Southwest Airlines

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Southwest Airlines

Category: Case Study

Subcategory: Economics

Level: Academic

Pages: 3

Words: 825

Name
Instructor
Course
Date
Southwest AirlinesExplain the position of the following key stakeholders and their interest in the Wright Amendment in the late 1970s?
Southwest Airlines
Southwest Airlines is one of the major stakeholders in the airline business in Love Field airport. It is popular in the interstate flights, and it has been growing over the years despite the challenges it faces from its competitors. Despite the fact that it was not given a chance to sign the bond ordinance to move its operations to Dallas/Fort Worth (DFW), it fought its way through to continue in business. In the beginning, it was a small airline with low reputation but its CEO initiated drastic changes that helped Southwest Airlines especially when it moved to Hobby Airport. Wright Amendment influences the Southwest Airlines business as it gives regulations that should be followed by the airlines. When Wright Amendment deregulated the airline industry and allowed various commercial airlines to set their prices, it gave Southwest Airline an opportunity to grow through publishing its prices. Wright Airline also gave Southwest Airlines a chance to offer its services from Love Field where it owned the largest market share. Southwest was, therefore, a monopoly at Love Field.
American Airlines
American Airlines was given a chance to sign the bond ordinance to move its services to DFW. It is said to own the largest market share of 84% at the new airport, DFW. Southwest Airlines believed that no airline would be interested with competing with American Airlines; the statement indicated that American Airlines was leading in the industry. America Airlines not only moves interstates by it can move even to other countries. American Airlines supported the Wright Amendment because it allowed it to fly outside the countries and reduced the competition from Southwest Airlines which was a monopoly in Love Field but was only allowed to fly interstate. Therefore, with Wright Amendment restricting the Southwest Airlines business, it favors American Airlines business by reducing the number of competitors.
The North Texas business community
The business community also has a say in there are of residents. They are the main customers of these airlines since the transport their goods between states and other places through airlines to avoid traffic and. Therefore, their views should also be considered. The reaction of an airline concerning their views affects the rate of customers available. This group is interested in Wright Amendment it affects their life style. Repeal of the Wright Amendment will lesser their fare burden; however some are against the Wright Amendment as they state that it will increase pollution, traffic congestion and compromise with safety.
How have the stakes changed since September 11, 2001, for the former stakeholders and what new stakeholders have emerged?
The stakes in these cases are the airlines stakeholders. The major stakeholders in the American airline were the short-haul business of low-cost airlines, in this case, the Southwest Airlines. With the help of Wright Amendment the fare through air reduced as airlines were allowed to give their prices. Many passengers who were majorly full-fare business travelers preferred air transportation to avoid traffic and long-hours traveling. However, following the September 11, 2001, attacks; the air transportation decline due to terrorist fears that gave rise to many security checks at the airports. Naturally humans do not like security checks. As a result, a new stakeholder that emerged in the airline industry were the long-haul business airlines, the American Airlines since traveling via air to far destinations cannot be avoided.
How has the economic changes in the U.S. from 2008 – 2014 impacted the position of key stakeholders?
As the economy changes, export and imports change over time. Export and imports largely affect the economy of a country and major exports and imports occur via the airline industry; most of which favors the long-haul business airlines. “The U.S. passenger airline industry has returned to profitability following the recent economic recession”. “The structure of the market will continue to evolve as economic conditions change, and the recent airline mergers are fully implemented” (” Airline Competition,” 2014). Therefore, a recovery in the economy or a good economy favors the airline industry.
What has been the business-government relations (BGR) strategy for Southwest and how might it change moving forward?
The BGR strategy according to the house of majority is to hurt the Southwest Airlines and to promote the airlines from DFW. Their strategy was using the Wright Amendment to implement unfavorable regulations to short-hurl airlines. This strategy will slow down Southwest Airlines’ growth. First of all, Southwest Airlines is only allowed to do interstate business that is already hurt by the terrorist attacks. There are also disagreements about where Southwest Airlines should fly to directly. Therefore, these restrictions continuously affect the growth of Southwest Airlines. The BGR strategy might also make Southwest Airlines lose its position in the Love Field airport as the main stake holder. However, since Southwest is known to fight its way through by the effort of their able CEO, Herb Keller, it will eventually find a way out.
References
“GAO U.S Government Accountability Office.” Airline Competition.gao.gov, Inc., 2014. Web.November 5, 2015. < http://www.gao.gov/products/GAO-14-515>
Kochan, Thomas A. Southwest Airlines. 1999. < http://www.caseplace.org/d.asp?d=425>