Southwest Airlines Case

Southwest Airlines has been making changes over the past few years that helped them

become the largest low-cost carrier in the United States. Most other airlines have been struggling to make it through this economy, but Southwest has found a way to thrive. The airline has dropped their prices and eliminated fees for extras that have allowed them to fill up most flights. One cost they continue to struggle with its offsetting the increasing fuel prices. This has caused some airlines to merge or sell the company to competitors.

It’s a great way to understand the external environment to use analysis which Southwest

Airlines is dealing with. Firstly the demographical factor that influence strategies of Southwest

Airlines. The aging population in the United States is a big issue. It is known that older people,

does not prefer to travel by plane, not for the short or long-haul. Elders aged 50 and above tend

to have more time to travel around with their friends as they already retired. They are still too

conservative and rather take a bus, train or drive themselves to the places they want to be. The

time is more flexible comparing with young generation-working groups and students. Working

groups and students can only travel during holidays. Because Southwest Airline is very customer orientated they are providing low costs and quick movement. This is more for the new

generation, people who are also familiar with for example the internet. Everything is moving

faster and as a shorter life cycle. The older people within the United States could find it too hard

to deal with this.

An Economical environment that influence Southwest Airlines could be the economical

crisis. This crisis is changing the value of money and the perception of customers. Also because

of this crisis and because of the internet the customer can become too price sensitive. Because of the fact that labor cost are the highest costs Southwest Airline has, they need to deal with this. In the economical crisis it is hard to motivate employees and to stimulate lower cost. Southwest Airline offers a low service to the customer by not offering free beverages and meals, this is just an example that helps in providing such low costs.

Political Environment: In 2006 Southwest Airline has the average flight of 622 miles and has a

duration of 1.53 hours. This is what the CEO of Southwest Airlines said: “We’re