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Southwest Airlines SWOT 2024 | SWOT Analysis of Southwest Airlines

Company: Southwest Airlines Co. CEO: Gary Kelly Founders: Herb Kelleher & Rollin King Year founded: 1967 ( as Air Southwest), and 1971 (as Southwest Airlines) Headquarter: Dallas, Texas, U.S. Number of Employees (Dec 2019): 60,800 Type: Public Ticker Symbol: LUV Annual Revenue (Dec 2019): $22.4 Billion Profit | Net income (Dec 2019): $2.3 Billion

Did you know that Southwest Airlines had to sell one of their four Boeing 737s in 1972 to cover payroll?

Table of Contents

Southwest Airlines’ Strengths

1. luv culture.

Making every customer feel like a part of the family is an effective way to enhance customer loyalty. The airline has mastered the art of bringing the customer into the Southwest family using its enticingly warm LUV culture .

2. Lower Cost

One of the reasons behind Southwest Airlines’ large number of loyal customers is its low-cost flights. Using the airlines’ Low Fare Calendar , passengers can book flight tickets starting as low as $45 for a one-way flight. The airline has held the title of the best low-cost carrier for years.

3. Best Employer

Southwest Airlines has consistently been ranked as one of the best employers in America. According to recent Forbes ranking, Southwest Airlines is ranked #2 America’s Best Employers 2019.

4. World’s Most Admired Company

In 2019, Southwest Airlines was ranked #11 Fortune’s most admired company in the world.

5. Consistently Profitable

Attaining high profits consistently is the main purpose of going into business. It fuels growth by allowing businesses to amass capital for expansion and R&D. In 2019, Southwest Airlines showed profits for 47 years consecutively . Considering airlines is a cutthroat industry, it’s indeed a great accomplishment.

6. Brand Value

Southwest Airlines is the 4 th most valuable airlines brand in the world, with a brand value of $6.6 Billion .

Most valuable airline in the world - Southwest Swot analysis =

7. Single Aircraft Type (Boeing 737s)

Since its inception, Southwest Airlines has exclusively used Boeing 737s for all its flight operations. As of Dec 2019, it has a total of 747 Boeing 737s Aircraft. Single aircraft type has been an effective, low-cost strategy for Southwest Airlines. It allows for simplified training (pilots, staff and ground crew), maintenance, scheduling, flight operations, and effective aircraft utilization.

8. Effective Service Strategy

Southwest Airlines provide direct non-stop flights under its point-to-point service , which reduces time-wastage.

9. High Capacity

The capacity of airlines is measured in terms of Available Seat Miles (ASMs). Having a higher ASM means more seats for longer miles, which contributes to the bottom line. From 2011 to 2019, Southwest Airlines’ ASMs grew from 120.58 billion to 157.25 billion , making it one of a few national airlines with ridiculously high capacity.

10. Effective Management

From financial management to HRM, having effective management from top-level down to the mid-level enhances stability and increases the rate of growth. Southwest Airlines’ management is regarded as one of the best in the industry and the airline’s major strength.

11. Market Share Dominance

Being a dominant player in the market is particularly beneficial in industries that are influenced by intense lobbying, such as airlines. Dominant players can leverage their connections, superiority, and resources to lobby successfully for the adoption of legislation that advances their agenda.

From Feb 2019 to Jan 2020 , Southwest Airlines is ranked 3 rd and has U. S. domestic market share of 16.8% , followed by American (17.6%) and Delta (17.5%).

12. Thousands of Flights

The more an airline flies, the more revenue it can generate. During peak travel season, Southwest operates over 4,000 flights a day. With a large number of flights, Southwest Airlines is undeniably a force to reckon with in the airline industry.

Southwest Airlines’ Weaknesses

1. lack of diversification.

Over dependence on a single revenue source exposes a company to catastrophic loss in case of uncertainty or economic turmoil within that sector.

In FY2019, Southwest Airlines’ reported $22.4 billion total revenues to consist of $20.7 billion as passenger revenue making up 93% of total revenues while freight revenue was $172 million, which is less than 1%.

Passenger (air ticket) revenue : $20.77 Billion (~93 % of total revenue)
Other (loyalty points) revenue : $1.48 Billion (~6% of total revenue)
Freight (cargo and mail) revenue : $172 Million (~1 % of total revenue)

Southwest Airline should diversify its revenue sources. Any issues that impede tourism or travel in these uncertain times can be catastrophic for the airline.

2. Dependent on the US Market

Southwest Airlines does not offer international flights and depends on the domestic US market completely (with the exception of few tropical vacation islands in Mexico, Central America, and The Caribbean).

“Don’t put all your eggs in one basket” comes to mind. Southwest can lose profitability and sustainability in case the US market dries up suddenly.

3. Overdependence on Boeing 737s

Since its founding, Southwest Airlines has depended solely on Boeing 737s.

On Mar 13, 2019, the Federal Aviation Administration (FAA) issued an emergency order to ground all MAX aircraft following two fatal accidents. Southwest Airlines owns 31 Boeing 737 Max out of its total fleet of 747 planes.

The grounding of Boeing 737 MAX resulted in a loss of revenue due to fewer planes. This highlights the issue over depending on only one aircraft model.

Southwest airlines swot analysis showing over dependence of Southwest airlines on Boeing 737 aircraft

Southwest Airlines’ Opportunities

1. expand globally.

Southwest Airlines recently expanded its local flights to Hawaii and can expand further to cater to the increasing air travel in emerging economies due to globalization and improved financial situation.

For starters, South America offers an unsaturated market and can be a perfect steppingstone for Southwest’s global expansion .

2. Improve booking process

In 2019, Southwest added PayPal and Apple Pay to its website, mobile app, and in-flight WiFi purchase page. It’s a great opportunity to expand e-payment options for its customers.

3. Expand on Freight Business

Southwest airlines can expand its freight business to tap into the ever-growing global logistics market with a market size of $6 Trillion in 2019.

4. Exploit New Technologies

The ever-increasing number of use cases for the internet offers Southwest airlines an opportunity to market its services directly to a wide audience. Also, the airline can adopt emerging technology trends such as bio metric boarding kiosks to speed up the security process.

5. Offer Long-distance Flights

The market for longer flights is increasing rapidly as more millennials enter the workforce and dare to work and live further from home than previous generations. Southwest Airlines can expand from short hauls to long flights to exploit growing demand.

Southwest Airlines’ Threats

1. global recession.

From South East Asia to Europe, Africa, America, and Australia, economies across the world are nose-diving into economic turmoil due to uncertain times. With the record rate of unemployment in the US and threat of recession looming , Southwest’s operations are under threat.

2. Boeing 737 Max Issues

Boeing’s Max aircraft are crucial for Southwest Airlines’ growth plans and modernization initiatives . With the grounding of Boeing 737 Max, Southwest’s operations have been immensely affected since its fleet consists primarily of this aircraft model.

If the situation continues, the airline can suffer from:

lost revenue due to cancellations
b) negative effects on customer airline choice

3. Negative Publicity

A report by the US government revealed that the airline has been flying jets without confirmed maintenance records for over two years and exposed over 17 million passengers to safety risks.

4. Intense Competition

From Jet Blue to Delta, American, Spirit, United, and Alaska, Southwest Airlines faces intense competition from other players in the US Airline industry.

In addition, Southwest Airlines considers not only the airline industry but also automobiles , buses , and train s as other forms of competition for them.

During an economic downturn, customers cut down on their discretionary expenses and choose less expensive ground transportation alternatives.

5. Increase in Fuel Price

The profitability and sustainability of airlines are heavily dependent on fuel prices. In the event of an increase in fuel prices, Southwest’s profitability and sustainability could be threatened due to increased operating costs.

operating cost of Airline in swot analysis of southwest airlines

6. Incidents of Terrorism

The airline industry struggled with the decline in leisure travel due to the 9/11 terror attack. Any terror attack in the future could be devastating not only to Southwest Airlines but also to the entire industry and economy.

7. Stringent Regulations

From FAA inspections to government legal compliance, the operations of Southwest Airlines can be threatened by stringent regulations in the airline industry. For one, the government recently announced that it would be taking action against the airlines’ decision to fly 49 used jets acquired from foreign carriers without proper inspection.

8. Uncertain Times (Economic Shock)

These uncertain times have highlighted the vulnerabilities of the airline sector. Planes have been grounded, and air travel demand is at an all-time low, leading to millions of dollars in losses.

In March 2019, Southwest warned its investors that its first-quarter revenue is projected to drop between $200 and $300 million . If the situation persists, Southwest’s profitability and sustainability can be affected even more.

References & more information

11 Little Known Facts About Southwest Airlines | Boldmethod
2019 One Report | Southwest Airlines
Low Fare Calendar | Southwest
Southwest Airlines SEC Filing
Teneva, M. (2018). Price Wars: Airline Industry Pains and Gains . Sky Refund.
Southwest Newsroom. Southwest Corporate Fact Sheet .
Thomson, J. (2018, December 18). Company Culture Soars at Southwest Airlines . Forbes.
Cowney, D. A. (2019, September 19). What is Southwest Airlines Low-Cost Strategy? Leadership Strategic Plan. Medium.
Mazareanu, E. (2020, February 10). Southwest Airlines: Available Seat Miles 2011-2019 . Statista.
Southwest Airlines. Culture. https://careers.southwestair.com/culture
Rothman L. A. (2019, Oct 23). Analyzing Southwest Airlines’ Market Share (LUV) . Investopedia.
Trefis Team. (2016, September 14). Factors That Have Strengthened Southwest’s Domestic Presence . Forbes.
Booker, B. (2019, December 17). Southwest Airlines Nixes Boeing 737 Max Planes from Its Fleet until April .
Trefis Team. (2020, February 25). Can Southwest Airlines Overcome Its Capacity Crunch To Grow Revenues In 2020 ?
Pasztor A. and Alison Sider (2020, January 30). Southwest Flew Millions on Jets with Unconfirmed Maintenance Records, Government Report Says . The Wall Street Journal.
Gilbertson, D. (2019, March 23). Southwest to cut 1,500 daily flights as passenger levels, bookings hit ‘unimaginable lows.’ USA Today.
Ballard, J. (2019, August 31). Where Be Will Southwest Airlines in 10 Years? Motley Fool.
Globe Newswire (2020, February 6). Global Logistics Industry 2020-2023 . Globe Newswire.
Bogaisky, J. (2019, December 26). What’s Ahead for Airlines and Aviation In 2020 .
Aditi S. (2018, Dec 13). Why millennial-themed airlines don’t attract millennials .
Siegel, R. (2020, March 10). Airlines slash routes, outlook, and executive pay . The Washington Post.
Tsang, A. (2019, July 25). Southwest Airlines to Leave Newark Airport as Toll of Boeing’s 737 Max Grounding Grows. The New York Times.
Foelber, D. (2020, January 31). Why JetBlue Airways Could Be the Best Airline Stock of 2020 . Motley Fool.
Gilbertson, D. (2020, March 5). Southwest CEO says bookings down . USA Today.
Lori Aratani, L. (2019, November 12). Southwest Airlines is operating 49 planes that may not have been properly inspected, top FAA official says . The Washington Post.
Oliver, D. (2020, January 30). Southwest speaks out about draft government report saying it neglected to prioritize safety . USA Today.

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A management consultant and entrepreneur. S.K. Gupta understands how to create and implement business strategies. He is passionate about analyzing and writing about businesses.

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Southwest Airlines SWOT Analysis 2021: Recovering from COVID-19 Crisis

Last Updated: Jan 6, 2023 by Amrith Sudhakaran Filed Under: SWOT Analysis , SWOT Examples

In this article, you will learn how to do the SWOT analysis for Southwest Airlines.

Southwest Airlines is a Low-Cost-Carrier that distinguishes itself from other airline companies through its low-cost fares.

Despite being an airline known for its low cost, Southwest airlines operated profitably from its inception in 1967 to 2019.

But when the pandemic hit , Southwest’s profits plummeted, leading the company to its first and only loss in over 50 years of operation.

