Southwest's Long Term Strategy

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With the vision and purpose of existence, Southwest’s long-term strategy is to provide superior service with low-cost targeting point-to-point destinations. When compared with its competitors, Southwest’s business model leverages the operations, resources and strategies very efficiently to minimize costs. The following are the few techniques/strategies which exemplify the success of Southwest’s operations. For over decades, Southwest chose small and midsize airports in big cities, where its competition is relatively low. Using small airports is hassle-free due to less traffic and congestion with an access to major markets. This allowed the southwest to reduce its turnaround time when compared to its competitors. This increased the aircraft utilization¬ by allowing aircraft to log more hours in the air. This is quite opposite to the way the other major airlines operate. Yet, the southwest strategy gave a competitive edge to gain market share and to achieve scale economies. Other airlines use hub-and-spoke system (anywhere to everywhere system) where passengers from small markets (spokes) fly to major airports (hubs) and then consolidate the passengers to long-hauling flights. Challenging the conventional practice of the airlines industry, Southwest adopted a point-to-point system where services are catered to each origin to destination (i.e. a city-pair) via nonstop flights (Gerald N. Cook, 2008). This reduces the travel time as there are no intermediate stops and
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