Southwest Airlines Essay

1219 Words5 Pages
Case Recap South West Airlines, in existence since 1971, has slowly grown its business by focusing on cheaper fares, excellent customer service and employee engagement. In 1994 it was declared eighth largest airline based on Revenue Passenger Miles (RPM) flown. In same year it recorded net income of $179.3 million with total operating revenue of $2.6 billion. It’s excellent low cost operations became model for Airline Industry. Other Airlines, such as United and Continental started copying Southwest’s operations model and competing directly with Southwest by introducing a concept called Airline-Within-an-Airline. In this concept an airline creates a separate section of airline operations within its own bigger umbrella of operations. These separate section of airlines operate differently (point-to-point system) than main airlines operations (hub-and-spoke system) and cater to different market segment. Continental was first to implement this concept. Continental, after emerging from bankruptcy, created “Continental Lite” in 1993, focusing on low-fare, short-haul and point-to-point service. Because of operating difficulties, Continental Lite suffered significant losses and in January of 1995 started folding back it’s Continental Lite operations into Continental operations. United, world’s largest airline in 1994, introduced airline-within-an-airline concept in its own operations on October 1 1994 by creating brand “Shuttle by United”. Similar to Continental Lite, it was designed on low-fare, high frequency, short-haul and minimal amenity. Out of 14 routes of “Shuttle by United”, nine competed directly with Southwest. Among these Oakland-Ontario, California was hotly contested route. Because of operational difficulties, United made two changes in Jan 1995. First, discontinue services on some of routes including hotly contested Oakland-Ontario route and Second, increase

More about Southwest Airlines Essay

Open Document