So, what was behind Southwest’s success streak? What did it do to recover from a 59% drop in profit? And what is Southwest doing to recover from this crisis?

Well, this Southwest Airlines SWOT analysis will clarify all of it and fill in the blanks of the PESTLE Analysis of Southwest Airlines . In this SWOT analysis, we will explore:

Strengths – Internal factors supporting Southwest’s growth.
Weaknesses – Internal factors hindering Southwest’s progress.
Opportunities – External factors that may help Southwest strengthen its position in the market.
Threats – External factors that may weaken Southwest’s position in the industry.

Let’s begin with the strengths.

What are Southwest Airlines’ main strengths?

The main strengths of Southwest Airlines are its low-cost business model and point-to-point routes. In addition to these, Southwest Airlines has taken aggressive measures to increase its liquidity. As a result, it has added a strong balance sheet to its arsenal of strengths.

Here’s an overview of Southwest’s strengths:

Low-Cost Business Model : Southwest Airlines uses three main measures to reduce its operating costs. The first of these measures include implementing a point-to-point route structure rather than a hub-spoke route structure. In addition to this, Southwest flies only one type of aircraft. Lastly, Southwest improves operation efficiency by reducing the headcount and increasing the efficiency of employees needed to run operations.
Point-to-Point Routes : Traditionally, airline companies operate the hub-spoke model. In this model, the airline concentrates its resources on major cities – the hubs. Southwest Airlines breaks this model. Instead, it operates scheduled flights between secondary or downtown airports. These airports are less congested, leading to high asset utilization.
Single Aircraft Policy: Southwest exclusively flies the Boeing 737. The single aircraft policy simplifies the operation of the fleet and training of the staff. This decision reduces operational expenses and improves efficiency.
Strong Balance Sheet : Despite a net loss of $3.1 billion, Southwest has maintained its investment-grade credit rating with Moody’s and Standard & Poor. Southwest increased its liquidity to a record high of $14.3 billion with the help of cost-cutting measures and government aid. Southwest’s liquidity exceeds its long-term debt of $10.3 billion.
Network and Schedule Optimization : Southwest airlines routinely adjusts frequencies in its existing routes while adding new routes and itineraries. The company also eliminates less profitable routes. The ongoing optimization of existing routes, adding new routes, and eliminating unprofitable routes create a winning formula for maintaining low operating costs and high operational efficiency.

Southwest airlines managed to pull through 2020 without eliminating any of the destinations it serves. The company also absorbed the impact of the downturn quite well with an adjusted balance sheet leverage of 56% at the end of 2020.

However, the airline industry is hyper-competitive . Therefore, its success in the years to come will not only depend on how well it leverages its strengths but also on how well it addresses its weaknesses.

In the next part of the article, I’ll explain major weaknesses of Southwest Airlines.

What are Southwest Airlines’ weaknesses?

The biggest weakness of Southwest Airlines is its inability to remain competitive in the face of other airline companies adopting cost-cutting measures because of the pandemic. In addition to this, Southwest’s destinations and passenger amenities are falling short of those its competitors offer.

Here’s an explanation of Southwest’s weaknesses:

Route Structure : Southwest Airlines has a strong network of point-to-point routes in the US. However, its competitors have more extensive routes within the US and in the international markets. At the end of 2020, Southwest served 107 destinations. However, its rival Delta and its alliance partners serve 900 destinations in 140 countries.
Commercial Alliances : Many of Southwest’s competitors have formed commercial relationships. These relationships allow Southwest’s competitors to provide more destinations to their patrons than Southwest can.
Passenger Amenities : Southwest’s single aircraft policy limits passenger amenities to what the Boeing 737 can offer. Other airline companies operate aircrafts that have a larger carrying capacity and better passenger amenities. For instance, Southwest flights don’t offer premium seating facilities such as first class or business class.
Supply Chain : Southwest relies on Boeing for spare parts. The reliance on a single company creates supply chain bottlenecks. The prolonged delays in restoring Southwest’s fleet of grounded Boeing 737 MAX highlights the problems of Southwest’s sole reliance on Boeing.
Limited Cost-Reduction Possibilities: Prior to the pandemic, Southwest’s low-cost business model gave it an edge in the airline industry. However, after the pandemic, several airline companies resorted to similar measures to remain operational. As a result, Southwest lost its advantage. What’s worse, the company is struggling to find further opportunities for cost reduction.

While it may take a decade for the airline industry to return to normal, airline companies must face intense competition on the road to recovery. However, the future isn’t bleak. These turbulent times present several opportunities for Southwest. Capitalizing on these opportunities could give Southwest a significant edge in the industry. We will discuss these opportunities next.

What are Southwest Airlines’ major opportunities?

Some of the major opportunities for Southwest Airlines are expanding its routes and upgrading its fleets. In addition to this, Southwest can also re-think its cost structure so that they offer more amenities and compete with ultra-low-cost airlines.

Here’s an overview of Southwest’s opportunities:

Expand Routes : The pandemic has disturbed the existing order of flight routes. In the emerging new order, Southwest can find many gaps for under-serviced routes and expand its network.
Upgrade Fleet : The airline industry is not the only victim of the economic recession. Aircraft manufacturers such as Boeing and Airbus have been hit hard as well. These companies are looking for increasing their liquidity. Given Southwest’s financial position, now is the best time for Southwest to acquire new aircrafts for relatively low costs.
Re-Think Cost Structure : At this time, the airline industry as a whole is recovering from a severe setback. Since Southwest got back on its feet more quickly than other airlines did, this recovery window is the perfect time for the company to make bold moves such as re-thinking its cost structure to compete with emerging ultra-low-cost airline companies.
Offer More Amenities : The tight competition and rigid operation locked Southwest into offering limited amenities for its passengers. In the years to come, the company anticipates the competition to increase. Before the race picks up and intensifies, Southwest can upgrade its fleet to offer more passenger amenities.
Ultra-Low-Cost Airlines : Ultra-low-cost airline routes are becoming increasingly more popular. Ultra-Low-Cost Carriers or ULCC unbundles the fare. In other words, the whole fare is broken into components that the passengers can choose to eliminate. Unbundling leaves anything over the base fare optional. Although Southwest offers low fares, it is a low-cost carrier and not an ultra-low-cost carrier. Therefore, Southwest can explore opportunities in the ULCC niche.

The biggest opportunity for Southwest is the dip in competition the pandemic has created. COVID-19 essentially put the airline industry on time-out . Southwest can use this time to re-imagine its role and re-create itself to face the heavy competition that is on its way.

What threats do Southwest Airlines face?

Traditionally, the biggest threats to Southwest airlines are fluctuating fuel prices, heavy regulation, and intense competition. In addition to these threats, Southwest airlines are also facing new threats such as COVID-19 restrictions and growth of remote work.

Let’s look at Southwest’s threats in more detail:

Covid-19 Pandemic : After nearly 50 years of profitable operation, the pandemic led Southwest to its first loss. Southwest’s operating revenue fell from $22.4 billion in 2019 to $9 billion in 2020 . As a result of this 59% drop, the company had to take aggressive measures to stay relevant.
Volatile Fuel Prices : Last year, Southwest spent $1.8 billion on fuel. This expense is 14% of the total operating costs. So, fluctuations in fuel prices have a big impact on Southwest’s operating costs and profit.
Heavy Regulation : The airline industry must satisfy the requirements of many operational and economic regulatory bodies such as the FAA and DOT. In addition to this, the company must also comply with many operational, health, and safety regulations. With the emergence of online commerce, the company must also address informational technology and data privacy regulations.
Intense Competition : The pool of fliers shrank because of the global health crisis. As a result, the competition to acquire patronage has increased. In 2020, American Airlines, Southwest Airlines, Delta Airlines, and United Airlines accounted for nearly 66% of the market share in the United States. However, the individual market share of these companies was close.
Growth of Remote Work : Lockdowns and social-distancing norms has accelerated work-from-home culture. Online video conferencing platforms such as Zoom has reduced the need for travel. The increase in online collaborative tools has also reduced the need for people to work under one roof. As a result, the segment of income from business travel has been severely hit. Airline companies fear that this behavior shift would be permanent.

In today’s scenario, the biggest threat to Southwest is the competition to acquire patrons and the decline in business travel. The silver lining for Southwest in this scenario is that it has been able to rapidly raise cash. It has also survived the pandemic without canceling any of its destinations.

Southwest Airlines SWOT Table

The SWOT table summarizes SWOT analysis for Southwest airlines in an easy-to-read grid. Here’s the SWOT table for Southwest airlines:

If you want to learn how to make a SWOT table for another company, you can read our in-depth guide on how to make a SWOT table .

In addition to this, we have a lot of SWOT analysis examples for you to learn and increase your critical thinking skills. And for a step-by-step explanation, you can read our articles on what is SWOT analysis and look at our SWOT analysis templates .

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Southwest Airlines SWOT Analysis & Recommendations

Southwest Airlines SWOT analysis, strengths, weaknesses, opportunities, threats, internal external factors, air travel business strategy case

Southwest Airlines’ operations as one of the biggest low-cost carriers in the world showcase how the company’s strategies appropriately address the internal and external strategic factors identified in this SWOT analysis. The SWOT analysis framework evaluates the enterprise in terms of business strengths and weaknesses (internal factors) and opportunities and threats (external factors) in the commercial aviation industry. Southwest Airlines’ mission statement and vision statement pertain to such strengths to move the business forward to take advantage of available opportunities. Aligning the airline company’s strategic management with the issues presented in this SWOT analysis optimizes business performance and minimizes problems associated with relevant weaknesses and threats. Considering the company’s role as a major player in the air travel market, Southwest Airlines’ approach to overcoming business challenges provides insights into best practices for low-cost providers in the industry.

This SWOT analysis highlights how business competitive advantages and limitations are addressed through Southwest Airlines’ generic competitive strategy and intensive growth strategies . The company’s strategic planning and related decisions determine which SWOT elements are prioritized, such as in focusing on some threats and weaknesses by using all the strengths of the airline business organization. Southwest’s leadership and administration consider strategic changes to respond to the external and internal strategic factors shown in this SWOT analysis.

Southwest’s Strengths (Internal Factors)

Southwest Airlines’ strengths are the internal strategic factors that contribute to high operational productivity and business competitive advantages. In this SWOT analysis case, such strengths enable the company to compete against other major airlines and take advantage of growth opportunities available in the industry environment. The major strengths of Southwest Airlines are as follows:

Strong commercial aviation brand
Large fleet and organizational size
Scalability of operations involving a point-to-point system

As a large-scale low-cost carrier, Southwest enjoys a strong brand that enables the business to attract passengers. This internal strategic factor supports the company’s ability to penetrate markets and successfully introduce new flight routes, based on brand recognition among target customers. The emphasis of Southwest Airlines’ organizational culture (company culture) on fun and friendliness reinforces this strength by making travelers’ experiences enjoyable. Also relevant in this SWOT analysis is the company’s large fleet size and corresponding organizational size, which are strengths that support operational expansion. Moreover, scalability of operations is an internal factor that strengthens Southwest’s ability to expand. For example, with minimal strain on current operations, the company’s system can support new routes. This strength is based on how Southwest Airlines’ organizational structure (corporate structure) maintains a point-to-point system of flight routes. This aspect of the SWOT analysis indicates that the company’s strengths can support further growth, such as through international expansion.

Southwest’s Weaknesses (Internal Factors)

Weaknesses are internal strategic factors that hinder the potential business growth of the airline company, despite the strengths identified in this SWOT analysis. Southwest Airlines needs to address its weaknesses to maximize the benefits of its business strengths. The following weaknesses are among the most notable in the commercial aviation company:

Limited presence in the international commercial aviation market
Thin profit margins linked to cost leadership

Southwest Airlines has most of its operations in the United States. In this SWOT analysis, such a situation is a weakness that limits the company’s revenue sources to its current air travel markets, especially the United States. In addition, Southwest’s thin profit margins are a weakness based on its use of cost leadership as a generic strategy for competitive advantage. This strategy enables the company to offer low-cost airline services, but also minimizes profit margins. Thus, the internal strategic factors in this aspect of the SWOT analysis are based mainly on the strategic choices of Southwest in its current business approach for maintaining its operations.

