Southwest Airlines- The Influence of “LUV” Abstract Southwest Airlines is the largest carrier in the United States based on the sheer number of passengers carried domestically in a year. Given the hardships faced by similar airlines in the past years, Southwest Airlines no-frills approach has been their ticket to success. “They began with one simple notion: If you get your passengers to their destinations when they want to get there, on time, at the lowest possible fares, and make darn sure they have a good time doing it, people will fly your airline”. (Southwest.com, 2012) Southwest Airlines- The Influence of “LUV” Southwest Airlines was founded on March 16, 1967 in Dallas, Texas, and commenced customer service on June 18, 1971. They began with three Boeing 737 aircraft serving three Texas cities- Dallas, Houston, and San Antonio.
[pic] Colorado Technical University Southwest Airlines: Porter’s Five Forces Term Project - Final Professor Hanji Wu Submitted in Partial Fulfillment of the Requirements for ECON 616 Applied Managerial Economics By Larry Rodgers, Brent Packard, Leanne Marks, James Ladwig Colorado Springs, Colorado September 2012 Southwest Airlines: Porter’s Five Forces Analysis Southwest Airlines continues to show their strength in this tough industry. With the company’s main focus in keeping costs down, they are in a much better position than the rest of the airline industry in continuing to make profits during this current recession with customers being careful with their money. In fact, while most airlines strongly compete for their fair share of the market which has an impact on their ability to make a profit, Southwest’s focus has been on discovering new ways of increasing their profit. (Bundgaard, et al, 2006) Rivalry Among Existing Firms The threat of rivalry is high. Price competition has been the primary focus of the rivalry among airline companies.
“Southwest is one of the most honored airlines in the world known for its commitment to the triple bottom line of Performance, People, and Planet.” (Southwest Investor Relations: Company Profile). Related Party Transaction Before 2011, Southwest Airlines and AirTran Airways were the two biggest discount airlines, but on May 2, 2011 the two companies merged into one. Both AirTran and Southwest are confident that this merger is best for everyone; for consumers, employees of both companies, and shareholders. Southwest is best known for their low fares and no-fee baggage policy. Many consumers are relieved that they will continue their no-fee baggage policy and
Due to Because of the growth in the low-cost segment of the airline industry, Southwest has tomust continue to innovate and differentiate itself from others to perpetuate its success and popularity. An evaluation of the company’s internal strengths and weaknesses and external opportunities and threats served as the foundation for this strategic analysis and marketing plan. The plan centers on Southwest’s growth strategy by , suggesting ways in which it can build on existing customer relationships and on theby developingment of new services targeted to specific customer niches. (Pride & Ferrel, 1995) SITUATION ANALYSIS Southwest Airlines provides low-fare air transport among 58 cities within the United States. According to the company, “Southwest is dedicated to the highest quality of customer service delivered with a sense of warmth, friendliness, individual pride and company spirit.” As of December 31, 2007, Southwest served 411 non-stop city pairs.
After seeing its profits fall 36% last year, Embraer was forced to lay off 20% of its workforce. Embraer’s chief executive has expressed his belief that Executive Jets along with defense contracts are the key to making it through the tough economic times. He projects these two aspects will account for half of the companies revenue. It is clear then that Executive Jets are a good barometer for the overall success of the company. The smaller, more efficient aircraft is the trademark of Embraer’s success.
It comes to a surprise that US Airways Group is capable of doing so well despite the low quality of service they seem to provide. US Airways Group has recently merged with a competitor within the airline industry, American Airlines, and the two companies are expected to do very well as a team. The airline industry is one of a kind, as it does not have very much competition within the industry. As US Airways Group has shown; the little amount of competition makes it easy to do well even with poor service. The airline continues to grow and keep companies like US Airways Group in business mainly due to the rapidly growth of the industry.
JetBlue has an economy of scale for cost on a seat per mile basis, even surpassing Southwest airlines. Southwest’s cost per seat/mile is 6.53 and JetBlue is now at 6.08. JetBlue has a cost advantage because its competitors cannot match their low costs of seats/mile basis. JetBlue prides them-self in keeping their flights on time and
Strengths of Southwest Airlines Swot Analysis • Has experienced very fast growth since its inception in 1971. • Offers credit based on the number of trips with the airline instead of the total miles traveled. • Was the first to offer senior discounts, ticketless traveling, and services for air freight delivery. • Carefully considers each applicant so that they are sure to hire the best employees which leads to excellent service for their customers. • Offers reasonably priced travel packages with low frills and excellent customer service.
1.0 Introduction JetBlue launch its operation in February 2000. It is a domestic airline that provides superior customer services at low fares. This company is able to stand strong even after the tragic events of September 11, 2001. As a new entrant in the airline industry, JetBlue provides wider cabin and wider seats for the passengers and innovation IT programs such as Internet booking system to gain market share. JetBlue started to experience slowed growth from 2005 to 2007 in the competitive environment when major airlines start to expand their business into domestic businesses.
The major networking airlines in the industry are united, Northwest, American Continental, and Delta. Their combined revenue in 2005 made up of about 82 percent of the total $25.3 billion revenue generated by the 10 largest airlines. Low-cost carriers operate at a low-cost business model, they use the point-to-point flight system. the largest carrires in the model are Southwest and JetBlue. Regional carriers specialized in short-haul flights that caters to small towns and communities using small jets.