Southwest Airline Analysis
Executive Summary
Southwest Airlines has been a strong growth company over the last 35 years. Using its low-cost, passenger friendly, point-to-point operational strategy, Southwest has been able to sustain considerable growth year after year and remain profitable for 33 straight years. While Southwest has gained market share in recent years, legacy carriers have struggled due to depressed market conditions. The entire airline industry has endured expensive labor contracts, soaring energy costs and reduced consumer demand. Southwest has continued to grow in the harsh airline industry because it‟s no frills business model focuses on controlling costs. Southwest targets routes with high consumer demand and the advanced experience of Southwest‟s personnel allow Southwest to quickly turnaround aircraft and keep their planes in the air more hours per day than its rivals. Though the airline industry appears to be on the mends, Southwest has firmly positioned itself as a price leader and a strong market force with the lowest CASM of any airline. Southwest has experienced remarkable growth in the airline industry by steadily taking market share from large legacy airlines. However, Southwest‟s success has brought considerable change to the market conditions of the airline industry. The struggling legacy airlines have been forced to streamline operations and new airlines with aggressive low-cost strategies have entered the industry. Damaging price wars have forced many airlines to drastically alter their cost structure in order to remain competitive. By its success, Southwest has begun to alter the market conditions that were partially responsible for its success. To ensure its future success, Southwest needs to maintain its cost advantages and find new growth opportunities even though Southwest has the most fuel hedging of any airline. Fuel costs remain a major concern and Pandora Group recommends that Southwest take steps to improve the fuel efficiency of its fleet by
Southwest Airlines has been a strong growth company over the last 35 years. Using its low-cost, passenger friendly, point-to-point operational strategy, Southwest has been able to sustain considerable growth year after year and remain profitable for 33 straight years. While Southwest has gained market share in recent years, legacy carriers have struggled due to depressed market conditions. The entire airline industry has endured expensive labor contracts, soaring energy costs and reduced consumer demand. Southwest has continued to grow in the harsh airline industry because it‟s no frills business model focuses on controlling costs. Southwest targets routes with high consumer demand and the advanced experience of Southwest‟s personnel allow Southwest to quickly turnaround aircraft and keep their planes in the air more hours per day than its rivals. Though the airline industry appears to be on the mends, Southwest has firmly positioned itself as a price leader and a strong market force with the lowest CASM of any airline. Southwest has experienced remarkable growth in the airline industry by steadily taking market share from large legacy airlines. However, Southwest‟s success has brought considerable change to the market conditions of the airline industry. The struggling legacy airlines have been forced to streamline operations and new airlines with aggressive low-cost strategies have entered the industry. Damaging price wars have forced many airlines to drastically alter their cost structure in order to remain competitive. By its success, Southwest has begun to alter the market conditions that were partially responsible for its success. To ensure its future success, Southwest needs to maintain its cost advantages and find new growth opportunities even though Southwest has the most fuel hedging of any airline. Fuel costs remain a major concern and Pandora Group recommends that Southwest take steps to improve the fuel efficiency of its fleet by