Southwest Airlines 2011 Case Reaction

Southwest Airlines essentially took the traditional airline business model and turned it on its head. By focusing on shorter, more frequent flights instead of fewer, full-capacity flights, Southwest offers low fares with an emphasis on getting passengers through the gates efficiently. The larger airlines have difficulty applying Southwest’s strategy because they continue to carry high fixed costs associated with the hub-and-spoke model. Another Southwest calling card is the emphasis on flying out of “secondary” airports. Southwest established its brand by capitalizing on underserved markets. The larger airlines simply aren’t organized—physically or strategically—to offer Southwest’s brand of service point-to-point, low overhead service. Another important component that has set Southwest apart is the emphasis on friendly service, which became an integral part of the airline’s advertising strategy and brand image.

For me Southwest’s largest obstacle is its own growing footprint. The AirTran acquisition appears to be the most significant medium- to long-term threat. While there are aspects of the deal that seem a good fit with Southwest’s strategic direction—like AirTran’s low-cost and additional locations on the Eastern Seaboard—there are also aspects that could be a reason for concern. Southwest has a very identifiable brand that starts with their unique gate queuing process and extends to the recognizable 737 airplane itself; and of course to the employees who run the gate and service the airplanes. In short, Southwest is running the risk of diluting its strong brand if customers no longer receive the “Southwest experience” when flying out of new (previously AirTran owned) locations. This starts with the service and appearance at the gate and continues through the in-flight service. Refitting gates and planes will come at a serious cost. Training or retraining AirTran employees could come at an equally high cost and it will be interesting to see how...