Brittany Williams

Laura Finney

Danatra Taylor

Lucie StraubLorenzo Perez

Synergy

1

The U.S. Department of Transportation (DOT) describes regional airlines as companies with revenues less than $100 million that focus on short-haul flights.

Key Competitors are: Alaska Air and Southwest Airlines

Intro to the Industry

The Industry's Dominant Economic Features

Number of rivals and their comparative size passengers per year market share in the industry

Pace of process and technology change greater amount of seats for economy class

Ongoing process of reducing costs higher flight capacity additional fees to travelers hedging fuel costs

2

4

Key Drivers of Change Low cost regional

competition

Globalization

Internet e-commerce

Five Forces Impact on Airline Industry

1. Suppliers2. Buyers3. Competitive Rivalry 4. Substitutes5. Entrants (brand recognition of

established airlines)

6

Companies in the Strongest/Weakest Positions

Market Cap in Billions

Net income in Millions

10

20 8

4

300

150

SWT

ALK

PIN

SWT

SWT

PIN

ALK

ALK

PIN

SOUTHWEST ALASKA AIR PINNACLE

Revenue in Billions

Companies in the Strongest/Weakest Positions Cont’d

Revenue/employees Market Cap/employees Net income/employees

200k

400k 200k

100k

20k

10k

SWT

SWT

PIN

PIN

ALK

SWT

ALK

ALK P

IN

Return on Assets/Return on Equity

Southwest ROA ROE2009 .70% 1.90%

2010 3.09% 7.85%

2011 1.06% 2.71%

Alaska Air ROA ROE

2009 2.47% 15.85%

2010 5.02% 25.40%

2011 4.79% 21.46%

Leading: Alaska Airlines Service to key locations in the NW Solid cost structure

Moderately Successful: Southwest Great brand recognition Established Model followed by competitors

Struggling : Pinnacle Bankrupt Cost Structure and Business Model- main reasons

10

Key Success Factors Cost Structure

Brand Recognitions/Promotion

Route Systems

11

AnalysisWill competitive forces strengthen? Yes because the power of the five forces

are high.Will driving forces increase/decrease

profitability. It will decrease profitabilityHow firms can tackle the unattractive

forces in the industry? Efficient cost structure.

12

Recommendations

The industry is not attractive. Long term profitability may not be

attainable industry wide. (except for well established companies)

Operating conditions have been declining Profitability has been unstable since 2007

How do you become a millionaire? Start as a billionaire, and buy an airline! -Richard Branson

Q/A