Southwest Airlines

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SOUTHWEST AIRLINES CASE STUDY

BY
Aurelio Montelongo Jr.

June 22, 2012

Southwest Airlines is in an environment whose conditions for most in this type of industry have been anything but profitable. So why is it that Southwest Airlines, who has been profitable in this volatile market been able to make money? Though Southwest did have a losing quarter it was not due to lack of fliers or its service to its customers, but an investment in its fuel hedging cost. As fuel dropped in price, Southwest was stuck with its contracts at higher prices. Southwest airlines began flying in 1971 after having to have to fight in court over restraining orders not allowing the new carrier to fly. Both times, Herb Kelleher pleaded his case before
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Not Southwest. Most of its flying is nonstop between two points. That minimizes the time that planes sit on the ground at crowded, delay-prone hubs and allows the average Southwest aircraft to be in the air for more than an hour longer each day than a similarly sized jet flown by a network carrier. Southwest 's avoid-the-hubs strategy also pays dividends in on-time operations. According to FlightStats, Southwest 's 78 percent on-time performance in June is eight percentage points higher than the industry average and higher than that of any of its major competitors.
Simple In-Flight Service
Business travelers haven 't always loved Southwest 's über-simple service, but it 's looking better and better as competitors cut back. There is just one class of service, a decent coach cabin that is slightly more spacious than those of Southwest 's competitors. There are no assigned seats. There have never been meals, just beverages and snacks. Keeping it basic allows Southwest to unload a flight, clean and restock the plane, and board another flight full of passengers in as little as 20 minutes compared with as much as 90 minutes on a network airline. Airline efficiency experts say that the savings allow each Southwest jet to fly an extra flight per day. Extra flights mean extra revenue.
No Frills, No Fees
As other carriers have rushed to remove perks and pile on fees and

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