Opportunities for Southwest Airlines (External Factors)

Southwest’s industry environment offers opportunities for business growth. In the SWOT analysis model, these opportunities are external strategic factors that present ways of improving the airline corporation. The following are some of the opportunities available to Southwest Airlines:

Growth through expansion in the global commercial aviation market
New partnerships with complementing firms
Growth through diversification of service offerings in or related to aviation

Considering Southwest’s focus on the United States as its main market, the company has the opportunity to expand to other markets. This external strategic factor refers to potential significant revenue growth as the company establishes new flight routes to serve more countries. New partnerships with complementing firms are also an opportunity in this SWOT analysis of Southwest Airlines Co. For example, these complementing firms can function as additional channels to reach customers, such as in terms of ticket sales. Thus, this external factor relates to Southwest Airlines’ marketing mix or 4Ps. In addition, the company has the opportunity to grow by diversifying its business, such as through new services or businesses that can form a synergy with its existing airline operations. Thus, the external factors in this SWOT analysis of Southwest Airlines indicate the benefit of adding new services, new routes, and new partnerships or alliances.

Threats to Southwest Airlines (External Factors)

Threats are external strategic factors that reduce or hinder business development. In this SWOT analysis case of Southwest, threats make it more challenging to expand the business internationally. The following threats impose pressure on the airline company:

Competition with large airline companies
Regulatory changes in commercial aviation
Volatility of fuel prices
Limited population of pilots

Competition is a strong threat against Southwest Airlines. For example, Delta, American, and United are aggressive competitors. In this SWOT analysis, such an external strategic factor hinders business expansion in markets where these competitors are present, and contributes to the competitive forces identifiable through a Five Forces analysis of Southwest Airlines Co. On the other hand, regulatory changes in commercial aviation are a minor threat that imposes challenges and associated costs in compliance efforts. Southwest also experiences the threat of volatile fuel prices. This external factor is a threat because air transportation firms depend on fuel, which account for major operating costs. Southwest Airlines’ corporate social responsibility strategy for sustainability helps address this threat. Furthermore, the company faces the threat of a limited pilot population that is estimated to be inadequate to support the industry’s future needs. This aspect of the SWOT analysis shows that Southwest’s business performance is subject to industry variables, some of which are beyond the company’s control.

Summary & Recommendations – SWOT Analysis of Southwest Airlines Co.

The strengths of Southwest Airlines ensure competitive advantages and a profitable business. The strong brand and scalability of operations facilitate the corporation’s expansion into additional commercial aviation markets. However, the weaknesses identified in this SWOT analysis indicate that Southwest has strategies that limit its current business profitability and growth. Nonetheless, the company has the potential to grow through new strategies to exploit opportunities in the global civil aviation market, such as business expansion and the establishment of new partnerships. Still, threats in the industry environment impose pressure on Southwest Airlines to consider innovative or radical strategies for long-term business success. Considering the internal factors and external factors in this SWOT analysis, it is recommended that the company expand its operations to other air travel markets. This recommendation addresses Southwest’s potential revenue and profit growth through international expansion. Another recommendation is to develop new alliances with other airlines or complementary non-airline businesses to increase the company’s reach in the global market.

Aghaie, S., Noble, C. H., & Lourenço, C. J. (2023). Credible vs. deceptive threat of market entry: Empirical evidence from the US airline industry. Industrial Marketing Management, 115 , 27-43.
Benzaghta, M. A., Elwalda, A., Mousa, M. M., Erkan, I., & Rahman, M. (2021). SWOT analysis applications: An integrative literature review. Journal of Global Business Insights, 6 (1), 55-73.
Southwest Airlines Co. – Form 10-K .
Southwest Airlines Co. – Proven Business Strategy .
U.S. Department of Commerce – International Trade Administration – Travel, Tourism & Hospitality Industry .
U.S. Department of Labor – Bureau of Labor Statistics – Occupational Outlook Handbook – Airlines and Commercial Pilots .
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Southwest Airlines SWOT Analysis 2024 With Key Insights

The moment you started reading this, more than 10 Southwest flights have landed and flown to the sky, serving thousands of people each hour. With consistency and the goal of providing affordable pricing, the company has become one of the largest, favorite, and go-to airlines for thousands of Americans.

It took them four decades to reach where they are now, and in that way, their strengths helped them while weaknesses and threats tried to bring them down. But, by utilizing and capturing opportunities, the company has survived this far, and we will get to know more in this Southwest Airlines swot analysis.

Table of Contents

Southwest Airlines: Company Overview

With just three aircraft serving three cities in Texas, Southwest founded in 1967 by Herb Kelleher and Rollin King and began operating in 1971. And now, the company is the world’s largest operator of the Boeing 737, with a fleet of over 700 aircraft.

The company reported total revenue of $23.8 B, with over 66,656 employees, and operates flights to 121 destinations in the United States, Mexico, and the Caribbean. Southwest Airlines aims to provide high-quality air travel at an affordable price, focusing on customer satisfaction and operational efficiency.

Product & Services of Southwest Airlines Passenger Airline

Did You Know? The company has around 3K flights daily, which goes through the roof with about 5K during peak seasons.

Strengths – Southwest Airlines SWOT Analysis

High Brand Value: Focusing on low fares, friendly customer service, and unique company culture has helped build a strong brand that resonates with customers. In 2022, the airline’s brand value was estimated at $7.3 B, a massive increase from the previous year and ranking as the world’s 4th most valuable airline brand.

Economical Pricing: By offering low fares for its flights compared to its competitors, Southwest Airlines has made a name for its economical pricing strategy. Southwest’s average domestic fare was $142 in 2022, lower than the average $397 for all U.S. airlines, which helped Southwest to remain a popular choice for budget-conscious travelers.

Steady Finance: The airline reported revenue of $23.8 B and a net income of $723 M in 2022. And the data shows this stable performance in the last few years, which is why it has maintained a positive cash flow , with $$11.049 B in operating cash flow, and the balance sheet remains strong.

Effective Customer Service: With a focus on providing passengers with a positive and friendly experience, Southwest Airlines is known for its excellent customer service. According to the various customer satisfaction Indexes, Southwest Airlines had a customer satisfaction score of 77 out of 100 in 2022, the second highest in the US airline industry.

Operational Excellence: The airline’s point-to-point system and efficient turnaround times have contributed to its success in providing customers with reliable and affordable air travel. According to the J.D. Power North America Airline Satisfaction Study, the airline ranked first in economy class with the lowest customer complaint rate.

Weaknesses – Southwest Airlines SWOT Analysis

Unbalanced Revenue: The company is highly dependent on a single segment for revenue, the passenger, which covered over 80% of the total revenue in the last eight years. Besides, its niche-based offerings and focus on economical pricing have made it almost impossible for the company to keep a balanced revenue stream.

Single Market Overdependency: Southwest generated over 90% of its revenue from domestic operations in the USA, making it vulnerable to domestic economic and consumer behavior changes. It creates an overdependency on the market, limits the airline’s growth opportunities, and increases its exposure to domestic financial risks.

Lower International Options: Most of Southwest’s flights are domestic, with limited international destinations , making it hard to target a mass market. As a result, the overdependency on a single market, unbalanced revenue, and various threats and weaknesses are taking away many opportunities for the company.

Weak Supply Chain: Southwest Airlines has recently faced some supply chain challenges, particularly concerning its maintenance operations. The Federal Aviation Administration fined the company $325,000 for improperly maintained Boeing 737 aircraft, and recently, in 2022, the company had a severe SCM meltdown.

Lack of Offerings: The company has emphasized its commitment to providing affordable and reliable air travel, which comes at a cost. Because of that, the airline does not offer first-class seating, and its aircraft doesn’t have in-flight entertainment systems.

Opportunities – Southwest Airlines SWOT Analysis

Multidomestic Strategy: As mentioned, international flights accounted for approximately 7.7% of Southwest airline’s total revenue in 2022, so there are opportunities to expand internationally to more countries, focusing on a multi-domestic strategy. Finding new international routes and starting with them would be an excellent start.

Tech Adaptation: In recent years, the tech has disrupted and efficiently brought operational excellence and better customer experience. The company can implement self-service kiosks, mobile boarding passes, and other digital tools to streamline check-in and reduce customer wait times, and launching a new reservation system is part of the process.

Diversify Offerings: One opportunity for Southwest Airlines to continue to grow and expand its business is to diversify its offerings. As only a limited number of service offerings are available in the portfolio, the company can offer new services with different price sets. That will help to bring new consumer bases and increase revenue.

Sustainability Practices: To become a part of the sustainability practitioners, the company can recognize the importance of environmental responsibility and social impact. The airline has set a goal to reach carbon neutrality by 2050. It has implemented several initiatives, such as investing in more fuel-efficient aircraft and using sustainable aviation fuel .

Effective Partnerships: To expand the company’s reach and offer new services to customers, it has always tried to bring in new partnerships. The airline announced a partnership with Expedia in 2021. And recently, in 2022, the company partnered with a giant like Amazon to give the consumer a better experience.

Threats – Southwest Airlines SWOT Analysis

Competitive Market: Southwest Airlines faces intense competition in the U.S. airline industry with giant competitors such as Delta Air Lines, Spirit Airlines, American Airlines, and Frontier Airlines, etc. It had a market share of 17.1%, behind American Airlines (17.6%%), and a similar market share with Delta Air Lines (17.1%) in 2022.

Rising Fuel Price: Fuel is one of the most significant expenses for airlines, and rising prices can lead to increased operating costs and lower profitability. In 2022, the airline’s fuel costs were up 85% compared to 2021 and still increasing, a significant threat to Southwest Airlines.

Economic Downfall: Inflations and recessions or downturns can lead to decreased demand for air travel, as it did during the pandemic or 2008 recession, impacting Southwest Airlines’ revenue and profitability. As inflation already affects the airlines, the recession will make it difficult for Southwest Airlines to keep a stable cash flow in 2023.

Strict Regulations: Changes in government regulations or policies can significantly impact Southwest Airlines. The FAA grounded the Boeing 737 MAX aircraft following two fatal crashes, which affected Southwest Airlines’ operations in 2019. The grounding resulted in the cancellation of thousands of flights and negatively impacted the airline’s revenue.

Labor Shortage: As the recession hit the economy, many industries are on a streak of letting go of labor, which also impacted the airline industry. In December 2022, the company had to cancel 60% of the flights, a total of 2600 flights, because of labor shortage, including pilots to field workers, including staff in the headquarters.

[Bonus Infographic] SWOT Analysis of Southwest Airlines

southwest airlines swot analysis infographic template

Recommendations for Southwest Airlines

Every company has to overcome all its weaknesses and mitigate threats to survive in the market long-term, and Southwest is no different. Here are some recommendations for them.

Expanding its international offerings could help the company reach new customers, increase its revenue, reduce one market dependency, and balance the revenue stream.
The company should continue to invest in employee retention and satisfaction.
Exploring new partnerships and offerings that could help it to reach new customers.
Adapting new techs will make the overall operations more effective and efficient.
Practicing sustainability will create a positive impact on the consumer.

Frequently Asked Questions (FAQs)

What day is cheapest to fly on southwest airlines.

Tuesday is the cheapest day to fly on Southwest Airlines.

Is Southwest a Budget Airline?

Yes, Southwest is a budget airline.

Is Southwest an International Airline?

Yes, Southwest is an international airline.

Final Words on Southwest Airlines SWOT Analysis

Southwest Airlines is a significant player in the aviation industry, known for its commitment to affordable and reliable air travel. The company’s focus on operational efficiency and employee satisfaction has helped it to maintain low costs and a unique company culture that sets it apart from its competitors. While Southwest Airlines faces threats such as competitive pressure, regulations, rising fuel price, and a labor shortage, it has a track record of adapting and innovating to maintain its success.

