strategic group map of southwest airlines

Delta has a track record of beginning negotiations before their amendable date and signing a new deal on or close to that date. Under the Railway Labor Act, the law that governs collectively-bargained agreements in the airline business, contracts do not expire but instead become “amendable”. Southwest has this benefit for small business travelers given their high frequency service in and among many big cities but has struggled to carry the highest-paying corporate traveler.ĭelta has a strong history of working with their labor groups, and has even kept several big groups non-union. When you know that a large percentage of your most premium revenue has no real competitor, it gives you a lot of flexibility. As a result, United and American must compete for more of their business traffic than Delta must.

Houston meets this standard for United, and maybe San Francisco too, but this is smaller amount of their system under their price control. United is in the worst position of the big three, fighting with American and Southwest for Chicago, fighting with two carriers for Denver, and Newark’s increased competition thanks to losing its slot protections and Delta’s build up at LaGuardia and JetBlue at JFK. By comparison, American has this position only in Dallas and Charlotte, though some may argue Miami is a stronghold but that has been withering. They own this position not only in Atlanta, but also in Detroit, Minneapolis, NY’s LaGuardia, and are growing their position in Seattle to create this effect. Delta bests their competition because they are in this sweet spot of the S-Curve in more locations and for a higher percent of their capacity. But once meeting a certain share threshold, almost all of the business traffic chooses the same option. Ben BaldanzaĪs this graph shows, having a small share of seats in a market means attracting almost none of the business travel.

Having a dominant seat share in a market tends to win that airline most, if not all, of the buss.

Strategic group map of southwest airlines