Southwest Airlines: The Key Issues Research Paper

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The paper will elaborate on Southwest Airlines, its strategy, the reasons behind its success and a critical review of the kind of plan it should chalk out for the future.

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Company Background

SouthWest Airlines has been running for the past twelve years and is reputed to be one of the best there is in North America. Southwest was initially named as Air Southwest Co. by Rollin King and Herb Kelleher who were the co-founders of the airlines. It was in 1968, did they file for their approval with the FAA for their plan to fly between three cities. From there on, especially the 1980s and the 1990s, the airline started expanding its bases quickly in the Southwest, Midwest and Northwest. Soon Florida was also added. In most of these places, South West Airlines, enjoyed success on a larger than predicted scale. Local airlines were inevitably abandoned by the natives there and SWA chosen over for its incredibly cheap airfares. It gave a good run for money to the likes of American airways and US Airways. Most of them had to track routes, which SWA was not taking, but found little progress even there. Today, it is the fourth-last domestic carrier, speaking in terms of the number of customers that board on it. The airline has come a long way, transforming itself from a regional operator in Dallas to a national carrier. At the end of 2002, SWA was serving 58 cities in 30 states and was operating a whooping 2800 flights a day. It enjoys revenue of 45.4 billion RPMs and even more astonishing is its thirtieth year in a row of profitable operations. It was apparently the only profitable US airline in 2002. It enjoys good standing amongst its customers for its on time performance, on-time performance, best baggage handling, and fewest customer complaints.

The organization has been running under the auspices of Mr. Kelleher for the past three years while Mr. Parker is the company’s top negotiator. He has been the main pillar behind the continued constant growth of South West Airlines. Their vision is the same today as it was ten years ago. They believe in providing good service, at cheap costs, no frills airline in it.

Analysis

There are a myriad of factors that have contributed to the success of Southwest. Its operating income was a huge 5 billion dollars in 2002 while operating expenses continued to decline proportionally. SW’s operations are proactive and are quick to size strategic opportunities that they come across. Rapid expansion was always resisted and it was only when sufficient resources would be available did they venture into other areas. Competition has intensified for SWA since September 11th, 2001 and has shifted to low fare airlines. This was a result of the losses incurred by some major airlines in 2002. Before September 11, United was SWA’s biggest competitor but owing to financial losses, it had to be closed down eventually. Other formidable low fare competitors include Delta and America West but thanks to careful planning by SWA, it continues to enjoy high market shares. (SouthWest Airlines)

Southwest tries to be as unique as possible in its marketing approach from the rest of the industry. It tends to live up to its fun-loving, funky bubbly reputation in the process. It followed this strategy especially when other big airlines were trying to run southwest out of business. It placed an ad that said, “Nobody’s going to shoot Southwest Airlines out of the sky for a lousy 513.” This was followed by an offer by Southwest to purchase a ticket from Southwest which stood at half the price of normal fares. It also offered a full fare ticket at a measly $26 along with a premium whisky with it. The response was overwhelming. Southwest’s Planes were jam packed in no time and became one of the top Liquor distributors in the state of Texas. The ads placed by Southwest have a very convincing flavor attached to them. They emphasize more on the real value that the airline is set to offer them. In other words, it aims at making flying fun and colorful. Ergo, it has earned a lot of respect and credibility amongst its customers by living up to its promises.

It continues to be one of the lowest-cost airlines in its markets. Bigger airlines could not help but incur losses when they tried to live up to its standards. SWA still operates at the lowest cost per available seat mile and this is around twenty five percent lower than its rivals. One big reason behind the lost costs is its enviable record when it comes to maintaining and using planes of the same time. They are and always have been Boeing 737s which has always helped them curb their operating expenses in the process. This was also substantiated by this realization on South West’s part that the planes can only earn money when they are in air, hence they focused on faster turnaround on the ground. Their on ground services became faster and rapid/ it has a turnaround time of twenty minutes or less while that of other companies is 1 hour. (Southwest Airlines)

They have also been unhindered and completely successful in rapidly turning around planes but post September 11; this could not be done without incurring expenses. As the government added new security procedures and measures, longer check-in times, operating expenses rose up. Yet another plus point of Southwest is the team spirit with which it works. This is more so, because the company holds this belief that employees come before customers. It is reputed in the market for providing ample amount of information to its employees about southwest, its mission, its purpose, its history and it’ long term goal. It believes that information is power and tries its utmost to capitalize on this bountiful resource. (Connections on The South West Network)

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Issues and Conclusion

At the moment, SWA is providing service in at least fifty eight cities around the globe. Thus there exist innumerable opportunities for expansion all over. However there is a hitch. Competitors have now learned from Southwest and its unique management strategies. They are trying to implement the same tactics to woo and win over customers. SW has always believed in conservative growth tactics but this may bounce back provided that its rival competitors opt for faster growth strategies. Thus it is incumbent that Southwest carefully chalks out a strategy which will help it meet any eventuality in near future. The best way out could be to develop a strategy that is a mixture of both conservative and fast growth strategies.

Works Cited

Connections on The South West Network. 2009. Web.

Southwest Airlines. 2009. Web.

SouthWest Airlines. 2009. Web.

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"Southwest Airlines: The Key Issues." IvyPanda, 7 Dec. 2021, ivypanda.com/essays/southwest-airlines-the-key-issues/.

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IvyPanda. (2021) 'Southwest Airlines: The Key Issues'. 7 December.

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IvyPanda. 2021. "Southwest Airlines: The Key Issues." December 7, 2021. https://ivypanda.com/essays/southwest-airlines-the-key-issues/.

1. IvyPanda. "Southwest Airlines: The Key Issues." December 7, 2021. https://ivypanda.com/essays/southwest-airlines-the-key-issues/.


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