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South West Airlines: A Case Study Analysis Corporate Strategy

2074 words - 8 pages

Southwest Airlines: History and GrowthSouthwest Airlines (SWA) is a successful domestic carrier operating out of Dallas, Texas. Lawyer Herb Kelleher and his client Rollin King filed for approval of their plans to fly as a regional carrier, flying between three cities in Texas. In February 1968, their plans were approved and the airline has since expanded into a US national carrier, at year-end 2002 flying between 58 cities in 30 states. (case study by Shah, Sterrett & Anderson. 2004).SWA has an enviable record of constantly ranking among the top five major carriers in the Department of Transportation (DOT) Air Travel Consumer Report, with recognition for on-time performance, best baggage-handling and fewest customer complaints. Customer satisfaction ranks highly and reviews in publications such as Fortune magazine and the Wall Street Journal put SWA in the position of being one of the most admired companies. Employment with the airline is highly sought after, with SWA willing to delay the purchase of new planes or office renovations in favour of protecting the jobs of their employees. This feeling of job security has led to high employee productivity and a fierce loyalty among staff.The unique organisational culture at SWA is one that takes a laidback approach to formal management programs and documented strategic planning practices, instead preferring to operate a company where employees work hard and have fun. These characteristics have led SWA to be a very successful carrier, with over 30 consecutive years operating at a profit.Southwest's External EnvironmentThe airline industry operates in a very controlled environment, with strict regulations governing flight schedules and carrier operations. Airspace is owned by governments, as are landing rights, and bilateral air service agreements exist between countries and carriers involved in international air travel.New security measures that have arisen from terrorist threats, increases in aviation insurance costs, and reductions in consumer air travel are strains that have caused many carriers to cease operations due to financial hardship and bankruptcy. Recently, a small regional carrier in financial crisis,......, flew for the last time relinquishing their airport rights to SWA. (www.topix.net/com/luv). The industry is fiercely competitive, with airlines fighting to increase market share and continually finding ways to reduce operating costs to maximise profit.The most significant competition that SWA have faced recently have been low-fare airlines. Since the terrorist attacks in September 2001, major US international airlines have incurred financial loss due to a severe reduction in consumer air travel, increased insurance costs and industry downsizing. The trend of major airlines to operate low-fare budget carriers has increased and created a market that is very competitive. The advantages for an airline to operate a budget carrier include the non-reliance on high business fares and the...

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