Wikipedia contributors. (n.d.). Southwest Airlines . Wikipedia.
Second Quarter 2022 Average Air Fare Increases 22% from Second Quarter 2021 . (2022, October 18). Bureau of Transportation Statistics.
O’Marah, K. (2022, December 30). Southwest Airlines Meltdown: A Supply Chain Management Perspective . Forbes.
Banker, S. (2022, May 2). Southwest Airlines’ Flight Path To Carbon Neutrality . Forbes.
Gabriele, A. (2023, March 9). Southwest Airlines Partners With Amazon After the Colossal Mess That Was Late 2022 . InsideHook.
Pande, P. (2022, April 24). How Rising Jet Fuel Prices Will Hurt Airlines and Travelers . Simple Flying.
Kulisch, E. (2022, June 1). Airline industry economist sees recession risk in 2023 . FreightWaves.
Isidore, C. (2020, January 23). The 737 Max grounding cost Southwest $828 million in 2019 . CNN.
Zilber, A. (2022, December 29). Southwest scrambles to fill key staff shortages with HQ workers, memo reveals . New York Post.

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Southwest Airlines SWOT and PESTLE Analysis

Company profile - southwest airlines, business sector : aviation, operating geography : united states, north america, global, about southwest airlines :, southwest airlines revenue :, competitive analysis of southwest airlines.

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Detailed SWOT Analysis of Southwest Airlines

1. Good profitability, revenue growth and a strong brand image: For the 47th consecutive year, southwest was profitable, earning $2.3 billion net income for the year 2019. Operating revenues rose to a record $22.48 billion in FY19. It had an impressive 83.5% load factor, which is an indication of the percentage of seats filled. The year 2020 was an exception due to the severe impact of pandemic which saw the trend broken with Southwest registering a net loss of $3.1 billion with operating revenues at just $9.0 billion. However once impact of pandemic subsides the company is expected to be on track again. Thus, Southwest has a legacy of strong profits year on year and also growth in revenues. This indicates the good overall profitability of the airline. Moreover, the strong brand image that the airline has built over the years has built great customer loyalty as well. It is one of the major airlines who pioneered ticketless travelling and the only airlines in the United States to offer bags-fly-free service (first 2 checked pieces of luggage with size and weight limits applicable) to everyone, no change fess, although differences in fares might be applicable.

As launch Customer of the Boeing 737 MAX 8 in North America, Southwest Airlines boasts of the largest fleet in the world of Boeing aircraft, all of which are equipped with satellite-based WiFi. Passengers using the WiFi network through personal devices are permitted to engage in on-demand content streaming i.e view movies and television shows, as well as nearly 20 channels of free, live TV.

2. A robust network and highest domestic market share: Southwest Airlines has effectively implemented the model of point-to-point network of connecting destinations as compared to the hub and spoke network of other airlines. As of January 2020, it serves 720 nonstop city pairs, serving 101 destinations with 747 aircraft in its fleet. As per records of the U.S. Department of Transportation (the “DoT”), "Southwest was the largest domestic air carrier in the United States, as measured by the number of domestic passengers boarding it”. In 2019, Southwest Airlines was the leading airline in the U.S., with a domestic market share of just over 20 percent. This indicates a very successful network connecting destinations that has indeed contributed to its industry leading market share in a highly competitive market. In spite of it being a low-cost no-frills airline, it persistently wins the passenger-satisfaction awards year after year. Southwest flies 4000 flights on weekdays to about 100 locales in America and 10 additional countries during surges in peak travel period.

3. Lowest operating cost in the airline industry: Southwest has operating costs which are lowest in the industry. It has the world’s largest Boeing fleet of any airline. Southwest is able to achieve this distinction by being able to keep costs low. They have done this by including a single aircraft type, the Boeing 737, in their fleet. Similar operations requirements for the fleet ensures operating an efficient point-to-point route structure, ongoing work, reduced fuel consumption, and highly productive employees as there is no variation in the maintenance of the fleet. The low-cost structure is one of the competitive advantages, as it has enabled southwest to offer low fares, drive traffic volume, and grow market share year on and also lead the industry in the segment.

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Opportunity

Detailed pestle analysis of southwest airlines.

1. Political interference and control: Domestic operations of Southwest airlines are controlled by The Federal Aviation Administration (FAA). In 1979 ‘Wright Amendment’ promulgated by the USA government, restricted Southwest Airlines to fly non-stop or provide through-plane service from Dallas Love Field to any other than 7 designated cities. This impacted business for almost over 26 years and the law was repealed only recently in 2014. Southwest wanted to fly all between states from Love Field Airport which was quite close to downtown Dallas. Apprehensions over Southwest to acquire larger market share prompted rivals to conspire with Fort Worth Congressman Jim Wright and block inter province flights from Love Field Airport. Southwest fought against this injustice and finally arrived at an understanding with the courts which is known as Love Field Compromise. It enabled Southwest to operate from Love Field airport non-stop flights cities in and around Texas viz. Louisiana. Arkansas. Oklahoma. and New Mexico, but at the same time the jurisprudence restricted South West to publish agendas or menus or look into luggage of any airlines flying from Love Field.

Technological

Environmental.

1. Regulations by the Government and respective changes: The company is subject to various federal laws and regulations relating to the protection of the environment, including the Clean Air Act, the Resource Conservation and Recovery Act, the Clean Water Act, the Safe Drinking Water Act, and the Comprehensive Environmental Response, Compensation and Liability Act, as well as state and local laws and regulations. The airlines deals with drinking water supplied on the aircraft, emissions, storm water release, aircraft decibel levels, disposal of materials such as jet fuel, chemicals, hazardous substances, and aircraft deicing fluid from its daily operations. Southwest uses a lot of new technologically advanced components to minimize adverse effects on the environment. In order to minimize the release of these into the environment it has installed “blended winglets” to reduce drag and enhance fuel efficiency. It also uses electric ground power for aircraft air and power support, auto throttle and fuel efficient initiatives.

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References used in southwest airlines swot & pestle analysis report.

1. SOUTHWEST AIRLINES CO. 2020 ANNUAL REPORT TO SHAREHOLDERS - https://www.southwestairlinesinvestorrelations.com/~/media/Files/S/Southwest-IR/LUV_2020_Annual%20Report_.pdf

2. Form 10-Q 2021 - https://www.southwestairlinesinvestorrelations.com/~/media/Files/S/Southwest-IR/3Q21%2010-Q%20Final%20Filed.pdf

3. Which U.S. Airlines Dominate Market Share in North America?: https://upgradedpoints.com/us-airlines-marketshare-north-america/

4. Southwest Airlines Ranks No. 14 Among FORTUNE's World's Most Admired Companies - https://www.prnewswire.com/news-releases/southwest-airlines-ranks-no-14-among-fortunes-worlds-most-admired-companies-301219297.html

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Southwest Airlines SWOT Analysis

Overview of southwest airlines, single type aircraft, constant profits, large capacity, many flights, dominant market share, operational costs affecting net income, lack of commercial alliances, overdependence on boeing 737s, passenger amenities, supply chain, outdated product, limited international operations, increase freight business, grow global tourism, expand globally, offering long distance flights, ultra-low-cost airlines, heavy regulation, competition, negative publicity, question: can i change my flight with southwest airlines, question: what are the cancellation policies at southwest airlines, question: what size should my carry-on be, question: what are travel funds.

The airline industry is tricky, as seen from some of the challenges the major players in this niche face. However, the challenges rock across the industry, but the players still manage to remain afloat and facilitate travel across the globe. In this piece, we will break down a popular domestic carrier in the United States and present a SWOT analysis to see the positive and negative side of it.

Southwest Airlines is one of the leading airline companies in the US. In 2018, it recorded the highest number of enplaned passengers in the US. It operates across all the 40 states and 15 international destinations in 12 countries. In 2018 alone, the airline carried 163.6 million passengers.

Unlike its competitors, who follow a hub and spoke model for their operations, Southwest Airlines follows a point-to-point service mode l. This makes the company stand out not only in customer service but also in its price leadership.

The company was established in 1971 by Rollin King and Herb Kelleher. The current CEO of the airline is Gary Kelly, and its headquarters are in Dallas, Texas. In 2019, the company had employed 60,800 employees and had a net income of $2.3 billion.

The main focus of the company is its operational efficiency which aims to reduce costs. To maintain the operational costs and fuel prices, the company only uses the Boeing 737 aircraft. The airline company has nearly 750 units of this aircraft in its fleet.

Southwest Airlines has been exclusively using Boeing 737s for all its flight operations since its inception. It currently has around 750 Boeing 737s. Using a single type of aircraft for flights is cheap and effective. It makes it easy to train the staff, ground crew, and pilots since their focus is on this model, and they can quickly learn how to operate and maintain them. This unified approach makes them experts on the Boeing 737, which drives efficiency in the long run.

One essential aspect of running a business is generating enough profits to sustain it and drive growth. They are a good foundation for companies that seek to build a considerable capital base for expansion. Southwest Airlines has recorded profits for 47 consecutive years up to 2019. Keeping in mind that airlines are a cutthroat industry, gaining profits for such a long period is recognizable.

In airlines, capacity is measured in terms of Available Seat Miles (ASMs). A successful airline should have a higher ASM. If the ASM is high, it means there are more seats for longer miles. The ASM of Southwest has grown from 120.58 billion in 2011 to 157.25 billion in 2019. The growth has made the company to be one of the few airlines with high capacity.

A large number of loyal customers Southwest Airlines has can be attributed to its low-cost flights . The airline has a low fare calendar. Passengers can book flight tickets for as low as $45 on the calendar for a one-way flight. Southwest has held the title of offering cheap flight costs for a while.

The more an airline flies, the more revenue is generated. Southwest Airlines operates over 4000 flights in a day during the peak season. Such a high number of flights makes Southwest a force to reckon in the airline industry.

Airlines are influenced by intense lobbying, and the dominant ones benefit a lot. By being a dominant player in the market share, an airline can leverage its resources, superiority, and connections to lobby the successful adoption of laws that favor its agenda.

Southwest airlines have a US domestic market share of 16.8%, making it rank third. The first and second are the American and Delta airlines with 17.6% and 17.5%, respectively.

Southwest Airlines has attracted more customers than its rivals by reducing costs. But it has to focus on improving fuel efficiency and other areas where it can reduce costs. In 2020, the operating expenses of the company grew compared to 2019. This airline can improve its profit margin by cutting costs and getting enough resources needed to diversify or improve operations.

Most of Southwest Airlines’ competitors have established commercial relationships. These relationships boost them since they provide more destinations to their patrons than Southwest Airlines. By looking for more commercial alliances, the airline can expand its destination network, which will set it up to further growth.

Southwest airlines have been using Boeing 737s since its inception. In March 2019, the Federal Aviation Administration issued an emergency to ground all Boeing Max aircraft after two fatal accidents. Out of its 750 Boeing planes, Southwest has 31.

This led to fewer operating planes and, in return, lost revenue. This highlights how wrong it is to depend on only one aircraft model.

As we talk of reliance on one craft model, it is also notable that this policy limits passenger amenities to what is available in Boeing 737 alone. Competing airline companies operate aircrafts with better passenger amenities and a larger carrying capacity.

For example, Southwest Airlines does not offer premium seating facilities during flights like business class or first class.

Boeing is the leading company supplying Southwest Airlines with spare parts. With such arrangements, there is always an impending risk of supply chain bottlenecks. It is essential to diversify the supply chain so that any issue affecting Boeing cannot be cascaded to Southwest Airlines. The long delays in restoring the fleet of Boeing Max highlight the problem of Southwest’s total reliance on Boeing.

Southwest Airlines should develop new products for its customers. In recent years, the company densified its aircraft by decreasing the seat pitch. Besides the densification and offering onboard WiFi, the company could be missing out on a chance to leverage its strong brand to come up with new revenue opportunities. This is important to diversify its offering and keep customers happy, which will eventually boost revenues.

