This website uses cookies to ensure you have the best experience. Learn more

Analysis Of Southwest Airlines

2695 words - 11 pages

EXECUTIVE SUMMARYSouthwest Airlines has come across some issues and the one with the most concern is expansion. Southwest must meet the current and forecasted demand, find sufficient facilities, keep their strategy coherent and consistent, and ensure that the entry into a new market is timely. These issues main constraint is finding facilities at a low cost to remain profitable. What has to be taken into account would be new construction costs in a major city airport, addition of two new gates, more labor costs, etc.The management of Southwest must strive to keep its competitive advantage and strategic coherence when faced with future expansion decisions. The airline must make certain that any expansion decisions are consistent with its short-haul, high frequency, low-cost, "luv" strategy. Competition in the airline industry is tough, but also the risk of substitutes to air travel threatens to take travelers out of airplanes.Southwest's main advantage is their price (as much as 80% when compared to other major airlines). This strategy is highly sustainable, dramatically increasing their size of the market where they enter.From the three routes given, we chose that Southwest should implement the Baltimore - Chicago route, since financially it seems sustainable. The labor conditions in both of these airports are good (there is a lot of room for expansion), and the route is about 611 miles long, which still constitutes a short haul route.PROBLEM STATEMENTDespite the overwhelming success Southwest has maintained, the airlines does face several major issues that play vital roles to its continued profitability. Based on a conservative growth strategy, Southwest's top concern is expansion. The airline faces an urgent expansion decision regarding where and how to commit two new Boeing 737's into service. This decision is comprised of several important components. Southwest must meet the current and forecasted demand, find sufficient facilities, keep their strategy coherent and consistent, and ensure that the entry into a new market is timely.Southwest must be aware of an increasing or decreasing demand not only in the markets that it currently serves, but also any potential market. As air travel steadily increases, Southwest must decipher which cities hold the greatest opportunity to profit over other major airlines, such as United and US Air. The airline industry requires enormous quantities of capital, which prohibits Southwest to grow in an uncontrolled manner. For example, 500 letter writers in each city had requested the Detroit to Phoenix route. Southwest must then determine if there is ample demand to warrant the addition of that route into service.The main constraint regarding the proposed expansion is finding enough facilities at a low cost in order to remain profitable. Construction costs in a major city airport would be approximately $1 million including the addition of two gates and other improvements. The cost at smaller regional airports...

Find Another Essay On Analysis of Southwest Airlines

Southwest Airlines Capital Analysis

2155 words - 9 pages : (RITA, n.d.) Southwest Airlines is the only airline company to get listed in the top 50 Fortune magazine as the most admired company (Southwest, 2014, p. 5). They have very strong customer base and customer satisfaction is also high. About 85% of the customers use to book their tickets, it is number one airline site which is having an average of 9 million unique visitors per month and it is the first airline to get more than 5 million

weaknesses of southwest airlines Essay

974 words - 4 pages Southwest Airlines was founded in “1964, when Rollin King purchased a charter airline company called the Wild Goose Flying Service” (Lauer, 2010). The idea of Southwest Airlines began in “1967, between King and Herb Kelleher” (Lauer, 2010). After winning “legal battles against their rival competitors Southwest was ready for operations in 1971” (Lauer, 2010). The CEO of Southwest Airlines is “Gary Kelly, who was hired to work in 1986” (Lauer

Southwest Airline Inc. case : "PEST" Analysis of Airlines Industry

1052 words - 4 pages bitter rivalry. The hostility between competitors were so harsh that two rivals -Texas International and Braniff joined hands to destroy Southwest Airlines even before it could begin its operation. Failed to stop its operation, the rivals began to put up obstacles at every step Southwest took. No wonder, they were dubbed as "predator" meaning an animal that eats other animals. This attitude of destroying the competitor is found in this case in

The Mission of Southwest Airlines

2050 words - 8 pages says, “today their employees now own ten plus percent of their company’s stock.” This unbound employee loyalty shows first hand in its day-to-day operations, the employees go out of their way to stay on time and to accommodate and help their customers. Andre O. Schwage, CEO and President of Satmetrix Systems, a software analysis company of customer satisfaction and service in many industries today, said “Southwest Airlines’ consistently high

The History of Southwest Airlines

3902 words - 16 pages company has just broken out of the sector average of 14.42%. The company will deliver about average to the investor, and certainly below an average S&P500 company where the rate is 24.11% As the conclusion of the ratio analysis we'll use the Du Pont analysis for the two companies. Net Profit Margin Asset Turn-Over 1-Debt to Asset Ratio R.O.E. SkyWest Airlines 11.94% 1.06 1-0.611 20.7% SouthWest Airlines

