Southwest Airlines

Southwest Airlines is a major U.S. airline that primarily provides short haul, high frequency,
point- to point, low fare service. Southwest was incorporated in Texas and commenced
operations on June 18, 1971 with three Boeing 737 aircraft serving three Texas cities- Dallas,
Houston, and San Antonio. Today Southwest operates nearly 400 Boeing 737 aircraft to 59 U.S.
cities. Southwest has the lowest operating cost structure in the domestic airline industry and
consistently offers the lowest and simplest fares. Southwest also has one of the best overall
customer service records.

Statement of the problem: With the escalating fuel prices, ever-escalating operational costs,
potential threats, and the global economic crisis, can Southwest Airlines maintain its
profitability?

Objectives:
1. To continue the short-haul approach and point-to-point flights coupled with high
employee retention to maintain their customer service.
2. To meet the performance objective of profitability.
3. To nurture the existing corporate culture and to modernize part of the fleet to provide a
better interior and customer experience.

SWOT
Strengths
1.
2.
3.
4.
5.
6.
7.
8.

Strong fleet operations

Friendly Staff
Best low fare carrier
Largest airlines in the world in terms of highest number of passengers per year
Recognized as a great value and excellent services
Flexible working hours even though 82% of employees are unionized
Strong brand image
Highest daily domestic departures than any other commercial U.S. airline

Weakness
1. Declining profits and margins
2. Heavy dependence on passenger revenues
3. Heavy dependence on a single producer Boeing

4.
5.
6.
7.

Conservative growth strategy

Limited to cities domestically
Operates its own booking service
Does not offer segmentation (business flights, first class, etc.)

Opportunities
1.
1.
2.
3.
4.
5.
6.

National and international markets

Growth of older generation
Research and development
Vertical integration
New technology opens the door for new products/services
Longer flights
Growth of business and leisure travel

Threats
1.
2.
3.
4.
5.

Intense competition
Regulation restrictions
Price fluctuations in petroleum markets
High unemployment and inflation keeps travellers from flying
Joint ventures can negatively affect brand image

SWOT ANALYSIS
INTERNAL

EXTERNAL

STRENGTHS
1. Strong fleet operations
2. Friendly Staff
3. Best low fare carrier
4. Largest airlines in the
world in terms of highest
number of passengers
per year
5. Recognized as a great
value and excellent
services
6. Flexible working hours
even though 82% of
employees are unionized
7. Strong brand image
8. Highest daily domestic

WEAKNESSES
1. Declining profits and
margins
2. Heavy dependence on
passenger revenues
3. Heavy dependence on a
single producer Boeing
4. Conservative growth
strategy
5. Limited to cities
domestically
6. Operates its own
booking service
7. Does not offer
segmentation (business
flights, first class, etc.)

departures than any other

commercial U.S. airline

OPPORTUNTIES
1. National and international
markets
2.Growth of older generation
3. Research and development
4.Vertical integration
5.New technology opens the
door for new products/services
6.Longer flights
7. Growth of business and
leisure travel
THREATS
1. Intense competition
2. Regulation restrictions
3. Price fluctuations in
petroleum markets
4. High unemployment and
inflation keeps travelers
from flying
5. Joint ventures can
negatively affect brand
image

SO

-By recognizing their great

value and excellent services,
they can have new technologies
that can have new opportunities.

WO

-To overcome conservative

growth strategy, they can pursue
through their growth of business
and leisure travel.

-By having a Strong fleet

operations they can be have
National
and
International
markets.
.ST
-As they are recognized for their
great value and excellent
services and being known for
largest airlines in the world, they
can
reduce
the
intense
competition with other airlines
company.

WT
-Due to the intense competition,
Southwest airlines should
increase the number of cities
domestically and not only to the
limited cities.

Strategy Mix
Objective
Schedule
1. To continue the short- 1-2 years
haul approach and pointto-point flights coupled
with high employee
retention to maintain
their customer service.

2.
To
meet
the 1-2 years
performance objective of
profitability.

3. To nurture the existing 1-2 years

corporate culture and to
modernize part of the
fleet to provide a better
interior and customer
experience.

Output
Organized flight
schedules,
avoiding delays,
for maintaining
and possibly
increasing
customer
service and
satisfaction
Increase in
performance
can lead to
greater
profitability
Customer
experience and
satisfaction will
increase.

Budget
N/A

Person Responsible
Management
Department

N/A

Management
Department

N/A

Management
Department

Conclusion
Southwest Airlines built numbers on its culture where as most competitors let the culture
to shape up by their focus on numbers. The group concludes that they should maintain the best
low fare carrier to attract passengers and so the number of passengers will increase.