Southwest Case Study

Statement of the Problem
southwestward executive team must focus on 1) what to make of the new developments and 2) how to respond to new competition from competitors (primarily Shuttle by United) trying to replicate their business enterprise model which is cutting into their market shargon and creating a way out in gross for the company.
Situation Assessment
The Airline Deregulation crook of 1978 allowed air lanes to set their own fargons and enter or exits routes freely, causing the U.S. flight path constancy to become entrenched in fierce competition, price-cost wars, acquisitions, and mergers. large carriers began to focus on serving more cost economic nonstop long-haul routes anchored by densely populated metropolitan areas or city-pairs (i.e. hub-and-spoke model) which had been highly profitable in a modulate environment. While major(ip) carriers account for more than 95% of the home(prenominal)ated passenger travel, new regional carriers (i.e. Southwest) filled in the gaps, providing low-fare, low-frill point-to-point flights that are more economical to operate than hubs. This trend shaped the industry into three segments based on annual revenue (major carrier > $1B; national carrier $1B > $100M; regional and commuter airline < $100M).



Major carriers accounted for more than 95% of domestic passengers in 1994, of which tail fin accounted for over 80% of all major carrier domestic passenger traffic with United being the largest at 22.1%. Southwest was number eight with 4.4 % market share.
The major carriers hub-and-spoke strategy saw an increase in revenue and some cost economies but was generally offset by increased costs resulting from decreased utilization, greater capital investments, and larger staffing. They generally fly about five flights per day in a variety of configurations with a turn time of nigh 55 minutes. Customers generally do not perceive higher(prenominal) priced airfare with higher value (i.e. Rolls-Royce). Up to 90% of their seats are booked by travel agents and...If you want to get a full essay, order it on our website: Orderessay



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