Southwest Airlines is a domestic operator in 40 states in the US. It only offers its services to a limited number of international destinations like Caicos, Turks, Cayman Islands, Cuba, Belize, Costa Rica, Dominican Republic, Aruba, and the Bahamas. When compared to Delta Airlines, its competitor, these are just a drop in the ocean.

Delta Airlines is a leading competitor and offers its flight services across 300 destinations in 50 countries. Another close competitor, the American Airlines Group , also serves more than 350 destinations in 50 countries.

Measuring them up against the competition, Southwest Airlines does not come close in matters international and has to expand its destination network across multiple countries to increase the chances of catching up with them.

Opportunities

The advent of e-commerce has fueled globalization. An increase in e-commerce businesses leads to a rise in global freight businesses too. In the next five years, the international freight business is expected to grow at a CAGR of 7%. Southwest Airlines should take advantage of this growth in the industry and increase its freight business.

The global tourism industry should grow at a CAGR of 4% over the next five years. The growth rate is higher in the US and remains at 5%. This high growth trend in the global tourism industry enhances the business of the company. Southwest Airlines can position itself as the desired carrier for tourists and use this to increase the number of people traveling with them.

A while back, Southwest Airlines expanded its local flights to Hawaii. The improved financial situation and globalization should prompt the airline to expand further since air travel increases in emerging economies. South America has an unsaturated market, which is a great stepping stone for the global expansion of Southwest Airlines.

Millennials are taking up job opportunities, and most of them live further from home than preceding generations. This leads to a demand for lengthier flights. To exploit its growing demand, Southwest Airlines can expand from short hauls to long flights.

Ultra-Low-Cost airline routes are gaining popularity day by day. Ultra-Low-Cost Carriers unbundle the fare. They break down the full fare into components. Passengers can choose to eliminate any of the components. Anything beyond the base fare is optional.

Southwest offers low fares and is a low-cost carrier. However, it is not an ultra-low-cost carrier. Exploring opportunities in the ULCC niche will help Southwest breakthrough.

The airline industry has to satisfy many economic and operational regulatory bodies like the DOT and FAA. Also, the company has to comply with many health, operational, and safety regulations. The emergence of online e-commerce means that the company has to address data privacy and informational technology regulations. All these regulations can put this airline at a hard place trying to satisfy them, limiting growth.

There are many players in the US airline industry competing with Southwest Airlines. Some of these companies are Alaska, United, Spirit, American, Delta, and Jet Blue. The players in the airline industry are not the only ones competing with Southwest Airlines. They also face competition from trains, buses, and automobiles.

In an economic turndown, customers forego using flights and opt for less expensive transportation modes.

The US Government revealed that Southwest Airlines had been flying jets without confirming the maintenance records for more than two years. This exposed more than 17 million passengers to safety risks. Such bad publicity can keep customers from traveling with this airline as they opt for the competition.

Answer: Yes. If you are affected by any involuntary change, you can change your flight time by up to 14 days from the original day of travel at no extra cost. Sometimes, Southwest Airlines can change their flights’ schedule, and if your flight is affected, they will email or call you with a new itinerary. If the new trip does not work for you, you can cancel or change it.

You will not be required to pay any fee if you change your flight. But, if there will be a difference in the fare of the new flight, you will have to pay. Likewise, if the new flight costs less, Southwest will refund the difference or hold the difference for future use in the form of a reusable travel fund.

Answer: Southwest has two cancellation policies . You can decide if you want to hold the value of the ticket where it will be converted to a travel fund which you can use to buy a future flight. Alternatively, you can choose to receive a method of payment refund.

Answer: A carry-on bag should be 10 x 16 x 24 inches. If your bag is bigger than these dimensions, you should check it at the ticket counter. If it is larger than the dimensions, you will have to pick it at the baggage claim. Carry-on items are limited to one small bag, a big one, and a personal item. The personal items have to fit in the space under the seat, which is 18.5 x 8.5 x 13.5 inches.

Answer: Travel funds are a credit form of cancelled flights that can be used to buy future flights. The funds are tied to the six-digit confirmation number on the cancelled flight. The travel fund expires on the date the original ticket will expire.

Southwest Airlines is the leading domestic carrier in the US market. For faster growth, the company should invest in international expansion. It will also benefit significantly from forming joint ventures with other successful airlines. Southwest Airlines has major opportunities that will help it gain more profitable growth.

Southwest Airlines SWOT: Financial strength is mainstay, but cost and culture challenges loom large

At 43 years of age, Southwest Airlines is firmly entrenched in middle age within a mature US market place. During its more than four decades the airline has largely retained its appeal and perpetuated its renegade image, even if that perception is now more legend than reality. As its merger integration with AirTran comes to a close, Southwest continues to exploit its domestic strength by forging a presence in key US markets while laying the groundwork to bolster its international offerings in 2015 with service from a new international terminal at its sixth largest base measured by seats deployed, Houston Hobby . But even as it still engenders positive customer sentiment, Southwest faces numerous challenges. These include preserving its culture and finding new ways to generate revenue. At the same time it is becoming more difficult for Southwest to brandish its low fare image with the rise of ultra low-cost airlines that are fulfilling Southwest 's traditional role - traffic stimulation through rock bottom fares.

Southwest Airlines Strengths

1. financial wherewithal.

During 2Q2014 Southwest recorded its fifth consecutive quarter of record profits. Its consistent profitability and balance sheet strength have resulted in the airline holding the position of the only US airline to achieve investment grade status until Alaska Air Group secured that coveted position earlier in 2014. Southwest managed to remain profitable during the financial downturn of 2008 and 2009, and its CY2013 profits of USD754 million were the highest recorded by the airline since 2008.

Southwest Airlines Co . annual net profit (loss): 2008 to 2013

Source: CAPA - Centre for Aviation and airline reports

Growth of Southwest Airlines Co . annual net profit (loss): 2009 to 2013

At the same time Southwest has sustained a measurably strong balance sheet. Its leverage at the end of 2Q2014 was 37%, and its cash in hand was USD4 billion. During 1H2014 it generated USD1.6 billion of free cash flow, and as of 30-Jun-2014 Southwest had reduced its debt and capital lease obligations by USD1.5 billion.

2. Southwest has an iconic brand

Southwest is one of the most recognised brands in the US , and it consistently works to exploit its heritage through advertising during high profile sporting events and in social media. It has been deemed the top travel brand and fifth overall brand by The Business Journals in the American Brand Excellence Awards.

This provides important differentiation in a commoditised industry. Standing out by not going along with the crowd and forgoing the revenue is arguably a net gain, albeit perhaps not easily accountable.

3. It maintains a robust domestic network

Presently Southwest is benefitting from strong demand within the US market place, reflected in its 8% passenger unit revenue growth in 2Q2014, the largest gain of any US airline. Based on data from CAPA and OAG for the week of 15-Sep-2014 to 21-Sep-2014 Southwest is the second largest airline in the US domestic market measured by seat deployment. Its share is approximately 20% behind Delta 's nearly 22% share.

United States of America capacity by airline (% of seats): 15-Sep-2014 to 21-Sep-2014

Source: CAPA - Centre for Aviation and OAG

Through its acquisition of AirTran and seizing on required slot divestitures by American and US Airways in order for those airlines to move forward with their merger, Southwest has made inroads in the key US markets of Washington National and New York LaGuardia .

As a result Southwest has a relatively strong position in eight of the top 10 US cities by arrivals for the week of 15-Sep-2014 to 21-Sep-2014: Chicago (it holds an 88% seat share at Midway ), Atlanta (second largest with a 7% share, Delta retains an 80% share), New York LaGuardia (fourth largest airline with an 8% share), Denver (second largest airline with a 26% share), Los Angeles (a highly fragmented market where Southwest retains a 13% seat share), Houston (a 91% seat share at Hobby), Las Vegas ( Southwest holds a 43% share) and Washington (a nearly 9% share at Washington National and a 70% share at Baltimore/Washington International) (All information is based on data from CAPA and OAG .)

United States of America top 10 domestic cities by arrivals: 15-Sep-2014 to 21-Sep-2014

Southwest Airlines global top 10 hubs/bases/stations by seats: 15-Sep-2014 to 21-Sep-2014

Southwest Airlines Weaknesses

1. minimal revenue opportunities.

Southwest has rejected the product unbundling that nearly all of its US counterparts have undertaken that airlines tout is designed to allow customers to tailor their experiences. The reality is for most airlines - full service, hybrid, and ultra low-cost - ancillary revenue presents the largest opportunity to grow revenue significantly over the medium and long term. The airline's top-line revenues increased just 3.6% year-on-year during CY2013 after peaking at 29% growth in CY2011.

Growth in Southwest Airlines Co . annual operating revenue: 2009 to 2013

Southwest has attempted to pull some ancillary levers in its own, usually more positive way - selling select boarding positions at the gate, tightening flexibility around its most restrictive fares and increasing some other fee revenue. During 2013 the airline estimated that those changes would result in roughly USD175 million of incremental revenue on an annual basis. See related report: Southwest Airlines plots course to meet previously missed ROIC targets Southwest transported roughly 133 million enplaned passengers in CY2013, and its revenues outside freight and passenger operations fell 2.5% to USD815 million. US hybrid airline JetBlue carried 30 million passengers in CY2013; but recorded ancillary revenue of USD670 million in CY2013, of which USD170 million was derived from its Even More offering (extra legroom, priority boarding and in some cases expedited security clearance). Also a customer favourite, JetBlue has successfully grown its ancillary revenue through creating products customers value rather than making passengers feel nickel and dimed. It is not a stretch to conclude Southwest could create some added value for its legions of fans.

2. Its product is outdated

Southwest has the balance sheet strength to leverage new products that its customers would find appealing, and that in the medium term would generate high margin revenue. An extended legroom offering is now the norm for numerous airlines worldwide (including many ULCCs), and offers an opportunity to drive up ancillary revenue. Southwest has actually densified its aircraft (and decreased seat pitch) during the past couple of years - another trend apparent in the US industry. But other than offering onboard Wi-Fi, its product is arguably stale, and more importantly, it could be missing an opportunity to leverage its strong brand to create new revenue opportunities.

Southwest Airlines Opportunities

1. wright amendment repeal.

During Oct-2014 all restrictions on long-haul flying from Southwest 's Dallas Love Field base will be dissolved, allowing Southwest to offer direct flights to many of its strongest markets without the need for connecting service.

Initially Southwest is operating service to Baltimore , Denver , Las Vegas , Orlando and Chicago Midway . Other new service includes flights to Atlanta , Fort Lauderdale , Los Angeles, Nashville, LaGuardia , San Diego , Orange County, Tampa and Washington National . See related report: Southwest Airlines wins Love - but also new competitive forces with repeal of Wright Amendment Given its favourable positioning in all of those markets the new direct flights from Love Field should spool up quickly and make a positive revenue contribution to the airline's already strong results.

2. New international operations

Southwest introduced its own-branded international service during 2014 after many years talking about expanding to adjacent international markets. The AirTran acquisition and a reservations system upgrade have helped accelerate the process and now Southwest offers service to Aruba , Cancun , Los Cabos, Nassau , Montego Bay and San Juan. The airline marks an important milestone in late 2015 when it launches international flights from Houston Hobby after successfully beating back opposition from United ( Houston Intercontinental's largest airline) over the construction of a new international terminal at Hobby. The addition of international service is important network diversification for Southwest as it has arguably penetrated most of the domestic US (85 domestic destinations as of 21-Sep-2014). Its ability to offer its large passenger base access to near international leisure destinations is a natural progression, and should create some revenue upside once the markets reach maturity.

3. Potential partnerships with foreign international airlines

A recent study by CAPA identified a number of US airports which are currently underserved by foreign airlines. Southwest is frequently the dominant airline at the airport, operating only domestic services.

See related story:

787 and A350 airline operators will open up new Europe-US routes - despite some inertial resistance

There are many examples of independent LCCs and other airlines in such circumstances establishing partnerships and extensive codeshares with foreign carriers which need feed behind their initial gateway. For various reasons, including opposition from some employee groups, Southwest has not entertained such possibilities. There is substantial opportunity for enhanced traffic flows in these relationships.

