Southwest Airlines

Core
Strategy
If you get your passengers to
their destinations when they
want to get there, on time, at
the lowest possible fares, and
make darn sure, they have a
good time doing it, people will
fly your airline.

Company Overview
Southwest Airlines Started as an intra-state
operator in the state of Texas in 1971
Short haul, high frequency, low cost strategy, and
point to point route system
In 1994 southwest held 4.4 Market Share%
Southwest make the expansion to become a
major carrier
Lowest operating cost in the domestic airline
industry
Low cost philosophy survived, a severe price
war

Cost Leadership Strategy

OTHER

SOUTHWEST

Multiple types
of aircrafts are
used

Single type of
aircraft is used
that is Boeing
737

OTHER

SOUTHWEST

On an average
there were six
cabin crews.

Maximum three
cabin crew

Other Cost Leadership

Strategy
Use secondary airports (Less
congested)
Operates in mid-sized cities.
Low cost pricing strategy
No complementary meals
High utilization rate of fleet of
aircraft.

Marketing Strategy

Target Customer
Convenience, timeoriented travelers.
Price sensitive leisure
travelers.

Rapid Rewards Programs for

frequent flyers.

Growth Of SouthWest
Fleet Size

Passenger carried / per employee

Source: 1994 Annual Report

Net Income ($ 000s)

Aircraft Utilization (Hrs)

SWOT Analysis

Strengths
Strong fleet operations
Dominant market positioninNorth America
Friendly Staf
Best low fare carrier
Largest airlines in the world in terms of highest
number of passengers per year
Recognized as a great value and excellent services
Flexible working hourseven though 82% of employees
are unionized
Strong brand image
Highest daily domestic departures than any other
commercial U.S. airline

Weakness
Declining profits and margins
Heavy dependence on passenger revenues
Heavy dependence on a single producer Boeing
Conservative growth strategy
Limited tocities domestically
Operates its own booking service
Does not ofer segmentation (business flights, first
class, etc.)

Opportunities
Recovery of USAirline Industry
Acquisition of Air Tran Holdings
Recovery of US tourism
International Expansion
Longer flights are being introduced
Traveller traffic is expected to grow by 3.5% through
2019.

Threats
Intense competition
Regulation restrictions
Price fluctuations in petroleum markets
High unemployment and inflation keeps travellers
from flying
Joint ventures can negatively afect brand image
Exposure to Shaky American Economy

What Should SouthWest Do ?

Induct more and more cost saving initiatives
Continue with the same highly selective process for recruitment
Increase operations by expanding operations or through M&As
Focus on technology which helps increasing fuel efficiency
Not compensate safety for frugality
Maintain the same operating efficiency
Work on more and more reward initiatives
Not let the people be overconfident of the success and keep
motivating them
Maintain the same culture and employee satisfaction
Keep customer service as their main motto