Southwest Airlines - Is the Us Airline Industry in 90’s a Competitive Industry?

Q: is the US airline industry in 90’s a competitive industry?

Porter’s five-force model:

A) Rivalry among existing competitors

the airlines industry is a sector that has been growing rapidly; indeed, there are two kinds of companies that are nowadays flying, the first one is the normal airlines or carriers and the second is the low cost carrier. Since 1978 when the deregulation was signed, the industry knew a huge increase in its turnovers and many companies have been created in this period. The low cost carriers have also been created after this where the idea was offering the same service, which is travelling in a flight, but without all the small options around.

Concentration:

We can’t really say in this situation that there are a group of 4 big companies since there are more than 4 airline companies and that each one has a market share depending on the region where their flight goes. There are 2 groups of airlines that share the market between them: the low cost carrier (LCC) and the normal carrier or airline. In addition, it is a market where pricing is a very important factor and a major indicator in defining market share.

Diversity of competitors:

The competitors are not all the same size and all but are all seeking the same target of customers. The companies may also have different attributes and offer different options in soma cases but the main service is the same , which is a seat in a flight. Also, all the airlines signed a deregulation that made prices fall down since they were all fighting over the same thing and that prices were the major thing for their customers.

Product differentiation:

Brand identities are different between LCC and normal airline ,