Southwest Airlines Case Study

Southwest Airlines is a major airlines company which provides air transportation to the people in U.S. It is headquartered in Dallas, Texas, and employs 34,901 people. It was co-founded in March 16, 1967 as Southwest Co. by Rollin King and Herb Kelleher initially named Air Southwest until changing the name to Southwest Airlines in early 1971. The main objectives of the firm was to attract the passengers by providing convenient schedules, taking people to their destination on time, and charging fees compatible with their automobile. The company is known among the top market leaders by following the low-cost differentiation strategy. Their tagline “Freedom to Fly” gives them another advantage. They provide fare promotions to stimulate ticket sales on flights. Passengers do not have to pay for their bags.

Even though Southwest airlines is the world's third largest airline when tallying the number of passengers carried annually it still have several issues which might bring them down in the future. One of the main key issues they are facing is how will they continue to be a low cost leader in the industry and another one is how to expand in more geographical areas in the country.  Southwest have lower fares but their services are limited to just few number of cities. Moreover they are dependent on single plane producer. The Company has a lower rate in terms of company developments and growths, which do affect also their rate in increase in profit. Furthermore, over the past few decades the airline industry has desperately turned to mergers in hopes of achieving economies of scale. Southwest and AirTran have merged together. The main thing they are missing is their brands. Branding consultants and aviation experts say the big airlines have lost focus on their brands as a result of their drive to make operational gains.

The alternative courses of action can be expanding their market. The advantage of doing it is it will help to increase profit, increase company growth and development and they will earn more customer patriotism. The disadvantage of expanding market is increase in operation costs. They will have more employees to pay with their salaries and the security in the competition guaranteed to be favorable in their part. Another course of action is they can improve their services rendered like consideration frills. It can invite more customers, increase profit and they can compete to other company who serves frills because their prices are still low. The disadvantages are increase operation cost, increase in services means increased in member of employees and compensation, and increase in operation cost means increased in piece as well. Another course of action is they can cut down operation cost. It will help them to increase net profit, the cost strategy is developing, and the expenses go down as well. The disadvantages are it will degrade the kind of service they offered, it may discourage customers and there will be low customer trust and patriotism.