Southwest Airlines Case Study

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Executive Summary

As Southwest continues expanding, it is important that they maintain the low cost structure that has made them so successful historically. As larger and more congested destinations are added to Southwest’s routes, they must focus on customer service as the on-time arrivals and other metrics are certain to deteriorate. Additionally, in order to protect from volatile fuel prices, it would be prudent to expand the fuel-efficiency of the fleet by capitalizing on Boeing’s most recent advances. Southwest must also maintain its position as the “hassle-free” low-cost carrier, with more subtle method of collecting additional fees than checked baggage and reservation changes.

Identify the Problem

The main challenges facing Southwest Airline are maintaining its competitive leadership position through cost control, while keeping its culture alive.

SWOT Analysis

Strengths * Best low-fare carrier * Point-to-point routing * Boeing 737s * Customer service * Successful marketing|

Weaknesses * Growth into congested markets * Heavy dependence on Boeing * Contractual obligations * AirTran integration * Boeing 717s * Labor relations|
Opportunities * Near-international destinations * In-flight WIFI and live sports * Growth from AirTran * Traveler traffic growth|

Threats * Fuel price volatility * Diminishing advantage as low-cost carrier * Regulation * U.S. economic condition|

Proposed Solution/Implementation & Assessment

Southwest could further develop its ancillary fees, which supplement its standard ticket revenue, as a way to maintain low ticket prices. To Increase carrying capacity Southwest has been moving into more expensive airports. Southwest has approved 73 Boeing 737-800s for 2012 to 2017 allowing increased capacity on certain flights, including replacement of 717s from the AirTran merger. Southwest could also integrate AirTran into the point-to-point strategy for their...
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