Case Study: Southwest Airlines

Southwest Airlines got started as Air Southwest in 1967 by a couple businessmen looking for a better way to fly. The new airline grounded for its first three years due a lawsuit filed by some of the prominent air carriers during that time. After the lawsuit was over the airline was ready so they changed their name to Southwest Airlines and took to the air.

Southwest Airlines was founded on several principles of business; “If you get your passengers to their destinations when they want to get there, on time, at the lowest possible fares, and make darn sure they have a good time doing it, people will fly your airline”. They understood there was a potential for airline travel to be used by everyone, not just for business travel. Since day one,

First, its low price strategy allowed it to maintain and expand its market share after the 1990s demand surplus dwindled. Second, previous positive management employee relations allowed Southwest to negotiate with its labor force to lower costs. In its history Southwest has only had one labor strike. Third, Southwest has extensive price hedging of fuel that they gained through oil futures that extended through 2009. This has allowed Southwest to largely avoid the increased cost of oil that has devastated many other airlines. Furthermore, in 2004, Southwest began its first domestic code sharing arrangement by negotiating a deal with ATA. Industry experts have speculated that this arrangement has generated $50 million in revenue for

To begin, Southwest has only Boeing 737s in its fleet. Working a single type of aircraft increased the experience of employees which in turn means that its employees are extremely efficient in the maintenance, piloting, and general use of the Boeing 737.Increased efficiency along with a culture of positive employee participation results in significant cost reductions. This type of culture and infrastructure for an efficiently run low cost, point to point carrier requires time to be copied by other