Buyer power is a fairly weak competitive pressure to the airline industry due to a lack of cohesiveness and inability to integrate upstream.  The extent in which airlines can “pick and choose” ticket prices is dependent on the route and type of consumer.  When buyers have the power to choice between rivals when there are multiple flights to and from the same location, the ticket prices are more likely to be lower because airlines know they will have competition.
Although buyer power has less of an impact on the airline industry, the five forces analysis shows that an intense rivalry exists within the airline industry; also that suppliers have significant power, substitutes are available, and there is potential threat of new entrants.  The five forces identified for the airline industry that determine the nature and strength of competitive pressures in the industry have contributed to annual losses across most of the market.  Despite the fact that most major airlines have reported annual losses year after year for decades, Southwest has managed to rise above the competitive pressures and have reported profits every year since 1973.
 
In order to understand Southwest’s internal environment their strengths, weaknesses, opportunities, and threats must be identified.  The company has several strengths that help position them to be profitable.  Their operating strategy has proven over the past few decades to be effective, being the first to offer a point-to-point route system resulting in minimizing connections, delays, and total trip time and focused primarily on nonstop flights.  Unlike the hub-and-spoke route systems of rival airlines where most flight destinations were reached via connecting flights at hubs, Southwest found a way to essentially eliminate connection flights thus reducing flight time.  The new point-to-point route system stimulated higher passenger traffic at airports across the country; the U.S. Department of Transportation began referring to the increase as the “Southwest effect.”  In additional to the new route scheduling system, Southwest maintained diligent efforts to achieve and maintain low operating costs.  They only used one type of aircraft in order to simplify training, minimize maintenance and repair costs, and to simplify the scheduling of flights.  Furthermore, Southwest Airlines is also known for their superior customer service, where employees do everything in their power to ensure passengers have a positive flying experience.  Despite the friendly, fun-loving spirit employees convey to customers, Southwest abides by the philosophy that employees are their most important asset as they are one of the main reasons behind the business’ success.  Southwest is also a leader in technological innovation, they were the first airline to introduce online ticket purchases and paperless tickets.  They even developed a state-of the art flight dispatch system that assisted in reducing weather and operational delays which helped further promote their operating excellence and competitive advantage as a low-cost/low-price/no-frills company.  While Southwest has many potential strengths and competitive assets, identifying potential weaknesses and competitive deficiencies is important for the company in order to identify alternatives or solutions before the issues are too detrimental or costly to the company.