Southwest Airlines Threats

Contrary to its claims, Southwest is no longer the low fare leader as Spirit Airlines , Frontier Airlines and Allegiant Air overtake the historical Southwest role of using low fares to stimulate air travel. During CY2013 its average fare increased 7%, and nearly 6% in 1H2014. Some of that was due to strong demand within the US market place; but the reality is Southwest needs to maintain certain fare levels to manage its costs. The rise of ULCCs is arguably creating an identity crisis for Southwest . The airline is no longer really low-fare or low-cost, but does not offer any of the amenities of hybrid or full service airlines. Southwest argues that not neatly fitting into a mould is part of its renegade image. Yet staying stuck in a 43-year old mindset stifles innovation, which is something Southwest needs to focus on in order to remain relevant in the long term.

2. Costs are rising and likely to rise further

Southwest is in the midst of numerous labour negotiations that are making it tough to predict its unit cost increases in the medium to long term. For the moment its unit costs are in line with major airlines, rising 2% in 1H2014 as passenger unit revenues grew a healthy 6% during that time. But the airline will inevitably endure some cost pressure as new contracts take effect after tense negotiations. Southwest has previously acknowledged that its labour agreements are built on an operating model it executed 10 to 15 years ago, and the airline has one of the highest pay structures in the industry. For CY2013 salaries, wages and benefits represented 31% of the airline's total top-line expenses. See related report: Southwest Airlines: solid financial performance for FY2013, but challenges are piling up

3. A unique culture is being eroded

The push and pull of the labour negotiations has already created cracks in Southwest 's favourable employee relations and its culture. In early 2014 the union representing ramp workers sued Southwest after the airline requested that employees at Chicago Midway prove they were ill during Jan-2014 after inadequate staffing and a winter storm triggered operational disruptions at the airport. Illustrating the pressure Southwest faces in its employee relations the union representing ramp workers in early 2014 warned: "By refusing to reward employees for their contribution to our airline's success, management is taking a terrible wrong turn from Southwest Airlines ' past emphasis on putting employees first and maintaining positive labor relations."

There appears to be a substantial rift emeging between employees seeing a commonality of purposes with the company and pursuing their own interests.

Outlook: Southwest 's competitiveness remains solid; but cracks are starting to emerge

The strong domestic environment within the US is helping Southwest to sustain an undeniably strong financial position, and the lifting of the Wright Amendment and new international service should help keep its passenger revenues robust. But Southwest needs to define itself for the long term in light of the rise of ULCCs and the product evolution taking place within the industry. Perhaps the most renegade change it needs is for its "family" to undertake a mindset change.

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A Scrupulously Conducted SWOT Analysis of Southwest Airlines

Southwest Airlines Overview

Southwest Airlines is a highly renowned American airline that serves more than 47 states within the US and also offers international flights to more than 10 countries. The airline was founded in 1967 and is headquartered in Dallas, Texas in the United States. With a market share of around 17 percent in the US airline industry, Southwest Airlines is one of the most successful airline companies in the United States.

This article presents a fastidious and well-researched SWOT Analysis of Southwest Airlines looking into the comparisons between the strengths and weaknesses of the company. Furthermore, the analysis highlights the different opportunities and threats for Southwest Airlines in the external business environment. In case you wish to learn about conducting a SWOT analysis in detail, you should definitely go through our meticulous Swot Analysis guide . So, let us get started.

Southwest Airlines Strengths
Southwest Airlines Weaknesses
Opportunities for Southwest Airlines
Threats for Southwest Airlines

A meticulous SWOT Analysis of Southwest Airlines

Southwest Airlines’s strengths

Strong financials- Southwest Airlines has abundant financial resources with its revenue in 2021 increasing by a huge margin of 74.5% to $15.8 billion. Further, the company had net cash of $4.8 billion which can help it overcome negative situations and exploit new opportunities (Southwest 2022).
Brand value- Southwest Airlines is valued highly in the US market. The company has featured 22 times in various rankings including the strongest and most valuable US brands , the biggest Airlines brands, and the best global brands. It is currently the 4th most valuable airlines brand and is valued at $6.8 billion.
Strong market share- Southwest Airlines has a strong foothold in the US market with a 17.4% market share (Salas, 2022).
Customer service- Southwest Airlines provides various facilities to enhance customer satisfaction. These include Early Bird Check-In, wherein the customers can check-in through the web and are assigned boarding passes prior to commencement of regular boarding. Further, most of the planes have inflight entertainment and Wi-Fi services on the majority of their fleet.

Southwest Airlines’s weaknesses

Limited routes- Southwest Airlines operates to limited destinations that include the US, 4 destinations of Mexico, and Puerto Rico along with Bahamas, Cuba, and a couple of other Caribbean destinations.
Over-dependence on Boeing 737- The whole fleet of Southwest Airlines comprises of Boeing 737 out of which 69 are the Max 737 and further the delivery is pending for 234 Max 737’s and 149 Max 8 (Josephs, 2021). Governments all around the world banned Max 737s for about two years due to safety issues. The over-dependence of the company on Max 737 can cause disruption in the operations.

Southwest Airlines’s opportunities

Expansion to more countries- Currently Southwest Airlines flies in 47 US states along with Mexico and a few Latin American countries. The company can expand its operations in emerging economies like India and China. Indian aviation has grown tremendously over the years and would be the third-largest aviation market by 2024. Further, China is also witnessing high growth and it is expected that China’s fleet size would rise to close to 10,000 planes by 2040, almost 22% of the world’s fleet, thus highlighting huge growth opportunities.
More investment in cargo shipment- The revenues from the freight operations constitute just 1% of the total sales (Forbes, 2020). The company can enhance its cargo operations by tying up with several cargo operators that would enable it to penetrate more into the markets. Furthermore, Southwest airlines can also tie-up with US Postal Services to deliver the packages to the customers.
Integration of latest technology- Southwest Airlines can use the latest technologies like robotics for conducting ground operations and can tie up with wearable tech companies to provide facilities for storing boarding passes on the device and providing them real-time information on the devices themselves. This would ease the passenger experience.

Southwest Airlines’s threats

Competition- Southwest Airlines has intense competition with Delta Airlines, and American Airlines among others. American Airlines is the top airline in the US market with a 19.5% market share and has a fleet of 860 planes. Delta Airlines is also a significant player with a 16.3% market share, 860 aircraft and it earned a profit of $280 million in 2021 (Josephs, 2022).
Increase in crude prices- The prices of crude have risen by more than 70% in the last 12 months to $113/barrel. Further, the US government’s decision to cease oil imports from Russia could add to Southwest Airlines’ worries as the prices would rise further and there can be disruptions in supply as well which could impact the financials of the company.
Negative publicity- The company flew its airplanes for two years by violating the federal aviation administration’s laws wherein it didn’t possess any records for maintenance (Slotnick, 2020). This type of behavior can result in fatal accidents and loss of trust among the passengers.
Pandemic- The increase in the intensity of the virus can pose a threat to the business of the company as it would have to ground the planes, which would result in huge financial loss to the company.
Variation in demand for travel- Most of the revenues are generated during the summer months when the demand for air travel is at its peak while the demand is low in the first and third quarters of the calendar year.

To conclude, it can be said that Southwest Airlines is one of the best and most trustworthy in the industry which is evident from the fact that in spite of difficult times because of COVID, Southwest Airlines has been able to maintain positive financial growth and its customer service is one of the best in the industry despite it being the low-cost carrier with the limited operations. This showcases the company’s dedication to its customers and other stakeholders. However, the governments worldwide are not satisfied with the operations of the Boeing 737 because of its failure on various occasions, and the company’s over-dependence on the 737 can lead to disruption in the operations if the governments gain plan to ban the fleet. Also, you can read the PESTLE Analysis of Southwest Airlines to determine how the macroenvironment factors influence the company or the automotive industry.

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Southwest Airlines: Business Model, SWOT Analysis, and Competitors 2023

Inside This Article

Southwest Airlines is a renowned American low-cost carrier that has revolutionized the airline industry with its unique business model and customer-centric approach. In this blog article, we will delve into the intricacies of Southwest's business model, highlighting its key strengths, weaknesses, opportunities, and threats through a SWOT analysis. Additionally, we will explore the competitive landscape, identifying the major players that pose a challenge to Southwest's market dominance. Join us as we analyze Southwest Airlines' strategies and anticipate its position in the aviation industry in 2023.

What You Will Learn:

Who owns Southwest Airlines and how its ownership structure may influence the company's decision-making process.
The mission statement of Southwest Airlines and how it guides the company's strategic direction and customer service approach.
How Southwest Airlines generates revenue and the key factors that contribute to its financial success.
An explanation of the Southwest Airlines Business Model Canvas, which highlights the various components of the company's business model and how they work together.
An overview of the main competitors of Southwest Airlines and how they compare in terms of market share, routes, and customer base.
A SWOT analysis of Southwest Airlines, examining its strengths, weaknesses, opportunities, and threats in the competitive aviation industry.

Who owns Southwest Airlines?

Ownership structure of southwest airlines.

Southwest Airlines, one of the largest low-cost carriers in the world, has a unique ownership structure that sets it apart from many other airlines. The company operates under a publicly traded model, which means that its ownership is distributed among a diverse group of individual and institutional investors.

At present, the largest shareholders of Southwest Airlines are primarily institutional investors such as mutual funds, pension funds, and other financial institutions. These investors hold significant stakes in the company, often owning thousands or even millions of shares. Some of the major institutional shareholders of Southwest Airlines include The Vanguard Group, BlackRock, and State Street Corporation.

In addition to institutional investors, individual shareholders also play a crucial role in owning Southwest Airlines. Many individual investors, including employees of the company, hold shares of Southwest Airlines either directly or through retirement plans like 401(k)s. This broad base of individual ownership is a testament to the company's commitment to employee ownership and engagement.

It is worth noting that Southwest Airlines has a dual-class stock structure, with two different classes of shares: Class A and Class B. Class A shares are publicly traded and have voting rights, while Class B shares are mostly owned by Southwest Airlines' employees and have limited or no voting rights. This structure reflects the company's emphasis on employee participation and aligning their interests with those of the company.

Overall, Southwest Airlines' ownership is a balanced mix of institutional and individual investors, with both groups having a significant influence on the company's operations and decision-making. This diverse ownership structure helps ensure stability and fosters a long-term perspective, allowing Southwest Airlines to focus on delivering value to its shareholders while maintaining its reputation as a customer-centric airline.

What is the mission statement of Southwest Airlines?

Southwest airlines' mission statement.

Southwest Airlines is renowned for its unique mission statement, which is deeply ingrained in the company's culture and operations. The airline's mission statement can be summarized as follows:

"To connect people to what's important in their lives through friendly, reliable, and low-cost air travel."

Southwest Airlines places a strong emphasis on creating meaningful connections and providing exceptional customer service. By offering affordable air travel options, the company aims to enable individuals to reach their desired destinations while staying within their budget. Southwest strives to establish a warm and welcoming environment for its passengers, ensuring that their travel experience is not only hassle-free but also enjoyable.

The Core Values of Southwest Airlines

To fulfill its mission statement, Southwest Airlines upholds a set of core values that guide its actions and decision-making processes. These core values include:

Warrior Spirit: Southwest Airlines encourages its employees to have a warrior spirit, fostering a determination to overcome challenges and go above and beyond to serve customers. This value reflects the airline's commitment to excellence and continuous improvement.

Servant's Heart: Southwest Airlines believes in the importance of having a servant's heart, prioritizing the needs of others before its own. This value is reflected in the company's dedication to providing exceptional customer service and treating passengers with kindness and respect.

Fun-LUVing Attitude: Southwest Airlines promotes a fun-LUVing attitude among its employees, encouraging them to bring their authentic selves to work. This value fosters a positive and inclusive work environment, contributing to a vibrant and friendly atmosphere that passengers can sense during their journey.

