Introduction: Southwest Airlines is based in Dallas, Texas and is the fourth largest airliner in the United States.
The company was co-founded by Rollin King and Herb Kelleher on March 15, 1967, initially named Air Southwest until changing the name to Southwest Airlines in early 1971. King and Kelleher wanted a low-cost/low-fare airline that would shuttle passengers between Dallas, Houston, and San Antonio, Texas. The company now operates 537 Boeing 737 aircrafts and provides service to 64 cities in 32 states.The mission of Southwest Airlines is dedication to the highest quality of customer service delivered with a sense of warmth, friendliness, individual pride, and company spirit.
It primary provides short haul, high-frequency, point-to-point, low-fare air transportation service among the United States. SWOT Analysis: Strengths Southwest Airlines has many strengths. Southwest Airlines is the leader in providing low cost in state flights for its customers. Southwest’s average passenger airfare is only $112.
76.It consistently offers frequent flights, inviting cabins, reliable service, and amazing customer service. Since every Southwest airplane is operated by only 71 people, labor costs have decreased. Southwest has the lowest operating cost of any US airline. Southwest Airline’s total revenue of $11. 0 billion and net income of $178 million is also a strength.
It has $1 billion in cash, and has the strongest balance sheet and credit rating of any US airline. This allows management to quickly borrow an addition $1. 1 billion and gives the company a buffer to pay all its bills and absorb any cash drains.Since Southwest airlines have been the leader in low cost flights for the last 36 years, and have been profitable for 33 years, they use the strategy of purchasing the same airplane for their entire fleet. The Boeing 737 is their airplane of choice; they have chosen to have a single airplane because they only have to have their employees trained on one type of airplane and because of that their efficiency increase. Which is a strength because not only does it save in costs, it is also time efficient in training of employees.
Another cost cutting technique used by Southwest which is a trength is their use of ticketless travel, which saved additional money by running its own proprietary reservation system. Along with those strengths, their customer service is a strength. Southwest’s strategy to delivering good customer service and creating customer satisfaction is to present happy faces to passengers, displaying a fun attitude, and to do things to provide their customers with a positive experience.
Southwest made an effort to hire gate personnel who liked to interact with customers, had good interpersonal skills, and were cheerful.All of these, low cost flights, cost cutting techniques, and excellent customer service, have led to Southwest being the leader of their industry. Weaknesses Southwest Airlines has managed to be consistently profitable in all of their years in business. However, there are some things that Southwest needs to improve in order to continue their plane of steady growth over the long term. One weakness is that Southwest Airlines only serves 29 states and doesn’t offer international flights and it can’t compete against bigger companies that offer more nationally and internationally flights.If Southwest offered more destinations in the US and internationally, it could increase the number of customers.
Another weakness is their preference to use only Boeing 737s. Being limited to one type of airplane leaves them with limited flexibility when the airplane receives a bad reputation. This would be a costly venture for Southwest Airlines. So Southwest should look into using other models of airplanes that is similar to the Boeing 737s.
Another weakness is that Southwest is often referred to as a second class flight because it doesn’t have a first-class section on any of its planes and it doesn’t have any fancy clubs in terminals for its frequent flyers to relax. This proves that its cheaper prices can be equated to its less advanced amenities, which are not attractive to customers. A way to improve this is to have a small first class section in the flights for those who desire to pay more for better amenities. The fact that Southwest Airlines doesn’t offer passengers baggage transfer services to other carriers is a weakness.Any people decide not to fly with Southwest because of this.
To get these customers back Southwest, like most other airlines, should offer baggage transfers. Opportunities There are many opportunities for Southwest Airlines. One is that it could consider expanding into new smaller airports. This would increase the number of flights they could offer customers, and thus appealing to more customers, especially the business people, who could be a potential market that is untapped by them. They could offer more frequent flyer rewards to passengers and businesses who want to save money and they could offer flight transfers.
While expanding into new hubs across the nation, Southwest should also invest in new Boeing 737’s to expand their fleet to accommodate the increase in flights. By improving their range and their flight offerings, it would positively impact Southwest Airlines. Threats Social Threats. The past events of September 11, 2001 is a major social threat of Southwest Airines. Since this day air travel has changed tremendously.
Southwest must now come up with a new way to make their customers feel safe and secure, in order to continue to see long term growth.Technological Threats. Southwest Airlines uses its technology to lower costs by allowing customers to buy tickets directly from their website than having to go through a travel agent which would cost more money. Also Southwest uses paperless tickets, so if there would to be a problem with a server or anything Southwest Airlines would be in chaos. Economical Threats.
The price of oil has increased to almost thirty six dollars a barrel due to recent political activities. During this time, being involved in the transportation industry is proving to be difficult.The price for aviation fuel has nearly doubled in the last year with no signs of slowing down. The current economic state has caused many people to use air travel less.
Both of these economical threats have an effect on Southwest Airlines. Environmental Threats. Airplanes use large amounts of gas which is an environmental threat. Political Threats. The Wright Amendment of 1979 which is still in effect as of 2003 won’t let Southwest Airlines advertise, publish schedule or fares, or check baggage for any travel from Dallas’s Love Field to any city it serves outside of Texas, Louisiana, Arkansas, Oklahoma, and New Mexico.Government regulations and flight regulations are also political threats. Recommendations: Southwest Airlines should take this opportunity to expand to greater regions. It is time for Southwest airlines to use its low price tickets to drive its competitors out of business and take over their market.
Giving up some of the profit to cut the ticket price even lower can open Southwest to a much larger market that will bring more profit in the future. Southwest may want to look into providing low cost, no frills, long haul flights.The company has a concern about increased costs with long-haul flights.
This could be overcome by serving pre-packaged foods. This would allow the company to expand into the long-haul market and still over low fares while keeping turnaround time short. The company may also want to consider using another type of airplane to serve small flights. The use of a smaller plane would allow faster turn around time, use less fuel, and would fill capacity more often than the Boeing 737. Conclusion: Southwest Airlines is a strong company. It has developed a great low cost model for the past thirty years.It has expanded from a tiny company with merely three aircrafts to one of today’s major airliners that flies between 58 cities carrying over 60 million customers each year.
Now, Southwest is given an opportunity to grown even bigger at this extremely hard and critical time for the airline industry. After the incident of September 11, Southwest Airlines is one of the few airliners that remained profitable. Southwest airlines does have some issues that it must consider resolving. By following the preceding recommendations, Southwest will be able to expand its market share and continue its growth as a key player in the airline industry.