Southwest Airlines free essay sample

In the airline industry has targeted at a distinctive market niche, in which customers want low prices and frequent departures. To achieve its goal of profitability maximization, Southwest primarily provides low fares, high frequency services, point-to-point flying, short hop flights, and high-quality Customer Service. Its low prices and no-frills approach has greatly attracted customers and enabled them to purchase flight tickets with the lowest prices among U. S. airlines. Along with its expansion and merger with AirTran, Southwest has gradually changed its strategy. Longer non-stop trips, one-stop trips and even international trips have been added to its flight schedule. It continues to be profitable with lowest cost in the industry. Overall, low price is the major part of Southwest’s strategy that brings both development and market share. External Analysis * Threats Airline industry could be affected by many factors such as general economic environment, fuel price, airline terror acts, weather conditions and air traffic restrictions. We will write a custom essay sample on Southwest Airlines or any similar topic specifically for you Do Not WasteYour Time HIRE WRITER Only 13.90 / page General economic environment has impact on the demand for travel, and therefore influences the number of flights run by Southwest. The fuel price controls the company’s costs; rising fuel price would increase the cost, and the company cannot always avoid influences of fuel price by fuel hedging. Terrorist attack incidents would both physically and psychologically affect customers and employees, which leads to a higher security cost. Weather conditions have important impact on flights as well. Bad weather conditions may delay flights, increase turnaround time, and thus mark up costs. All these potential threats are faced by Southwest Airlines. Southwest is also facing a very competitive environment with both large- and small-scale airline companies. Those companies like JetBlue, Virgin America and Spirit Airlines that have similar strategies to Southwest are the most notable competitors of Southwest. They all have low-cost and low-fare strategies that force Southwest to maintain low prices to be competitive. Airlines with international flights also threaten Southwest’s future expansion. Since Southwest has already entered international market, it needs to keep an eye on those competitors providing international flights. Another threat derives from the company would be other traffic alternatives. Because the majority of services provided by Southwest are short-haul, it is very easily challenged by surface transportations such as cars, trains and buses. Consumers who travel short distance consider so many factors as costs, convenience and safety. As a result, Southwest has to retain its safe, reliable, frequent, low-cost air transportation to compete with surface transportations. Opportunities It is mentioned in the case article that â€Å"over 100 cities have asked Southwest to begin service in their communities because of the positive impact the company has had when it began operations in a new location. † In addition, the destinations of Southwest have not been developed efficiently; still a great number of potential cities can be settled nationwide. Additionally, mergers or acquisitions could reinforce Southwest’s position in international airlines. American Airlines and US Airways are major airlines left to merge, and they both already have international flights. A merger or acquisition would reduce risks and challenges associated with joining new markets. Internal Analysis * Strengths After merger with AirTran, Southwest has more than 100 destinations including domestic major cities and foreign hubs. Southwest’s financial performance has also been impressive; it operates at profit for almost 40 years in a row. Further, Southwest has significantly effective and economical operations that minimize the turnaround time to 20 minutes or less and fly a single aircraft model-Boeing 737-which avoids unnecessary costs of training, maintenance, and inventory. Southwest has also fully taken advantages of its website and mobile applications to increase its efficiency. * Weaknesses Southwest has started to provide long haul and international flights, however its 80 percent of flights are still short-haul. Its market for long-distance trips has not been fully utilized. Lack of alliances limits Southwest’s enlargement and puts intense competitions to the company. Although it merged with AirTran in 2011, the major international hubs still need to be reached. No luggage transfer outside Southwest system would also limit the company’s flexibility. Strategic Recommendations * Retain the existed advantage: low cost * Develop more urban cities as destinations domestically * Make an alliance to exploit international flights * Improve mobile applications that enable passengers to book tickets, check in and board a flight * Continue to hedge fuels * Keep on improving turnaround time * Increase employee retention by providing continuous training program and improving management-employee relation