Southwest Airlines Case Study

Air southwest was born on March 15, 1967 with its founders Rollin King and Herb Kelleher. The young flight company’s initial intention was to serve Dallas, Houston and San Antonio Texas. Legal debates kept the small airline grounded until 1971 when they changed their name to Southwest Airlines and completed their first flight on June 18 of that year. Many of Southwest’s first flights were in fact from Dallas then to Houston and finally to San Antonio despite the hard time with approving the route. Southwest kept their service simple along with their fare structure which became the basis for the strong company they are today. Southwest saw some financial trouble, like most new companies do, and had to sale one of their aircraft in order to pay employees and make ends meet. Even after being forced to sell an aircraft Southwest kept up its hard work and continued the same schedule they were using with 4 aircraft, now only using 3 in their fleet. Because of this determination and hard work the aspiring company was able to complete the quickest turn around rate of any of its competitors and still holds that title even now. With the company remaining dedicated to improvements by 1985 they were already offering not only flights around Texas but had spread all the way through the Midwest.

A lot of Southwest Airline’s success can be accredited to its very well thought up strategy. The airline used a business model that was so affective a trend was named after the company known as the “Southwest Effect.” Southwest started with a very simple plan of action which consisted of making flights around Texas cheaper than that of driving a car. In order to follow this business plan the company put rates low enough to make just enough profit to slide by. The company realized that by keeping the rates this low that there aircraft were running nonstop and business was increasing dramatically.

Southwest Airlines provides low-fare air transport among 58 cities within the United States. According to the company, “Southwest is dedicated to the highest quality of customer service delivered with a sense of warmth, friendliness, individual pride and company spirit.” As of December 31, 2007, Southwest served 411 non-stop city pairs. Approximately 78% of the Company’s customers fly non-stop. Southwest Airlines is a one of a kind, unique enterprise. Although it operated Boeing 727 aircraft for a short time during the 1970s and 1980s, between that time and 2012 the airline operated only Boeing 737 aircraft, and as of August 2012 is the largest operator of the Boeing 737 worldwide with over 572 of these aircraft in service, each operating an average of six flights per day. It is the fifth largest passenger airline in the United States. The company essentially functions as a point-to-point operation rather than a hub-and-spoke service unlike its competitors. Southwest has various competitive advantages, which have led