Southwest Airlines :: essays research papers

Southwest Airlines1.)Many changes have occurred and are occurring in the airline industry, which exhaust a potential threat to Southwest Airlines. The airline industry has traditionally had many airlines receive annual loses on their income statements. This trend is still continuing straight off as many airlines stand in financial trouble. Some of these financial troubles arise from changes brought upon them from the ever-changing g everywherenmental regulations. The most recent change in governmental regulations that get out have the largest effect on Southwest Airlines is the change in the federal ticket tax in 1997 on flight routes that are bingle mebibyte plus miles. This new tax system replaces a percentage tax with a tax that includes a flat segment fee that will cause conflict with the low-fare carriers. This is causing Southwest to make some changes in their strategy, which will cause them to lose some of their cost advantage. Their largest cost advantage over their curr ent rivals is in the flights, which are five-spot hundred miles (59% cost advantage). Their cost advantage is much smaller for the larger flights, which are one thousand five hundred miles (35% cost advantage). This already has caused Southwest to change their strategy by reservation their nonstop flights longer with over 16% of their flights longer than one thousand miles.Another threat that Southwest Airlines is facing is the mimicry by other airlines. Other airlines are copying Southwests strategy in erect to enter the low-fare, short-haul market. Delta Airlines has built a low-fare regional carrier service and has acquired a minority stake in three regional airlines. United Airlines is also making a serious entry into the same market. United is doing this with United Express, which will feed passengers from regional carriers into the United system, and United Shuttle, which provides over 450 short-haul flights in the western states. The hazard for expansion is limitless for Southwest Airlines.