Southwest Airlines Case Analysis

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Southwest Airlines Report
Core Strategy
Southwest Airlines Co. in the airline industry has targeted at a distinctive market niche, in which customers want low prices and frequent departures. To achieve its goal of profitability maximization, Southwest primarily provides low fares, high frequency services, point-to-point flying, short hop flights, and high-quality Customer Service. Its low prices and no-frills approach has greatly attracted customers and enabled them to purchase flight tickets with the lowest prices among U.S. airlines. Along with its expansion and merger with AirTran, Southwest has gradually changed its strategy. Longer non-stop trips, one-stop trips and even international trips have been added to its flight schedule. It continues to be profitable with lowest cost in the industry. Overall, low price is the major part of Southwest’s strategy that brings both development and market share. External Analysis

* Threats
Airline industry could be affected by many factors such as general economic environment, fuel price, airline terror acts, weather conditions and air traffic restrictions. General economic environment has impact on the demand for travel, and therefore influences the number of flights run by Southwest. The fuel price controls the company’s costs; rising fuel price would increase the cost, and the company cannot always avoid influences of fuel price by fuel hedging. Terrorist attack incidents would both physically and psychologically affect customers and employees, which leads to a higher security cost. Weather conditions have important impact on flights as well. Bad weather conditions may delay flights, increase turnaround time, and thus mark up costs. All these potential threats are faced by Southwest Airlines. Southwest is also facing a very competitive environment with both large- and small-scale airline companies. Those companies like JetBlue, Virgin America and Spirit Airlines that have similar strategies to Southwest are the...
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