Southwest Airlines Business Model

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The airlines industry has historically been one of the most unprofitable industries. The reason can be explained when incorporating Michael Porter’s famous Five Forces Model. The threat of competition is Southwest Airlines Co. (NYSE: LUV) is an American low-cost airline based in Dallas, Texas, with its largest focus city at Las Vegas' McCarran International Airport. It is the largest airline in the United States by number of passengers carried domestically per year and (as of December 31, 2007) also the largest airline in the world by number of passengers carried.[7] It is also the 6th largest U.S. airline by revenue.[8] It also maintains the third-largest fleet of aircraft among all of the world's commercial airlines. As of July 12, 2008, Southwest operates approximately 3,500 flights daily. Southwest Airlines has carried more customers than any other U.S. airline since August 2006 for combined domestic and international passengers according to the U.S. Department of Transportation’s Bureau of Transportation Statistics.[9] Southwest Airlines is one of the world's most profitable airlines and in January 2008, posted a profit for the 35th consecutive year.[10] Southwest Airlines was originally incorporated to serve three cities in Texas as Air Southwest on March 15, 1967, by Rollin King and Herb Kelleher. According to frequently-cited story, King described the concept to Kelleher over dinner by drawing on a paper napkin a triangle symboliziSouthwest Airlines founder Herb Kelleher studied California-based Pacific Southwest Airlines extensively and used many of the airline's ideas to form the corporate culture at Southwest, and even on early flights used the same "Long Legs And Short Nights" theme for stewardesses on board typical Southwest Airlines flights. The airline adopted the first profit-sharing plan in the U.S. airline industry in 1973. Through this plan and others, employees own about 10 percent of the company stock. ng the routes.(Dallas, Houston, San...
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