Southwest Airlines : The Most Important Airline

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Southwest Airlines was founded in Texas and opened its doors to customers on June 18, 1971, with only four Boeing 737 providing services to only 3 cities in Texas (Houston, San Antonio and Dallas) Mr. King and Mr. Kelleher started Southwest Airlines with one philosophy in mind: "If you get your passengers to their destinations when they want to get there, on time, at the lowest possible fares, and make darn sure they have a good time doing it, people will fly your airline." (Khaledi) Southwest Airlines is now the most important airline, actually, is the 4th leading company in the industry in the United States and their symbol on NYSE is LUV. Currently, Southwest Airlines is America 's largest airline with the lowest rates, and they serve…show more content…
Due to high demand and success of this strategy, the airline has made the strategic decision to invest in bigger planes that will have a higher capacity of passengers. This idea was introduced in 2012 by CEO Gary Kelly and called this strategy a (2013) “game changer” with the intentions to ultimately increase profits. In July 2014, Southwest Airlines decided to jump into the international airline travel into Mexico and the Caribbean using the acquisition that took place with AirTran in 2010. This expansion, however, is still in its early stages and has yet to show full financial results. Although the company has been able to gain a competitive advantage by distinguishing themselves from the competition, it still remains a difficult industry to compete in. Because the competition is very high it is simple for customers to look elsewhere for a better deal. The product is air travel and there are many competitors offering the same destinations. Airfares and rates vary and the competitors are always pushing to lower rates in order to fill empty seats and ensure profits. There is no guarantee of customer loyalty with such high competition. Other competitive threats are the fixed rates that airlines have to endure. The fixed costs of purchasing airplanes and keeping up with their maintenance are very expensive. Due to investment in equipment and fixed assets is so high, the industry has high exit barriers. Southwest

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