Southwest Airlines Swot Analysis
The mission of southwest Airlines is dedication to the highest quality of Customer Service delivered with a sense of warmth, friendliness, individual pride and Company Spirit (Ruppel, 2012). The people of Southwest are the single greatest strength and most enduring long term competitive advantage (Kelly, 2012).
Southwest Airlines started out as Air Southwest Co in 1967; serving only three local airport hubs in Texas. The hubs were San Antonio (SAT), Dallas (DAL) and Houston International Airport (IAH). Currently IAH has been renamed to the Bush International Airport (Kelly, 2012). In the beginning there was severe opposition from competitors such as Continental and Trans Texas. This was mostly due to the business model that Southwest was presenting to the Texas Aeronautics Commission (TAC), where Southwest was going to be flying only a few short dedicated routes and flying them cheaply. This business model was going to be financially straining on other airlines that were running those routes but at a higher cost.
Southwest got its biggest break when Boeing agreed to sell Southwest three 737-200’s and Boeing carrying 90% of the financing (Kelly, 2012). This allowed Southwest to not have to acquire capital at a high interest rate; thus allowing more capital to be invested into the initial Southwest business model. The biggest factor affecting Southwest during its initial startup and still to this day are its competitors (Goolsbee and Syverson, 2011). The extent to which rivalry exists will influence the overall profitability of the industry. Market concentration remains a significant factor affecting rivalry. No single airline solely dominates the industry; the eight largest carriers retain/control a total market share of 92% (Goolsbee et. al. 2011).
The level of customer satisfaction attributed to Southwest is staggering. The results from a double blind survey were released on 10/28/2009 by Smarttravel.com and the results might as well have been called
Southwest Airlines started out as Air Southwest Co in 1967; serving only three local airport hubs in Texas. The hubs were San Antonio (SAT), Dallas (DAL) and Houston International Airport (IAH). Currently IAH has been renamed to the Bush International Airport (Kelly, 2012). In the beginning there was severe opposition from competitors such as Continental and Trans Texas. This was mostly due to the business model that Southwest was presenting to the Texas Aeronautics Commission (TAC), where Southwest was going to be flying only a few short dedicated routes and flying them cheaply. This business model was going to be financially straining on other airlines that were running those routes but at a higher cost.
Southwest got its biggest break when Boeing agreed to sell Southwest three 737-200’s and Boeing carrying 90% of the financing (Kelly, 2012). This allowed Southwest to not have to acquire capital at a high interest rate; thus allowing more capital to be invested into the initial Southwest business model. The biggest factor affecting Southwest during its initial startup and still to this day are its competitors (Goolsbee and Syverson, 2011). The extent to which rivalry exists will influence the overall profitability of the industry. Market concentration remains a significant factor affecting rivalry. No single airline solely dominates the industry; the eight largest carriers retain/control a total market share of 92% (Goolsbee et. al. 2011).
The level of customer satisfaction attributed to Southwest is staggering. The results from a double blind survey were released on 10/28/2009 by Smarttravel.com and the results might as well have been called
References: Anonymous. (2009) Retrieved 01 April 2012, http://travel.booklocker.com/2009/10/28/another-southwest-airlines-sweep/ Goolsbee, A. & Syverson, C. (2011) How do incumbents respond to the threat of entry? Evidence from the major airlines. Retrieved 01 Apr 2012, http://home.uchicago.edu/~syverson/southwestentry.pdf Kelly, G. (2012). Retrieved 01 Apr 2012, http://www.southwest.com/html/about-southwest/index.html Ruppel, J. (2012). Southwest: A symbol of freedom. Retrieved 01 Apr 2012, http://www.southwest.com/assets/pdfs/corporate-commitments/customer-service-commitment.pdf TSA, (2012) Retrieved 01 Apr 2012, http://www.tsa.gov/lawenforcement/people/fams_join.shtm