Analysis of the external environment of "Ryanair –"Southwest" of European airlines" case

1722 words - 7 pages The objective of my report is to analyze the external environment in "Ryanair-'Southwest" of European airlines" case, which is very important factor for the firm's formulated effective strategy. The external environment consists of a wide array of economic and sociopolitical factors. It is the specific market arenas that the organization has chosen in its strategy; it provides the business opportunities to the firm and it's also a source of

Air Flights: Five Forces Analysis and Southwest Airlines

1283 words - 5 pages eventually created The Hub-and-Spoke System, which allowed the airlines to attempt to maximize their profitability potential (Harris). Southwest decided against using this type of model, and instead chose to use the lower cost option of point-to-point. Their goal of efficiency led to the crew being able to clean the plane and have new passengers onboard quickly. Value Chain Analysis Primary Activities Finding a niche market for any firm presents

Why Southwest Airlines did so well? This is an analysis/report on strategies implemented by Southwest Airlines

659 words - 3 pages The reason that Southwest Airlines performed so well comprised many factors. To make the analysis as short and clear as possible without repeating the case too much, I see Southwest's success can be sub-divided into 3 areas of market, cost control, and quality from way the case author has organized.The far most important factor is that Southwest has chosen the type of market it entered. Southwest Airline found its niche market in short-hauls

Who We Are: The Culture of Southwest Airlines

905 words - 4 pages Who We Are: The Culture of Southwest Airlines 1Who We Are: The Culture of Southwest AirlinesNatalie NiceBCOM/230May 5th, 2014Professor Katalin OgleWho We Are: The Culture of Southwest AirlinesSouthwest Airlines is not defined by the products and services it provides, but by its culture and the conglomerate of its people. Any institutions' character is indisputably dependent upon all the particular elements that participate in fashioning the

Case study of The Path Goal Theory and James Parker, CEO of Southwest Airlines

2134 words - 9 pages produce a higher economic benefit to the profit of the company. The intent of this writing is to explore what the Path-Goal theory is, how it relates to leadership, and then apply the components to how James Parker, CEO of southwest airlines, appears to use them to facilitate daily operations within the company.The Path-Goal theory was developed from studies conducted by Robert House (Robbins 493). House chose to deviate from Fiedler's traditional

Southwest Airlines positions itself as a different class of airline by having the most generous frequent flyer program of all major carriers

538 words - 2 pages Southwest Airlines is the nation's leading, and largest, low fare airlines. Southwest Airlines positions itself as a different class of airline by having the most generous frequent flyer program of all major carriers. Southwest Airlines marketing campaign emphasizes the company's role in keeping fare prices down and its quality of service. This strategy is already being imitated by other airlines, such as Continental, United and Delta, which

Similar Essays

Analysis Of Southwest Airlines

884 words - 4 pages Administration. Southwest Airlines share price is now $3.49, having fallen dramatically from its $6.60 high in 1997. The company has been embarking on cost cutting since 1996, but has lately upped the ante. The most recent results released in February showed a third quarter pre-tax loss of $60 million. This was pretty much as expected with the airline leaking cash as it restructures. The plan is to focus on smaller more economic planes carrying

Swot Analysis: Southwest Airlines

1851 words - 7 pages Southwest Airlines made its first voyage back in 1971 with service based in the cities of Dallas, Houston and San Antonio (Brief History, 2009). 38 years later, Southwest Airlines has more than 3300 flights a day and serves 66 cities in 33 states (Factsheet, 2009). Southwest Airlines has demonstrated a variety of strengths in its 38 year presence. Recent economic events have also caused a renewed focus on the company's weaknesses. Aside from its

Environmental Analysis: Southwest Airlines

2415 words - 10 pages Environmental Analysis 1 Environmental Analysis 12 Environmental Analysis: Southwest Airlines Environmental Analysis: Southwest AirlineIntroductionSouthwest Airlines Co. began its operations in 1971 and has been serving the industry for the past 43 years now (Southwest Airlines, n.d.). It is the major domestic airline, and ranked number one in 2014 by the Bureau of Transportation Statistics (United States Department of Transportation

Southwest Airlines Financial Analysis

4471 words - 18 pages measure, which informs managers how much investors would be willing to pay above or below the current market price. The ratio is measured as market price per share divided by diluted earnings per share. (p. 284) In the years 2000, 2001, and 2002, analysis shows that investors are willing to pay a considerably higher amount to acquire shares of Southwest Airlines than they would for their competitors, Delta and JetBlue. In 2000, investors were