For Southwest Airlines
Prepared for Rick, Turley
CIS600: Information Technology and Project Management
Colorado State University
April, 17th, 2013
Southwest Airlines Co is a major U.S airline and the world's largest low-cost carrier, headquartered in Dallas, Texas. It was established in 1967 and adopted its current name in 1971. The airline has more than 46,000 employees as of August 2012 and operates more than 3,400 flights per day. As of June 5, 2011, it carries the most domestic passengers of any U.S. airline. As of January 2013, Southwest Airlines has scheduled service to 79 destinations in 39 states. Southwest offers low-fare, short-haul, and high-frequency, on time and point-to-point flights. Southwest has a very broad target demographic. They appeal to customers that are price-conscious and don’t mind the “no-frills” philosophy. This translates to a lot of small business owners, middle-class families, young adults and travelers traveling short-distances. Moreover the target market for Southwest Airlines is medium to high frequency business travelers who take one to three roundtrips per month, male/female professionals ages 24 - 55, travelers who are price conscious, dissatisfied customers from full-service airlines, travelers looking to commute distances between 750 and 1,700 miles, leisure family travelers, internet/technology savvy travelers, and 30 - 60 day trip planners. The main idea of the company was to target customers ready to trade driving for flying. For example a business traveler is going from San Antonio to Dallas the best choice for him/her to fly with is Southwest since he/she doesn’t need to stop by any other point (point-to-point flights), most of the other airlines rely on hub and spoke systems which is not the best choice for business travelers. Discount airlines (Southwest, JetBlue Airways, AirTran Airways, and Frontier Airlines) also known as low-cost carriers (LCCs), have changed the way we fly and altered our expectations for air travel. When the first LCCs took flight some 30 years ago, most followed the same simple formula: no food or frills, just simple pricing, low fares and basic transportation. This business model helped fledgling LCCs compete against the much larger and well-established "network" or "legacy" airlines (American, Delta and United Airlines) which dominated air travel for much of the 20th Century. Southwest Airlines popularized the most successful LCC model, subsequently emulated by many others. It kept costs low by operating a single aircraft type (the Boeing 737) on point-to-point, short-haul routes, with quick turnaround times between flights. This stood in contrast to the expensive-to-maintain, hub-and-spoke models operated by the major network airlines. As other LCCs prospered and matured, some offered more amenities, while the major legacy airlines slashed costs and airfares in an attempt to level the playing field. Now LCCs are becoming even more specialized as they locate their ideal niche and differentiate their products from the majors as well as other LCC competitors. As I mentioned earlier Southwest Airlines provide its service through simple business models low fares (no food no frills philosophy), operating a single aircraft type (Boeing 737), point-to-point flights (no hub and spoke systems). Several current economic factors have crucial influence on the entire airline industry, including Southwest as a part of it. The industry continues to be heavily impacted by the increasing fuel costs, with crude oil prices exceeding $120 per barrel in March 2012. In addition the prolonged world-wide economic decline and especially the bad shape of the United States economy (as the main target of the company) have significant negative effect on the entire industry. Also, the airline industry is heavily regulated by the federal government. The U.S. Department of Transportation regulates...