How Southwest Airlines Developed its Business Strategy to Become a Powerhouse in the Airline Industry
Southwest Airlines is one of the most successful airlines in the world and is known for its low fares, exceptional customer service, and high percentage of on-time departures. Southwest’s business strategy has been the driving force behind its success. In this blog post, we’ll take a closer look at how Southwest Airlines developed its business strategy and how it became a powerhouse in the airline industry.
Background
Southwest Airlines was founded in 1967 and started operating in 1971 with only three planes. Its initial business strategy was to offer low fares and high-frequency, short-haul flights between Dallas, Houston, and San Antonio. The airline quickly became popular and expanded to other cities in Texas. By 1979, the airline had expanded to serve 13 cities in Texas and had made its first successful public offering.
Business Strategy
Southwest’s business strategy is based on several key principles:
1. Low fares: Southwest’s fares are generally lower than those of other airlines. By keeping its fares low, Southwest is able to attract more customers and fill its planes.
2. Point-to-point flights: Unlike other airlines that use hub-and-spoke systems, Southwest operates point-to-point flights. This means that the airline flies directly between two airports without stopping at a hub. This allows the airline to save time and money, as well as offer more direct flights.
3. High-frequency flights: Southwest operates high-frequency flights, which means that it offers multiple flights a day on popular routes. This gives customers more flexibility and allows them to choose flights that fit their schedule.
4. Exceptional customer service: Southwest is known for its exceptional customer service. Its employees are friendly and helpful, and the airline has a no-fee policy for changing or canceling flights.
5. Efficient operations: Southwest is known for its efficient operations. Its planes have a quick turnaround time, meaning that they spend less time on the ground and more time in the air. This allows the airline to offer more flights with fewer planes.
Success and Expansion
Southwest’s business strategy has been incredibly successful. The airline has been profitable every year since 1972, and in 2019, it was the largest domestic airline in the United States, carrying more passengers than any other airline.
Southwest has also expanded beyond its initial focus on Texas. It now serves more than 100 destinations in the United States and several international destinations. In 2010, the airline announced its acquisition of AirTran Airways, which allowed it to expand its presence in cities like Atlanta and Milwaukee.
Challenges and Opportunities
Despite its success, Southwest faces several challenges. One of the biggest challenges is increased competition from other airlines. Many airlines have tried to copy Southwest’s business model by offering low fares and point-to-point flights.
However, Southwest has several opportunities to continue its success. One opportunity is to continue expanding its international presence. The airline currently serves several international destinations, but it could potentially expand to more destinations in Europe, Asia, and Latin America.
Another opportunity is to continue improving its customer service. Southwest is known for its exceptional customer service, but it can always do more to make the customer experience even better.
Conclusion
Southwest Airlines is a powerhouse in the airline industry because of its successful business strategy. The airline’s low fares, point-to-point flights, high-frequency flights, exceptional customer service, and efficient operations have made it incredibly popular with travelers. Despite facing challenges from competitors, Southwest has opportunities for continued success and expansion.
