Swot Analysis Of Southwest Airlines

Introduction:

Southwest Air was founded in 1966 when a group of Texas investors, including Rollin King, M. Lamar Muse, and Herbert D. Kelleher, pooled $560,000 to form the Air Southwest Company. Incorporated in 1967, the company was envisioned as a commuter airline serving three cities within Texas: Dallas, Houston, and San Antonio. However, its operation were delayed nearly four years due to entry barrier from competitors. Since its first flight in 1971, it has literally changed the rules of operating airlines while becoming the airline with most consistent profits. Southwest begin with the low cost strategy to penetrate the competition and achieve a competitive advantage.

Success Strategies Adapted:

With the goal of being the low cost

Establish international partnerships: According to the USA Today 2014 article; Southwest, which grew to carry more domestic passengers than any U.S. airline, began selling tickets Monday for international flights, the start of a significant shift for the low-cost domestic carrier.

Starting July 1, travelers will for the first time be able to fly southwest to Aruba, Jamaica and the Bahamas, setting up stiff competition with larger carriers that serve those areas. However, their expansion is slow. To speed up their international expansion, they should adapt partnership, code sharing or joint venture with international airlines. A multi-country contract with a single international airline can save them research and time for many partnerships.

Provide attractive loyalty or rewards programs: Although Southwest offers a reward program, it has some cons2 that can removed to make attractive and create customer loyalty to brand. The biggest cons of their reward program includes the area of network covered and because they serve very limited market it can cannot be corrected unless otherwise expanding to the new markets. According to the USA Travel News; The Southwest Rapid Rewards program is most beneficial for travelers based in the southwest United States who frequently fly to major cities around the U.S., Mexico and

• Less frequent flights: for instance, if two airlines separately fly three and two times a day respectively on a shared route, their alliance might fly less than 5 (3+2) times a day on the same route. This might be especially true between hub cities for each airline.

In an interview question in an article from center of Aviation; For GOL’s Mr. Camargo, the only LCC represented on the panel, the answer is clear. “Yes,” he says, “alliances have value for those migrating to the hybrid world, for example GOL, Southwest Airlines, Air Asia. It is good to have access to global corporate accounts. There are lots of high yield passengers crossing South America.”

Conclusion: By weighing the above analyzed pros and cons of forming alliance in form of either partnership or code sharing, it looks logical to use this strategy to speed up the expansion process for gaining differentiation from competitors that are already offering relatable cheap prices compare to southwest. The alliances can help maintain low cost leadership throughout the industry while helping in global expansion.