1. Presented By: Kelly Bossolt Marta Kovorotna Sarah Smith

2. Executive Summary  Financial Analysis  External Analysis  Entry & Rivals  Industry  Customers  Substitutes, Complements, Acquisitions  Internal Analysis  Recommendations

3. Financial analysis

7. External Analysis: Entry  Deregulation Act  Enabled new entrants  150 went bankrupt  8/11 developed merging agreements  Created competition  Creating lower prices  Creating more travelers  Rivals  Delta, United, American  80% Domestic Market, 67% Trans-Atlantic Market

8. External Analysis: Industry  2 nd Tier Providers  Took on the abandoned and ignored markets  Hub – and – Spoke  80% costs were fixed  Control Mechanism  Sublease for premium (18% higher for Southwest)  Efficient

9. External Analysis: Customers “The ones that could afford to fly, and the ones that couldn’t”  Two types of travelers  Convenience, time oriented  Price sensitive, leisure  Two tiered Pricing structure to accommodate both

10. External Analysis: Substitutes & Complements & Acquisition  Substitutes  Train, Bus, Boat, Car, Horse  Complements  Meals, Comfortable seating, Television  Imitator  JetBlue  Southwest acquired and integrated into its own  Diversified locations  Slightly more sophisticated  Leather Seats, Televisions

11. Recommendations  Move to international markets  Not necessarily Trans-Atlantic, but integrate new markets  Make some improvements in customer satisfaction area.