What Are the Sources of Southwest Airlines' Competitive Advantages?

Southwest believes that an important part of its competitive advantages rested with its people and how they were managed. There are many reasons for Southwest’s success, but three most important competitive advantages are employee management, risk assessment and cost efficiency.

Firstly, Southwest Airlines treat its very serious; employee satisfaction is very important and prioritized as one of key success factors. Because of the importance of its employees, the company’s recruiting process is very selective to ensure fit. Southwest has spent a lot of time indentifying the key components that comprise effective performance and behavior in order to make sure right people at right position. Because the company rejects more than 95,000 applicants each year, the recruiting process is designed to not make applicants feel inferior or rejected in order to avoid lose potential customers. In addition, the company hires very few people with MBAs and prefers people without extensive industry experience.

Secondly, Southwest Airlines remained aware of their strength, weaknesses, opportunities, and threats. Southwest has always seen itself as competing not so much with its competitors as with surface transportation. The company service involves frequent on-time departures as well as low cost fares and emphasizes point-to-point routes. They seized opportunities to expand when other competitors closed their airline services to some cities that they deemed unprofitable. Following the strategy of low cost, low fares, and frequent flights, Southwest keeps its fares simple. They concentrated on flying to airports that were underutilized and close to metropolitan areas and never offered meal service on its flights.

Thirdly, Southwest Airline has cost advantages from the remarkable work force productivity and operation management. Eliminating central hubs created efficiency, in which flights had point-to-point routes without connection flights, because delays