net loss of 5.348 Billion

• Continental Airlines - Net loss of 585 Million

• Southwest Airlines - Net income of 178 Million

Barriers to Entry into Airline Industry

• Very Expensive– Planes– Terminals– Staffing

• High Operating Costs - High cost of fuel- Maintenance of Airplanes

Other Competition

• Influence of Foreign Airlines

– Offering cheap flights in the US

– Raising standard of airlines

• Merging of Airlines

– Delta and Northwest

Substitutes & Compliments

• Other Modes of Transportation:– Personal Vehicles– Buses– Trains

• Hotels

• Rental Cars

• Vacations

Suppliers• Supplier Diversity Program• Jets– 544 Boeing 737s

• Jet Fuel– SolArc RightAngle (1.5 billion

gallons in 2008)

• Food/Beverages– Soda, Juice, & Water– Alcoholic Beverages– Pretzels, Peanuts, & Snacks

• Many others

CustomersThe Customer Is Always Right!

• May 2009: Flights on time, cabin clean and roomy, and service professional and courteous.

• March 2009: Another pleasant stress-free short flight by Southwest. Their 737's are so much more comfortable than United's CRJ-200s.

• July 2009: I don't care for this airline & will avoid them if at all possible.

• Feb 2009: Southwest does what it says - you know you will get a pleasant flight with a great fare.

Questions?

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