How Serious Is The Competitive Threat From Continental And United?

Bargaining Power of Customers (high)- Customers has several options when it comes to flying. But the main attraction to customers are low prices and Southwest makes it known that they have some of the lowest airfares. The only way Southwest can take back the power is by offering direct flights to cities that other airliners do not offer. Besides the small occurrence of having a direct flight to a city that no other airline has, Southwest

The airlines do not focus on the combination of quality and good service at a fair price; its focus is instead only on providing ultra low cost. It also charges customers for value added features and services. Thus the pricing is value added pricing. When compared to the competitors of Spirit for operating costs per seat mile; it is lower compared to other major airlines. The important points like encouragement to demand stimulation and preference for its low-cost model makes it successful for its low-cost pricing strategy.

The five universal competitive plans include overall low-cost provider strategy, broad differentiation strategy, focused low-cost strategy, focused differentiation strategy and best cost provider strategy (Bethel, 2017). Southwest Airlines popular competitive strategy is keeping customers happy by being low cost, employee driven, future-minded, and differentiated. The overall low-cost provider strategy that is being used at Southwest is a low-cost airline that focuses on no-frills service (Investopedia, 2015). Southwest Airlines diligently follows the strategy of a differentiated low-cost carrier. [They do this by providing the lowest possible fare in the industry, and do so by focusing on consistent service, reliable operations,

SWA built its competitive advantage through the strategic fit of various activities and its value chain, its positioning, and tradeoffs, enabling its

The price competition among airlines remains strong. Levisohn (2017) reported on a price war between LCC Spirit Airlines and network carrier United (UAL), where Spirit Airlines called out Chicago, Houston and Newark as its target markets, and UAL has confirmed it is aggressively defending the above hub markets. It appears that AAL is most at risk in getting caught in the crossfire, as UAL is being very specific about lowering fares only on flights that match up with Spirit's schedule the risk is most likely highest for carriers that have a large amount of capacity in markets where United and Spirit are going head to head.

The low fares that SWA offers is hard to beat as well as no extra fees, as the competition has implemented these fees to attempt to be profitable. SWA is known for their continued low cost fares and profitability.

How has SWA (a) responded to the “Shuttle By United” initiative (half page 5 points); and (b) what assessments can be made about SWA’s market and financial position on competitive routes based on 1994 4th quarter results (half page 5 points)?

In 2008, the senior management team at Continental Airlines, commanded by Lawrence Kellner, the Chairman and Chief Executive Officer, convened a special meeting to discuss the firm’s latest quarterly financial results. A bleak situation lay before them. Continental had incurred an operating loss of $71 million dollars—its second consecutive quarterly earnings decline that year. Likewise, passenger volume was significantly down, dropping by nearly 5 percent from the prior year’s quarter. Continental’s senior management needed to act swiftly to reverse this trend and return to profitability.

Southwest Airlines represents a rather unique organizational force that has driven the company to success since its inception in 1971. One of the most unique features about the organizational structure is that it is largely decentralized and employees are openly welcomed to express their opinions on a wide range of organizational issues. However, despite the "hands off" management strategy, the company consistently ranks as one of the top airlines in regards to customer complaints; in 2008, for example, the company received 0.25 complaints on average for every one hundred thousand passengers who used the aviation services (Triangle Business Journal, 2009). This analysis will look at some of the organizational factors that have contributed to the success of Southwest Airlines over the course of the last few decades.

Continental, Northwest and United Airlines intended to adopt part of the new fare system. Continental, because it is in Chapter

In the wake of a sizable slump in demand driven by economic downturns, terrorism attacks (especially the events of September 11, 2001) as well as increased competition from low-cost carriers, many incumbent U.S. airlines have been attempting a fundamental restructuring of their operations. Many would argue that a central element in this restructuring should include an overhaul of the labor-management relationship.

This internal business analysis is on Southwest Airlines, which was founded in 1967 by Rollin King and Herb Kelleher. The main focus for Southwest Airlines was to provide low cost flights for their customers, and also have exceptional customer satisfaction. Southwest is a leading airline company that continues to do well in an industry that has been historically challenging. For instance, in the span of two years (2005-2007) five major airlines have filed for bankruptcy. The challenges are great in the airline industry, because competitors are trying to imitate the “low-cost” offering of Southwest. Many companies have tried to do what Southwest has done, and many have failed to stay

Over the years, company sustained low operation costs and tickets prices following well-developed strategy. Among other measures, it was able to keep prices low by flying only one airplane type, minimizing service and maintenance expenses, and convincing employees to cut gate turn-around times and make the airline more efficient (Fitzpatrick, 2005).

The future of the industry is in JetBlue’s “cheap chic” style. Airlines need to maintain a cost effective price point while also not appearing cheap. Small

In the last decade, Continental Airlines has had a spotty track record. The airline twice filed for bankruptcy, realized diminished performance culminating in a $613 million loss in 1994, and was ranked dead last in industry indicators such as on-time performance among the major carriers. During these years, employees at Continental had undergone several series of layoffs and withstood both wage cuts and delayed wage increases in an effort to slash Continental’s costs. The result of these efforts was a demoralized workforce and a corporate reputation that put Continental near the top of Fortune’s list of “least admired” companies.