Free «Southwest Airlines» Essay
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A company’s business strategy is an ever-evolving guide to success. Compared to the other airlines in the industry, Southwest is the most consistent and efficient US airline in the domestic sector. Southwest Airlines has its headquarters Dallas, Texas and employs more than 46,000 personnel in its payroll. Southwest flies 547 single-aisle Boeing 737 airplanes across America and the Airline’s acquisition of AirTran has combined two major Boeing customers to form a collective Aircraft fleet of 685 Boeing planes.
The airline industry can broadly be categorized into the international and domestic airline industry. Southwest Airlines is the most successful low-cost carrier in the country with continued profitability for the past 39 years, even during periods of industry downturns. It is the largest domestic US airline by number of passengers enplaned and scheduled domestic departures.
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The major competitors to Southwest Airlines within the industry include the JetBlue Airlines; United Continental; American Airlines; Delta Air and Virgin Airlines. Competition remains one of the biggest challenges the company faces as a consequence of deregulation in the industry. This has resulted in an influx of a number of LCCs into the industry. Additionally, the threat of substitution of Air travel to the less expensive and more common modes of transportation that include railway and the automobile. The threat of new entrants coupled with substitution are issues that should not be taken lightly as in most cases offer less costly alternatives and less personal time commitments to customers.
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Key Results Areas
Operating strategy-Southwest Airline has adopted a point-to-point operational delivery strategy that is not adopted by most other airlines in the industry. The system allows for direct nonstop routing of its flights through the minimization of connect flights, delayed times and the general time of flight. The operational strategies have served the Airline well in gaining a substantial market share and achieving competitive advantage in the industry.
Healthy fleet operations-the Airline has a strong fleet base to complement its strong route network in the United States. The company’s service in over 68 cities in 35 states across the country is a sound level of operational strength it has in the industry. The company’s 500 Boeing 737 aircrafts as well as 99 planes were under lease by 2009 shows the company’s potency in ensuring that its services are carried out all across the country.
Strong Market share in North America- as long as the company maintains its lead in the commercial aviation industry, it will remain dominant force and strengthen its market share. Although the company is currently doing well economically, it still remains competitive and innovative in developing, maintaining and acquiring new markets through its marketing exercises and customer satisfaction programs.
Competitive airline rates - in the year 2010, Southwest Airlines was selected as the “Best Low Cost Airline in North America” by the Business Traveler magazine (Southwest Airlines Fact Sheet, 2012). Although this can be viewed as a risky strategy, the Airline’s pocket friendly rates have enabled it to increase its cash flows substantially in the past years as additional customers are willing to fly with them due to the disastrous economic circumstances plaguing the United States. Customer loyalty is important in succeeding in business, and low fares are an avenue to gain this commitment.
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Growing US airline industry- the diversification of the Airline industry to include heavy investment in the cargo and courier services provides a good opportunity for Southwest to grow it operational base and secure revenue from this cash pool. The Airline can establish an air courier services department to invest heavily in this market.
Customer service- Southwest airlines has been able to drive customer loyalty by inserting faith in their customer- enterprise relationship. The Airline has over the years modeled a successful business based on this strategy. As long as the Airline continues to advocate and promote this relationship, it will continue gaining consumer allegiance and as a result build airline customer base.
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High levels of competitiveness in the industry- the airline industry is riddled with fierce competition as Airlines are devising strategies to counter competition. Although Southwest Airlines has a competitive edge over its competition in terms of customer loyalty, and market share in terms of number of customers, it should employ tough marketing campaigns if it wants to be at the helm of the industry.
Dependence on single carrier- the Airline only operates Boeing 737 air planes in its fleet that might act as a deterrent against the airline’s development and growth in the industry. Dependence on Boeing as the only single source of parts for its carriers can also serve to cripple operations. Diversification is a major asset for any business as it reduces risk levels and also allows for different strategic ideas to be incorporated into business operations.
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Unionization- Southwest airlines allows its employees to join employee unions that might hinder some of the airline’s operational capabilities in the event the union calls for industrial strikes, especially after considering the fact that over 80% of the workers are members. The Airlines should strengthen the relationship it has with the unions and also improve the labor relationships it shares with the employees in order to insure against losses.