Southwest Airlines: Staying Ahead in the Pricing Game

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Southwest Airlines: staying ahead in the pricing game 1. What has been Southwest’s traditional pricing strategy? Why has this pricing strategy been so successful throughout the airline’s first three decades? Traditionally, Southwest used a low-price strategy. Southwest’s traditional pricing strategy has been the choice of buying cheap airplane tickets for just basic transportation services, without any extra service, such as meals. This pricing strategy was so successful throughout the airline’s first three decades because their strategy was the complete opposite of competitors. The airline did not serve major airports, but second-tier destinations where the costs were lower. They only served snacks on the flights, and employees were offered a profit sharing plan in place of a retirement plan. All of these elements helped cut costs and make Southwest profitable every year since its founding. They kept it simple and inexpensive. 2. What values do the airline customers-both business and leisure travelers- seek when they buy air travel tickets? Has Southwest done a better job than competitors of meeting the needs of these air travelers? In what ways? Some values that airline travelers seek are leisure of arriving to their new destination, flexibility, being efficient, and being comfortable all for a fair and inexpensive price. Traditionally, Southwest was inexpensive and flexible because of their low costs and the mentality of just getting travelers from point A to point B. The remodeling of the airline has created a more pleasant atmosphere for the customers. They have specifically targeted business travelers. Southwest’s policy allowing customers to change flights without penalty appealed to customers. But what really made Southwest stand out to both customers were its frequent flights serving a ton of cities at convenient times and low prices. Though

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