Southwest Airlines' & Fuel Hedging
A “Hedge” of the Pack:
A Review of Southwest Airlines Innovative Fuel Strategy
While many airlines suffer from rising fuel costs, Southwest Airlines continues to emerge victorious in the aeronautical landscape. Other carriers now forced to increase prices to compensate for fuel costs, are now subject to the new mindsets of consumers who are opting for longer bus and car rides, or simply not traveling at all. The woes of the airlines industry have many posing the question if airline travel is fast becoming a travel method for the affluent (Stoller, 2008). In the midst of the situation, Southwest Airlines is able to capitalize on rising costs and maintain its low-price position because of an innovative fuel acquisition strategy known as fuel hedging (Pae, 2008).
The following activities will be reviewed in this document as an analysis of this organization. The activities to be addressed are:
1. Organizational History of Southwest Airlines
2. Overview of the Airlines Industry
3. SWOTT (Strengths, Weaknesses, Opportunities, Threats and Trends) Analysis of Southwest Airlines
4. An Analysis of the Impact of varied economic concepts on the CPI
5. An Analysis of varied Economic Indicators
This document focuses on the impact of a volatile environment of consumer demand has impacted this organization, and how its “hedging” strategy has allowed it to maintain its competitive advantage in an ever-changing economic climate.
Organizational History of Southwest Airlines
Southwest Airlines is an organization that has remained true to its operational roots, and continues to expand and to offer a product as well as service that its passengers can consistently depend on. Southwest Airlines was started in 1966 as Air Southwest Co in Texas. Since its inception, its company philosophy and perspective has been “dedication to the highest quality of Customer Service delivered with a sense of warmth, friendliness, individual pride, and Company Spirit.”
The company
A Review of Southwest Airlines Innovative Fuel Strategy
While many airlines suffer from rising fuel costs, Southwest Airlines continues to emerge victorious in the aeronautical landscape. Other carriers now forced to increase prices to compensate for fuel costs, are now subject to the new mindsets of consumers who are opting for longer bus and car rides, or simply not traveling at all. The woes of the airlines industry have many posing the question if airline travel is fast becoming a travel method for the affluent (Stoller, 2008). In the midst of the situation, Southwest Airlines is able to capitalize on rising costs and maintain its low-price position because of an innovative fuel acquisition strategy known as fuel hedging (Pae, 2008).
The following activities will be reviewed in this document as an analysis of this organization. The activities to be addressed are:
1. Organizational History of Southwest Airlines
2. Overview of the Airlines Industry
3. SWOTT (Strengths, Weaknesses, Opportunities, Threats and Trends) Analysis of Southwest Airlines
4. An Analysis of the Impact of varied economic concepts on the CPI
5. An Analysis of varied Economic Indicators
This document focuses on the impact of a volatile environment of consumer demand has impacted this organization, and how its “hedging” strategy has allowed it to maintain its competitive advantage in an ever-changing economic climate.
Organizational History of Southwest Airlines
Southwest Airlines is an organization that has remained true to its operational roots, and continues to expand and to offer a product as well as service that its passengers can consistently depend on. Southwest Airlines was started in 1966 as Air Southwest Co in Texas. Since its inception, its company philosophy and perspective has been “dedication to the highest quality of Customer Service delivered with a sense of warmth, friendliness, individual pride, and Company Spirit.”
The company
References: Corridore, J., Standard & Poor’s Industry Reports, & Independent Analysts (2008), Retrieve August 2, 2008 from http://www.standardandpoors.com Federal Aviation Administration (2007). Aerospace Forecast Fiscal Years 2008–2025, A Review of 2007). Retrieved August 18, 2008 from http://www.faa.gov/data_statistics/aviation/aerospace_forecasts/2008-2025/media/Review%20of%202007.pdf Independent Analysts and Industry Reports (2008), Morning Star Stock Report. Retrieved August 2, 2008 from http://www.morningstar.com. Pae, P. Southwest Airlines reaps benefits of fuel hedging strategy. (2008, May). Los Angeles Times Southwest Airlines 2007 Annual Report (2008), Southwest Airlines 2007 Annual Report, Retrieve August 2, 2007 from http://www.southwest.com Stoller, G.(2008, August). Will fares go so high that only the rich can fly? Retrieved August 19, 2008 from USAToday.com Wikipedia.org (2008) Southwest Airlines.