Southwest Airlines is considered one the U.S’s major airlines. The original company was started in 1967 and then took on the name Southwest Airlines in 1971. As of the end of 2013, the company employs more than 44,000 people. Today they fly to 96 destinations in the US, and they just started international service as of July 2014, thanks to their purchase of AirTran airlines. By the end of 2014 AirTran airlines will be completely converted over to Southwest Airlines (Southwest Airlines). Southwest Airlines was the first to offer low cost and no frills air travel. In today’s economy, this is a very large subject and goal of many airline companies to try and reach. More competition is building to compete with. Amid rising airline cost and controversial service as a whole, Southwest still continues to keep their cost down due to their business model of basic and simple service. Southwest Airlines has been recognized in Fortune Magazine for 10 years on its survey of corporate reputations, and they have also been listed among the top three in admired corporations (Chandrappa, 2014). Southwest has continued to be successful based on their good reputation, smart financial habits, and rejuvenated marketing.
Successful financial increases in 2014 Quarter 2 Results
Known as the largest low-cost domestic airline, with the highest number of passengers
Large social media following
Just expanded to international service
Catchy marketing with memorable slogans and fun humor
Strong fleet operations with Boeing aircrafts, and growing.
Involved in many airport development projects, such as managing renovation and modernization in Dallas, Houston Hobby, and Fort Lauderdale airports (Chandrappa, 2014).
Southwest is the leader in the break-even load factor, meaning that it consistently recovers its cost of operation by having higher sales than needed to break even. For example, in the second quarter of 2014 – Southwest’s break even factor was 74.4%, and their actual load factor was 83.9% (Ihliu, 2012).
Offers credit program based on number of flights, not miles or money spent. Value added for the customer. Including two free bags each flight.
Conservative in spending and competitive growth plan
Sales model is being studied by other airlines
Limitations on cities, previously traveled to 57 cities, currently travels to 89 destinations in the US (Wikipedia, 2014).
Does not offer differentiated seating options such as first class, business class, etc. (Also can be viewed as a strength, this allows the airline price to stay low)
Cargo space is smaller due to the type of aircraft used
Fully dependent on a single airline producer, Boeing
Expansion to more cities within the US and more international flight options
In 2010 acquired AirTran holdings