A Competition in the Airline Industry

The assessment of competitive forces in relation to the passenger airline industry in the United States is as follows:

Threat of New Entrants (Barriers to Entry): The barriers to access to the passenger airline industry in the United States are fairly high. The primary reason is the capital-intensive characteristic of the industry. Southwest Airlines 30 years ago and Jet Blue a few years ago, however, demonstrated that successful entry into the market is possible. The modern-day unstable state of the passenger airlines marketplace is a double-edged sword with respect to the threat of new entrants. Over a 1 hand, the dreadful performance of the full-service airlines offers opportunities for new, efficient carriers. On a other hand, however, the threats hanging over the industry act to deter the capital investment required to enter the industry.

Bargaining Power of Buyers: The bargaining power of shoppers in the passenger airline market in the United States is relatively strong. Competition does exist in the market in larger market areas. Public concerns more than terrorist threats to air travel safety and concerns more than to cost of air travel lead to price-shopping. This case confers some degree of power on buyers in markets exactly where meaningful competition exists (primarily major metropolitan areas).

Increasing gap among rich and poor (reduces market size)

Experienced, effective, & dedicated management

The SWOT analysis for Southwest Airlines assesses the company's position in relation to industry threats and opportunities. A part of the assessment considers the strengths and weaknesses of the business that affect its ability to respond to opportunities and threats.

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