Southwest Airlines Cost Competitiveness

Company’s Strategy: Southwest’s strategy is to improve efficiency in its operations and pass cost saving to its customers by offering them low and competitive prices. Southwest Airlines is dedicated to providing the highest quality of Customer Service delivered with a sense of warmth, friendliness, individual pride, and company Spirit.

The mission of Southwest Airlines is dedication to the highest quality of Customer Service delivered with a sense of warmth, friendliness, individual pride, and Company Spirit.

Southwest Airlines Co. began its operations in 1971 and has been serving the industry for the past 43 years now (Southwest Airlines, n.d.). It is the major domestic airline, and ranked number one in 2014 by the Bureau of Transportation Statistics (United States Department of Transportation, 2014). Back in 1971 the airline began its services in Texas in the cities of Houston, San Antonio, and Dallas. The company has been ranked as the nation's largest low cost carrier (Mergent, 2012). It offers the lowest fares, and has the lowest cost structure in the industry.

By giving low-cost tickets prices southwest airlines attract to a broad base of salaries and the best cost provider strategy. They also separate themselves from their rivals by being different, an example of a broad differentiation strategy and they have no assigned seats, no baggage fee for the first bag.

profitable entry seemed to be the ability of airlines to fill their airplanes above the breakeven

Southwest Airlines also has flexible policies to ensure customers have a great experience. An example of their flexible policies is you can cancel a reservation up to 30 minutes prior to the flights take off. Southwest also have rewards programs that consist of earning points, points for purchasing flights that customers can use to purchase booked flights. It also has a partnership with Chase Bank and offers customers a Southwest credit card that allows them to accumulate points that they can redeem for future flights (Investopedia, 2015). Southwest also price matches on airline tickets. The competitive tactics that this airline is using are very effective price matching on the airline

Southwest Airlines is excellent in planning out their long-term goals. The above SWOT analysis proved that the company is successfully carrying out the cost leadership strategy to manipulate their competitors and boost up their company. Their mission in providing Low Fare cost is one of the best strategy that they can have to increase their market share, but not just that it also put a significant increase in the demand of air travel. Southwest Airline rapid rewards program is brilliant, so they should continue and expand it even more.

The Southwest is a leading American air service and is the largest low-priced service provider with the base in Texas. It came into existence in 1976 and its name became Southwest in 1971. According to an overview in 2014 the company has around 45k employees and around 3.4k flights are operated each day.

Southwest Airlines Co. is an airline company that offers air transportation services within the United States and in international markets. The company operates within the airline industry that is highly regulated, technology intensive, labor intensive, and highly competitive (Southwest Airlines, 2017). Southwest Airlines operates a service business whereby the company offers a point to point air transport service to its passengers. Other than passenger transport, the company offers transportation services for pets and unaccompanied minors. The flights offered include short haul and long haul between various destinations within the United States and internationally. In 2016, the company’s operating revenues from international operations amounted to $383 million. A unique feature of the Southwest Airlines is its cost structure whereby the company focuses on cost discipline and uses one aircraft type to minimize costs.

Other important things to appreciate about Southwest include its large modern fleet of 547 aircraft which are all Boeing 737s. This is good because customers get to enjoy ample leg space and relatively wide aisles on the plane which is not the case even with some very big carriers. Southwest offers value to its customers and there is nothing that can beat this. Southwest also has constant deals coming out where people can fly for even lower fares on special days and this makes it the number one choice of all budget conscious passengers.

Although in recent history Southwest Airline did some adjustments to its operation, company maintained its philosophy and stayed true to its original strategy. When company was established in 1971 its primary focus was to stick to short-haul trips, point-to-point flights, fleet only consisting of Boeing737s, high-frequency flights, low fares, and no international flights. Operating in no frills philosophy resulted in lower fixed cost which enabled Southwest Airlines opportunity for growth and created the competitive advantage.

Southwest Airlines is one of the largest airlines in the United States by number of passengers carried each year (Inkpen, 2013). The company had been profitable for decades unlink other major competitors and also was able to weather 2008-09 recession (Inkpen, 2013). At southwest, leadership philosophy is to manage well at good times to prosper through bad times (Inkpen, 2013). The airlines we found by Herb Kelleher and San Antonio in the year 1970. Southwest began flying in year 1971 in three Texas cities with three aircrafts and 25 employees. Its initial focus: Short-haul, point-to-point flights, a fleet of Boeing 737s, low fares and high-frequency flights (Inkpen, 2013). In year 2012, 81% of its passengers booked tickets via

Southwest Airlines Co. was established in 1967 when it was started with only three Boeing 737 aircraft that serve three largest Texas cities namely Dallas, Houston and San Antonio. In 1989, Southwest Airlines became a major airline when it surpassed the billion dollar revenue mark. Each year, millions of people fly with Southwest Airlines making them the nation’s largest carrier of domestic passengers. With 43 years of exceptional service Southwest Airlines continues to expand and serve 93 destinations in 40 states with more than 3,600 flights a day. This year Southwest launched their international flight service to five nearby countries by Air Tran Airways, a wholly owned subsidiary which was acquired in May 2011.

1. How does Southwest Airlines get its competitive advantage? Southwest Airlines uses a Cost Leadership Strategy, however most pricing strategists would agree that having a low price does not, in itself, constitute a competitive advantage. In fact, thinking that low prices are always a good strategy for competition is deeply misguided. However, at times, targeting low prices can lead to a strategic focus which delivers tremendous results. Modern competitive strategy will often examine firms from a resource-based

Southwest Airlines encourages respect, innovation, a caring attitude and strives to adhere to all labor and employment laws which includes respecting privacy and equal opportunity. With a strong concern for avoiding corruption and avoiding anti-competitive behavior, they work hard to maintain accountability of all business practices. An example of this is the promotion of competition to provide consumers low air fares and a variety of high quality air service offerings across the US. This shows their devotion to the community they serve and maintains the company culture.