Southwest Airlines - a Case Study

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Synopsis of the Situation: From June 18, 1971 when it started operation from the Love Field in Dallas Texas, Southwest Airlines stands out as a company willing to do things differently and wanting to be the best Airline in America, and last year it was rated America’s best airline, both in the quality of its flights and the being the most profitable. With such admirable past and what seemed like a future cast in success, one would not expect Southwest to be confronted with problems which could potentially derail it from its destination as the premier carrier in the US Airline industries. The twin problem of bleak economic outlook and looming labor union negotiation makes the future a challenge that must be negotiated carefully.

This case study examines these issues and tries to proffer solutions to them.

Key Issues: Southwest faces a challenging future despite several years of success as America’s only profitable Airline. The very basis of those successes is about to be tested with a looming negotiations with its ‘best-paid’ Pilot union and the coming end of fuel hedging contract. There is also the problem of the record rate of unemployment and the general economic outlook that is gloomy to say the least. These indeed are challenging times that the organization is faced with. But behind these challenges are opportunities that it can exploit to remain indeed a profitable Airline.

Define the Problem & the Opportunity. Many of the problems faced by Southwest Airlines are indeed out of its control. The global economic situation and the attending employment crisis are some of those. With the Wall Street Journal reports of “investors fretting over a sluggish economy and early evidence of decelerating revenue growth ahead of the busy holiday weekend” while recently analyzing the Airline industry as a whole.

But within the reach or immediate control of Southwest is its looming negotiation with its Pilots Union. While the relationship between the...
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