Work the Southwest Way: Southwest Airlines emphasizes the significance of working the Southwest way, which means following established procedures while being open to innovation and creativity. This value ensures consistency and efficiency in operations while allowing for flexibility and adaptability to meet customer needs.

By adhering to these core values, Southwest Airlines strives to create a unique and exceptional travel experience for its passengers, setting itself apart from other airlines in the industry.

How does Southwest Airlines make money?

Ticket sales.

The primary source of revenue for Southwest Airlines is ticket sales. Passengers purchase tickets for flights, which generate income for the company. Southwest offers a variety of fare options, including Business Select, Anytime, and Wanna Get Away, allowing customers to choose the level of service and flexibility that best suits their needs. By offering competitive prices, Southwest attracts a large customer base, ensuring steady revenue from ticket sales.

Ancillary Revenue

In addition to ticket sales, Southwest Airlines generates significant income from ancillary revenue. Ancillary revenue refers to the revenue earned from services and products that are not directly related to the core air travel experience. Southwest offers several ancillary services, such as EarlyBird Check-In, which allows passengers to secure a better boarding position for an additional fee. The airline also earns revenue from the sale of in-flight snacks, beverages, and merchandise. These additional revenue streams contribute to Southwest's overall profitability.

Rapid Rewards Program

Southwest Airlines' Rapid Rewards Program plays a crucial role in generating revenue for the company. This loyalty program incentivizes customers to fly with Southwest by offering points for each flight. Accumulated points can be redeemed for free flights, hotel stays, rental cars, and other rewards. The Rapid Rewards Program encourages repeat business and fosters customer loyalty, ultimately leading to increased ticket sales and revenue for Southwest Airlines.

Cargo and Freight Services

Beyond passenger transportation, Southwest Airlines offers cargo and freight services to generate additional income. The company leverages its extensive network of flights and destinations to transport goods and packages efficiently. Southwest Cargo provides reliable and cost-effective shipping solutions for businesses and individuals alike. By tapping into the demand for cargo transportation, Southwest expands its revenue streams and diversifies its income sources.

Partnerships and Codeshare Agreements

Southwest Airlines also generates revenue through partnerships and codeshare agreements with other airlines. These agreements allow Southwest to extend its reach and offer customers a wider range of travel options. By collaborating with partner airlines, Southwest can sell tickets on routes not served by its own fleet. In return, Southwest earns a portion of the revenue from these codeshare flights. This strategic partnership approach helps Southwest Airlines increase its market share and boost its revenue.

In conclusion, Southwest Airlines generates revenue primarily through ticket sales, supplemented by ancillary services, the Rapid Rewards Program, cargo and freight services, as well as partnerships and codeshare agreements. These diverse income streams contribute to the company's financial success and enable Southwest to remain competitive in the aviation industry.

Southwest Airlines Business Model Canvas Explained

Introduction to the southwest airlines business model canvas.

The Southwest Airlines Business Model Canvas serves as a comprehensive framework for understanding the key components of the airline's business model. Developed by Alexander Osterwalder, this tool provides a visual representation of an organization's strategy, value proposition, customer segments, revenue streams, and more.

Key Partnerships

One of the fundamental elements of Southwest Airlines' business model is its strategic partnerships. By collaborating with various stakeholders, the airline is able to enhance its services and expand its reach. Southwest has built strong relationships with aircraft manufacturers, such as Boeing, to ensure a reliable and efficient fleet. Additionally, the airline has formed partnerships with hotels, car rental companies, and other travel service providers to offer bundled packages and increase customer convenience.

Key Activities

Southwest Airlines' key activities revolve around providing reliable and low-cost air travel. These activities include flight operations, maintenance and servicing of aircraft, customer service, and marketing. The airline focuses on operational efficiency, quick turnaround times, and streamlined processes to reduce costs and deliver high-quality services to its customers.

Key Resources

To support its key activities, Southwest Airlines relies on several key resources. The most critical resource is its fleet of aircraft, which enables the airline to operate its flights. Additionally, Southwest invests in highly skilled pilots, flight attendants, and ground staff who contribute to the smooth functioning of the airline. The company's extensive network of airports, maintenance facilities, and reservation systems also play a crucial role in its operations.

Value Proposition

Southwest Airlines' value proposition centers around its commitment to providing low-cost, reliable, and customer-centric air travel. The airline differentiates itself by offering low fares, no baggage fees, and a hassle-free experience. Southwest's open seating policy and friendly customer service contribute to a unique and enjoyable flying experience. By focusing on these elements, the airline aims to attract price-sensitive customers and build long-term relationships with loyal passengers.

Customer Segments

Southwest Airlines primarily targets leisure and business travelers who prioritize affordability and convenience. The airline caters to a broad customer base, including families, solo travelers, small businesses, and frequent flyers. By understanding the needs and preferences of these customer segments, Southwest tailors its services and marketing efforts to deliver maximum value and create customer loyalty.

Revenue Streams

The main revenue stream for Southwest Airlines is ticket sales. The airline generates income by selling flight tickets directly to customers through its website, mobile app, and customer service centers. In addition to ticket sales, Southwest also earns revenue through ancillary services such as onboard food and beverage sales, Wi-Fi access, and early boarding options. By diversifying its revenue streams, Southwest minimizes its dependence on a single source of income.

The Southwest Airlines Business Model Canvas provides a comprehensive overview of the key components that drive the airline's success. By focusing on strategic partnerships, delivering a unique value proposition, targeting specific customer segments, and diversifying its revenue streams, Southwest has established itself as a leading low-cost carrier in the industry. Understanding and leveraging these elements within the Business Model Canvas framework can help other businesses analyze and optimize their own strategies for success.

Which companies are the competitors of Southwest Airlines?

Introduction.

Southwest Airlines, known for its low-cost model and exceptional customer service, operates in a highly competitive industry. While Southwest has managed to carve out a niche for itself, it faces fierce competition from various companies within the airline industry. In this section, we will explore some of the major competitors of Southwest Airlines.

Delta Air Lines

Delta Air Lines is one of the largest airlines globally and a significant competitor of Southwest Airlines. With a wide network of domestic and international routes, Delta offers a range of services catering to different customer segments. Delta Air Lines focuses on providing premium services, including extensive in-flight entertainment options, comfortable seating arrangements, and a broad range of travel classes. This emphasis on luxury and comfort sets Delta apart from Southwest, which primarily focuses on no-frills, budget-oriented travel.

American Airlines

American Airlines, another major competitor of Southwest Airlines, offers an extensive network of domestic and international flights. American Airlines targets a wide range of customer segments, including both leisure and business travelers. With a broader range of travel classes, including first-class and business-class options, American Airlines caters to passengers seeking a more luxurious travel experience. This differentiation allows American Airlines to compete with Southwest Airlines, appealing to customers who prioritize comfort and amenities over cost.

United Airlines

United Airlines is a leading global airline and a formidable competitor for Southwest Airlines. Operating an extensive network of domestic and international routes, United Airlines offers a range of services catering to both leisure and business travelers. With a focus on providing a premium travel experience, United Airlines offers various travel classes, including first-class and business-class options. Additionally, United Airlines has a strong presence in major hub airports, allowing them to offer a wider range of connecting flights. This strategic advantage enables United Airlines to compete directly with Southwest Airlines, especially on routes where nonstop flights are not available.

JetBlue Airways

JetBlue Airways, while not as large as some of the other competitors mentioned, is a notable low-cost airline that competes directly with Southwest Airlines. Similar to Southwest, JetBlue focuses on offering affordable fares and exceptional customer service. Both airlines have a similar no-frills approach, providing a simplified travel experience without charging extra fees for services like checked bags. JetBlue Airways primarily operates in the domestic market but offers a limited number of international flights. This overlap in target market and business model makes JetBlue a direct competitor of Southwest Airlines.

In the fiercely competitive airline industry, Southwest Airlines faces significant competition from various companies. Delta Air Lines, American Airlines, United Airlines, and JetBlue Airways are among the major competitors that challenge Southwest's market position. Each of these airlines differentiates itself by offering varying levels of luxury, a broader network of routes, or a combination of both. Despite the competition, Southwest Airlines continues to thrive by focusing on its core strengths of low-cost fares, excellent customer service, and efficient operations.

Southwest Airlines SWOT Analysis

Strong brand reputation: Southwest Airlines has built a strong brand reputation over the years, known for its customer-friendly policies, low fares, and excellent customer service. The company has consistently ranked high in customer satisfaction surveys, leading to customer loyalty and repeat business.

Extensive domestic network: Southwest Airlines operates an extensive domestic network, serving more than 100 destinations across the United States. This wide coverage allows the airline to attract a large customer base and capture a significant market share.

Cost leadership: Southwest Airlines has a reputation for offering low fares compared to its competitors. The airline has implemented cost-saving measures, such as using a single aircraft type (Boeing 737) to simplify operations and reduce maintenance costs. This cost leadership strategy enables Southwest Airlines to attract price-sensitive customers and maintain a competitive edge in the market.

Limited international presence: Unlike some of its competitors, Southwest Airlines has a limited international presence. The airline primarily focuses on domestic flights, which could be a strategic disadvantage in an increasingly globalized market. This limitation may result in missed opportunities to tap into the growing international travel market.

No first-class or business-class seating: Southwest Airlines operates with a single-class configuration, offering no first-class or business-class seating options. While this helps in maintaining simplicity and reducing operational costs, it may deter high-end business travelers who prefer premium seating and services. This could limit the airline's potential to attract a certain segment of customers.

Dependency on the US economy: Southwest Airlines' performance is closely tied to the health of the US economy. Economic downturns, such as recessions, can lead to reduced air travel demand, affecting the airline's profitability. This dependency on a single market makes Southwest Airlines vulnerable to economic fluctuations.

Opportunities

International expansion: Southwest Airlines has the opportunity to expand its international presence and tap into the growing global travel market. By adding more international routes and partnerships with foreign airlines, the company can attract a wider customer base and increase revenue streams.

Technological advancements: The airline industry is constantly evolving with technological advancements. Southwest Airlines can leverage technology to enhance its operational efficiency, improve customer experiences, and streamline processes. For example, implementing self-service kiosks, mobile apps for booking and check-in, and utilizing data analytics for personalized marketing can give Southwest Airlines a competitive advantage.

Growing demand for sustainable travel: With increasing awareness of environmental issues, there is a growing demand for sustainable travel options. Southwest Airlines can seize this opportunity by implementing eco-friendly practices, such as investing in fuel-efficient aircraft, adopting sustainable fuel alternatives, and reducing carbon emissions. This can attract environmentally conscious travelers and enhance the airline's reputation.

Intense competition: The airline industry is highly competitive, with numerous airlines vying for market share. Southwest Airlines faces competition from both legacy carriers and low-cost carriers, which may lead to price wars and reduced profitability. The intense competition can also result in decreased customer loyalty, as customers have a wide range of options to choose from.

Fluctuating fuel prices: Fuel prices are a significant cost component for airlines. Fluctuations in fuel prices can significantly impact Southwest Airlines' operating expenses and profitability. Volatile fuel prices make it challenging for the airline to accurately forecast and plan its financials, posing a constant threat to its bottom line.

Regulatory challenges: The airline industry is subject to various regulations, including safety, security, and labor regulations. Compliance with these regulations can be costly and time-consuming. Changes in regulations or the introduction of new regulations can pose challenges for Southwest Airlines' operations and increase compliance costs.

By conducting a SWOT analysis, Southwest Airlines can identify its strengths, weaknesses, opportunities, and threats, enabling the company to formulate effective strategies to leverage its strengths, mitigate weaknesses, seize opportunities, and manage threats in the ever-changing airline industry.

