Impact Of The Airline Industry On Southwest Airlines

1669 Words Jul 25th, 2015 7 Pages
The airline industry is greatly impacted by external factors, and therefore has experienced many ups and downs in the past. It is an industry with many barriers to entry, and a shrinking number of organizations. Despite this, Southwest Airlines has experienced a great deal of success within the industry. Beginning service in June 1971, the low-cost airline has had steady growth, and developed into a highly successful organization, and an industry leader in many aspects. Despite this, the airline industry faces dangers from rising fuel costs, which may ultimately affect Southwest Airlines’ success in future.
The airline business is a highly competitive industry. According to Morningstar article Southwest Airlines Co Analyst Report, the airline industry has many barriers to entry, which creates an intense industry rivalry. This claim is backed up by the text Attention All Passengers by William J. McGee, which states “Air travel has become a commodity, and the airlines themselves an oligopoly.” (McGee) Therefore, a sustainable cost advantage is the only way to survive in this cutthroat industry. (Dihora) Furthermore, the same Morningstar article claims that the airline industry is not growing. This is because the top four airline carriers control approximately 80% of the domestic market in 2015. This can be compared with results from the year 2000, when around 9 carriers controlled as much. (Dihora) This statistic shows that the number of organizations in the market is in fact…
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