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Southwest Airline Inc. Case : "Pest" Analysis Of Airlines Industry

1052 words - 4 pages

An industry is a creature of its environment. Its very survival and all of its perspectives, resources, problems, and opportunities are generated & conditioned by the environment. Thus it is important for an industry to monitor the relevant changes taking place in its environment and formulate strategies to adapt to these changes.The overall environment of the Airlines Industry in the USA as found in this case, could be described as that of bitter rivalry. The hostility between competitors were so harsh that two rivals -Texas International and Braniff joined hands to destroy Southwest Airlines even before it could begin its operation. Failed to stop its operation, the rivals began to put up obstacles at every step Southwest took. No wonder, they were dubbed as "predator" meaning an animal that eats other animals. This attitude of destroying the competitor is found in this case in all aspects of the environment of Air Line Industry-Political, Economic, Social and Technological.Political Environment:In stable Governments, political trends may not be as important as in countries where Governments are week. Yet even in stable countries, political trends may have a significant impact on business. Governments around the world help their domestic industries strengthen their competitiveness through various fiscal and monetary measures. Political support can play a key role in the industry's search for markets abroad. Without it, an industry may face a difficult situation.Scanning the Political Environment in this case we find that Southwest sought to make use of the opportunity created by Airline Deregulation Act passed by the US Congress in 1978. This law permitted inter-state air flights. But Southwest's attempt to becoming an inter -state airline soon faced political obstacles. Southwest wanted to operate all its inter -state flights from Love Field Airport, which was very close to downtown Dallas. On the other hand all other airlines operated their flights from Dallas Forth Worth (DFW) airport, which was far away from main city. Fearing that Southwest will be able to get larger number of passengers on inter-state routes, its rival airlines with the aid of Fort Worth Congressman Jim Wright tried to pass a law banning all inter state flights from Love Field Airport.Southwest bosses Kelleher and Collin in a counter action, however succeeded in winning support of influential Senators -the members of upper House of Congress. The lawmakers supporting the two sides then negotiated an agreement which is known as Love Field Compromise.1)It enabled Southwest to operate from Love Field airport non-stop flights only to cities within Texas or to those states bordering with Texas namely Louisiana, Arkansas, Oklahoma, and New Mexico.2)But the law forbade South West to advertise, publish schedules or fares or check baggage of the inter state flights taking off from Love Field.The Deregulatory Act is an example of how Political Institution Like US Congress...

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