Skywest Inc. And Regional Airline Industry

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MGMT 314: Skywest Inc. and the Regional Airline Industry


The  regional  carriers provide  transportation  to  and  from  small communities to large airports and usually, these regional airlines form partnerships with major airlines to perform their services together. The efficient work of the regional airlines helps maintain a strong hub-and-spoke system. The aircrafts used by the regional airlines are the turboprops and the regional jets. Due to contracts they make, faults and  financial troubles made by major airlines affect the regional airlines. Regardless, there are many competitors among the regional airlines for  partnerships with the major airlines. 


Porters Five forces analysis has been  carried out to understand and analyze the competitive environment of the regional  airline industry. The conclusion reached is as follows:

  • Rivalry among Competitors: Fierce competition exists in the regional airline industry. Factors such as the high number of competitors, the slow buyer demand and low switching costs have all contributed towards an intense rivalry among competitors.
  • Threat of New Entrants: The regional airline industry has a quite low threat of entry. The barriers to entry make it quite difficult for a candidate to enter the market. The large capital investment in the form of planes and hangars makes entry quite difficult. Moreover, government intervention and regulations after the 9/11 attack pose additional costs for airlines which make entry much more harder.
  • Bargaining Power of Suppliers: The major suppliers of an airline industry are the airplane  manufacturers. Only a few suppliers for the regional airplanes exist (in this case Brasil’s Empresa Brasileira de Aeronautica SA and Bombardier). This gives the suppliers quite a leverage over the regional airline companies and gives them an opportunity to charge high prices without losing the customer base.
  • Bargaining Power of Buyers: The buyers in this case are not only the customers of regional airlines but also the major airlines. There is a fierce competition between the regional airlines for contracts with major airlines and the major airlines can thus, be assumed as buyers of the services offered by the regional airlines. The limited number,  the identity and the size of the major airlines all led to the bargaining power of  buyers  being high.
  • Threats of Substitutes: The regional airline industry can be considered to have substitutes such as low-cost carriers, cars, buses and trains. This threat can be considered to be  of  medium strength currently.
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The strongest force existing in the environment would be the rivalry among competitors and the weakest would be the threat of new entrants.


Skywest Inc. is the  parent holding company of Skywest Airlines and Atlantic Southeast Airlines (ASA). It is the largest independently owned regional airline company. It operates primarily through partnership contracts with United, Delta and Midwest Airlines. The company is trying to  achieve a competitive advantage through the low cost provider strategy. Skywest has partnership contracts with 3 major  airline  companies: United, Delta and Midwest. These contracts are extended provided that Skywest continues to be the ...

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