Southwest Airlines State Of The Airline Industry

Satisfactory Essays
Southwest Airlines State in the Airline Industry
Edwin Romero
Ashford University
BUS 690: Business Strategy
Dr. David Kalicharan
January 12, 2014

As Southwest Airlines reached their 43rd birthday, it has matured within the airline industry. During the past four decades, Southwest Airlines has maintained its image. However between 2008 and 2013 the profits have been at a loss and Southwest Airlines has had a declining financial performance record. In the end, Southwest Airlines would need to define itself for the long term in light of the rise of the ultra-low-cost carriers (ULCCs) and the product evolution taking place within the industry. Perhaps the most radical change they need is for its Southwest "family"
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The number of passengers reached to around 3.3 billion as travelers benefitted from a growing global network and airfares that dropped to 3.5%. Airlines also benefitted from the growth in connectivity and a 4% fall in freight rates, after inflation. The employment rate grew due to the need of aviation support, and is now at 58 million jobs worldwide. The airline industry has made enormous investments in modernizing fleets, which a total of 1,400 aircraft worth some $150 billion were added to airline fleets.
Investors saw favorable returns from airlines in 2014. The airline industry’s average return on invested capital (ROIC) reached 5.4% in 2014, which is up from 3.7% in 2012, and 4.4% from 2013. All of the growth in the airline industry has occurred in spite of a decade of terrorist fears, a 1.8 billion annually fare hikes from 2002 through 2011, and the implementation of many risk management travel screening measures. As the years have passed after the 9/11 attacks, the fear of traveling and rise of fares has ceased due to the security measures and great customer service the airline industry as a whole provides travelers.
Before discussing Southwest Airlines’ current position within the industry, a review of their strengths, weaknesses, opportunities, and threats (SWOT) analysis has been conducted.
Southwest Airlines SWOT Analysis
Strengths Weaknesses
Financial Ability
Iconic Brand
Has a
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