Southwest Airlines Case

Southwest Airlines Case Analysis

OVERVIEW

Southwest Airlines was founded in 1967 by Rollin W. King and Herbert D. Kelleher. The company incorporated as Southwest Airlines in Texas, and began customer service in 1971. By 1978 Southwest was listed on the New York Stock Exchange and was the most profitable airline in the industry. By this time 5 million passengers had flown through Southwest. And by the early 1990’s Southwest had added Florida and California to their services and dominated the market share.

There were two main strategic areas that brought Southwest success and helped them capture the market share from their major competitors. These two strategies area were efficient operational costs and investment in its people. Efficient operational cost led to low fares for the passengers and investment in employees led to outstanding customer satisfaction. This case analysis the two strategic areas that brought success to Southwest, SWOT analysis on Southwest and recommendations on how maintain the competitive advantage in the years to come.

ANALYSIS

Operating Costs

Southwest from the very start had been able to offer its customers the lowest fare. The most vital ingredient that made this was possible was their low operational costs. Southwest believed in flying one type of airplane fleet and they only flew the Boeing 737 series, whereas the competitors were flying multiple types of airplanes and models. Using one type of plane across the board ensured that Southwest saved millions of dollars in maintenance cost, spare-parts inventories and training. Moreover, every pilot and crew member was familiar with every plane. Apart from the above, using one type of airplane gave Southwest the opportunity to move the aircrafts through the route network without costly reconfigurations.

Southwest was also content on targeting on using secondary airports rather than big metropolitan airports and this helped them maintain lower average fares. Unlike their competitors,...