Southwest Case Study
Executive Summary In 2009 Gary Kelly, the CEO of Southwest airlines, was contemplating what it would take for Southwest to survive the economic downfall, due to high oil prices and decline in demand, that was upon the airline industry. One might argue that in the face of many options Southwest both diversified in there solutions as well as stayed true to the brand they had created. We will argue they did both. They branched out in terms of expansion and customer service, while remaining true to their brand in terms of management style and their online presence, or digital strategy.
Introduction
This case study is the story of a small regional airline carrier applying southwest values to become a major industry force. Southwest airlines began its business nearly 40 years ago in Dallas, Texas. Out of the ashes of a regional airline fight, Southwest airlines flourished by applying its two key goals of simplicity and low costs.
In 2009 (the time this case study was published), Southwest Airlines had decreasing revenues due to the financial housing/lending crisis, but was faring much better than many of its rivals. The 2009 10-K for Southwest Airlines does not list the direct competitors of the company. However, Yahoo’s financial website lists several of Southwest’s current competitors: Delta Airlines (DAL), Jet Blue (JBLU), and United Continental Holdings (UAL).
Southwest Airline’s total revenues for FY09, FY08, and FY07 were $10,350MM, $11,023MM (11.55% growth), and $9,861MM, respectively. A large percentage of these fluctuations in revenue can be explained in relation to passenger fares with FY09 average passenger fares of $114.61, FY08 of $119.16, and FY07 of $106.60. As the economy took off from 2007 to 2008, so did the fares which also increased Southwest airlines total revenue. The opposite holds true as we entered the deepest parts of the recession in 2009, and average fares declined. Southwest airlines also has positive net income, which is in contrast
Introduction
This case study is the story of a small regional airline carrier applying southwest values to become a major industry force. Southwest airlines began its business nearly 40 years ago in Dallas, Texas. Out of the ashes of a regional airline fight, Southwest airlines flourished by applying its two key goals of simplicity and low costs.
In 2009 (the time this case study was published), Southwest Airlines had decreasing revenues due to the financial housing/lending crisis, but was faring much better than many of its rivals. The 2009 10-K for Southwest Airlines does not list the direct competitors of the company. However, Yahoo’s financial website lists several of Southwest’s current competitors: Delta Airlines (DAL), Jet Blue (JBLU), and United Continental Holdings (UAL).
Southwest Airline’s total revenues for FY09, FY08, and FY07 were $10,350MM, $11,023MM (11.55% growth), and $9,861MM, respectively. A large percentage of these fluctuations in revenue can be explained in relation to passenger fares with FY09 average passenger fares of $114.61, FY08 of $119.16, and FY07 of $106.60. As the economy took off from 2007 to 2008, so did the fares which also increased Southwest airlines total revenue. The opposite holds true as we entered the deepest parts of the recession in 2009, and average fares declined. Southwest airlines also has positive net income, which is in contrast