Key Takeaways

Southwest Airlines is owned by its shareholders, with no single majority owner. The largest shareholders include institutional investors and mutual funds.
The mission statement of Southwest Airlines is to "dedicate ourselves to the highest quality of customer service delivered with a sense of warmth, friendliness, individual pride, and company spirit."
Southwest Airlines primarily makes money through ticket sales, as well as various ancillary sources such as baggage fees, in-flight services, and partnerships with other companies.
The Southwest Airlines Business Model Canvas is a strategic management tool that outlines the key elements of Southwest's business model, including its customer segments, value proposition, channels, revenue streams, key activities, resources, and partnerships.
The main competitors of Southwest Airlines include other major US airlines such as Delta Air Lines, American Airlines, and United Airlines. However, Southwest differentiates itself through its low-cost, point-to-point, and customer-centric approach.
Southwest Airlines SWOT Analysis reveals its strengths (strong brand reputation, low-cost structure), weaknesses (limited international presence, dependence on US market), opportunities (expansion into new markets, partnerships), and threats (competition, fuel prices, economic downturns).

In conclusion, Southwest Airlines is owned by a diverse group of shareholders, including institutional investors and individual stakeholders. The mission statement of the airline is to provide the highest quality of customer service, while maintaining a focus on employee welfare and profitability.

Southwest Airlines generates revenue through various sources, such as ticket sales, additional services, and partnerships. Their business model canvas is built upon key elements like low-cost operations, customer-centricity, and a strong corporate culture.

As for competitors, Southwest Airlines faces competition from major carriers like Delta, American Airlines, and United Airlines. However, its unique positioning as a low-cost airline with a strong focus on customer satisfaction sets it apart from the competition.

A SWOT analysis of Southwest Airlines reveals its strengths, including a robust brand image, efficient operations, and a loyal customer base. However, it also faces challenges such as increasing competition, fluctuating fuel prices, and potential labor disputes. By leveraging its strengths and addressing its weaknesses, Southwest Airlines aims to remain a leading player in the airline industry.

In summary, Southwest Airlines is a well-established airline with a strong mission statement and a successful business model. While facing competition from major carriers, it continues to thrive by delivering exceptional customer service, maintaining cost-effective operations, and adapting to the ever-changing industry landscape.

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Southwest Airlines: Point-To-Point Business Strategy Case Study

A short description about the southwest airlines, main issues/problems of the case, situational analysis, answering the questions.

Southwest Airlines (initially known as Air Southwest) launched its first flight in 1971. Its founders were Herb Kelleher and Rollin King. By then, the company only served three cities within US (Houston, San Antonio, and Dallas) and had not expanded its operations beyond the country. Unfortunately, it incurred remarkable losses in the first two years of its operation. This forced it to vend one of its four aircrafts instead of sacking some of its employees.

After enacting viable business strategies, Southwest Airline managed to overcome such obstacles. It announced its first profits in 1973. By 1977, the company had expanded its operations. It served other additional cities like El Paso, Lubbock, and Corpus Christi among others. It later launched interstate destinations within US indicating its prospective growth.

Later in 1986, the firm established a training program to equip its flight crews with viable business etiquettes. This enabled it to enhance its competitiveness in the realms of customer services. It later won a monthly Triple Crown prize due to its exemplary services. Upon its rapid expansion, the company acquired Moris Air in 1994 and consequently enhanced its flights to other cities within US.

It introduced Ticketless Travel in various cities, a move that augmented its business’ prowess. As at 2006, Southwest Airlines had advanced both technologically, revenue acquisition, and business wise. It acquired ATA Airlines allowing it to attain boarding slots in LaGuardia Airport, New York. This move enabled it to handle international flights after partnering with WestJet Airlines (a prominent low-cost carrier).

The company had to increase its charges for both domestic and international services in order to survive in the industry. In order to overcome current challenges facing the airline industry, Southwest Airlines has embraced technological innovations, price adjustments, protocol reforms, and viable acquisitions and mergers.

Southwest Airlines is facing numerous problems within the aviation industry. Firstly, there is a constant increase in fuel prices. This leads to increased business costs and other relevant challenges engulfing the entire industry. Another problem is the increase in operational costs mentioned earlier. An airline business is costly to establish, ratify, and operate due to massive logistical issues involved in the entire context.

Southwest Airlines is also experiencing such problems despite the witnessed success. There is a considerable need to reduce costs and increase profits in numerous occasions. It is from this context that the entire problems facing the industry lie. Additionally, it is important to consider that some airline business slump due to higher operational costs and reduced profits. Another problem is the current security threats that face the company and other players in the airline industry.

Such security problems might force the company to cancel some of its flights leading to reduced revenues and consequent losses. The global economic crisis has equally contributed to the mentioned problems. Economic catastrophe affects market trends, travelling schedules, and reduces the influx of customers since most organizations and individuals strive to minimize expenditures. Fluctuating fuel prices is another problem facing the company due to unpredictability of fuel costs mentioned earlier.

The company is equally unsure whether its point-to-point business strategy will apply as it tries to expand its domestic operations. Another problem is the stringent competition within the industry. International expansion strategies, union walkouts, and environmental uncertainties are some of the problems faced by the organization.

SWOT analysis, PEST analysis, & internal analysis (strengths & weaknesses)

When subjected to SWOT analysis, Southwest Airlines has numerous strengths in its business endeavors. The company has several competitive advantages compared to its rivals in the aviation industry. Additionally, it has established right products for its clients. This is evident in the travel arrangements, reliability, and variability in the destinations it covers. Additionally, it embraces technology and innovation to ensure that it remains competitive.

Concurrently, the company has trained competent human capitals hence capable of achieving customer satisfaction. Southwest Airlines has equally enhanced its customer services and changed business processes in order to attain the desired competitiveness. Conversely, the company possesses some weaknesses when analyzed critically.

Some of its customer services still need to meet international standards. The aspects of technology have not been fully enacted in the company despite the stringent competitions experienced. Additionally, it has limited international flights compared to other prominent competitors in the very industry.

Southwest Airlines has numerous opportunities it can cease in order to enhance its competitiveness, revenues, and customer value when scrutinized critically. The demand for aviation services is rapidly growing despite the recent economic challenges. This indicates that the company might perform well in future due to increased flight demands. Another opportunity is the merger it makes with other international airlines like WestJet Airlines. Additionally, the fact that it has a competent, innovative, and creative workforce is crucial.

This provides another considerable opportunity in the entire scenario. There are various opportunities in the aviation industry, which the company can harness in order to remain competitive in the market. Conversely, there are business threats that might hinder the wellbeing of Southwest Airlines. The fluctuating fuel prices, global fiscal crisis, stringent competition, security threats, high operational costs, and adverse international regulations form critical threats to the company.

There are also some issues that emerge when Southwest Airlines is subjected to PEST analysis. Political issues can affect the company massively. This is possible with regard to political trends, legislations, international policies, political wrangles, and other prominent business aspects in the entire scenario.

Economic factors incorporate the current global financial challenges and other considerable factors. Additionally, there are other specific economic factors in the aviation industry that have affected Southwest Airlines. This incorporates high operational costs within the industry, fluctuating fuel costs, and other potential fiscal problems facing the industry.

On social factors, the company enjoys changing lifestyles that have promoted the use of aircrafts as a means of travelling and sending important cargos. The use of flights is embraced by people of different ages. Additionally, the company has embraced technology in its various operations. Southwest Airlines has been innovative in its business approaches, a fact aided by technological advancements within the business.

Value Chain Analysis

Southwest Airlines has attained considerable competitive advantages in the business realms having enacted and embraced stringent and viable value chains in its endeavors. Airline industry is quite competitive hence demanding its players to embrace considerable value chain provisions as evident in the provided case. The entire business activities that Southwest Airlines assumes in its daily operations have contributed to the aspects of the alleged value chain.

Things done in every department or sectors of the company contribute to the demanded value chain. This is quite important in various aspects. The management of the company, employees, suppliers, affiliates, and other considerable stakeholders have endeavored to add value to the service provision granted by the company.

The ultimate competitive advantages noticeable within the company result from considerable contributions made by the entire stakeholders. It is from this observation that Southwest Airlines attains its ultimate value chain. This has enabled it to grow tremendously in the past years despite the challenges.

Customers have also trusted the services given by the company as evident in the case. Due to these provisions, the company has managed to grasp a considerable market share as evident by its continuous business growth. Additionally, the use of appropriate business approaches and staying customer-focused has allowed the business to augment its competitiveness in the airline industry despite the noticeable challenges.

Industry (Porter’s 5 forces analysis)

Porter’s 5 forces are applicable in the airline industry with respects to the provided Southwest Airlines’ case. This is an important observation following its relevancy in the entire context. For example, threat from new entrants into the industry is applicable in this context. Southwest Airlines and other existing airline firms are threatened by the entrance of other competitive rivals. However, since the industry is costly to establish and operate, such chances are limited.

Additionally, there is a considerable rivalry from the existing firms within the American market and beyond. Other international airlines like Emirates Airlines and Qatar Airlines among others have fronted stringent competition to Southwest Airlines with regard to its international markets. Additionally, the bargaining power of buyers is evident in the industry due to competition. Customers go for cheap and reliable airline companies.

This has forced other industry players to strategize properly and cut prices. Additionally, suppliers operating in the industry have equally fronted their bargaining power. The jet fuel suppliers usually change the cost of fuels to suit their business interests. This is a massive challenge to the industry and beyond.

Another apparent force evident in the case is the availability of substitute products/services. Airline customers can seek the services of other companies if such needs arise. This factor forces numerous businesses to establish their competitive advantages and other relevant business strategies.

Southwest Airlines experience competition from various firms. This occurs both locally and internationally. Since the company started as local airline business, all the local airlines in US as at then provided considerable competition provisions. On the international flights, Southwest Airlines experiences competition from well-established airline companies globally.

Evidently, Southwest Airlines can still maintain 36-year streak profitability despite the challenges mentioned in the case. This is possible since the industry is growing rapidly while the company has numerous strengths and opportunities to cease this opportunity. Additionally, the company can still depend on fuel hedging to control cost despite the fluctuating oil prices. This is possible through proper management and other characterizing factors.

Concurrently, the point-to-point methodology will still be useful as the company enhances its domestic flights. This is possible since it adds massive competitive advantages to the company against other rivals. Major traditional airlines will threaten Southwest Airlines when they become low-cost counterparts.

Additionally, the company will be able to expand internationally, maintain its positive relations with employees, and avoid future union walkouts and bargains. Despite the probable persistence of the current financial crisis, Southwest Airlines will still expand if it enacts its business strategies evident in the case. The company can embrace viable business strategies to curb environmental uncertainties. This will help it maintain its loyalty to customers.

Chicago (A-D)
Chicago (N-B)

IvyPanda. (2024, March 30). Southwest Airlines: Point-To-Point Business Strategy. https://ivypanda.com/essays/southwest-airlines-analysis-case-study/

"Southwest Airlines: Point-To-Point Business Strategy." IvyPanda , 30 Mar. 2024, ivypanda.com/essays/southwest-airlines-analysis-case-study/.

IvyPanda . (2024) 'Southwest Airlines: Point-To-Point Business Strategy'. 30 March.

IvyPanda . 2024. "Southwest Airlines: Point-To-Point Business Strategy." March 30, 2024. https://ivypanda.com/essays/southwest-airlines-analysis-case-study/.

1. IvyPanda . "Southwest Airlines: Point-To-Point Business Strategy." March 30, 2024. https://ivypanda.com/essays/southwest-airlines-analysis-case-study/.

Bibliography

IvyPanda . "Southwest Airlines: Point-To-Point Business Strategy." March 30, 2024. https://ivypanda.com/essays/southwest-airlines-analysis-case-study/.

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Case Study SWOT Analysis Solution

Case Study Description of Southwest Airlines (A)

In 1994, both United Airlines and Continental Airlines launched low-cost airlines-within-an-airline to compete with Southwest Airlines. From 1991 to 1993, Southwest had increased its market share of the critical West Coast market from 26% to 45%. Considers how Southwest had developed a sustainable competitive advantage and emphasizes the role of human resources as a lever for the successful implementation of strategy. Asks whether competitors can successfully imitate the Southwest approach.

Authors :: Charles A. O'Reilly, Jeffrey Pfeffer

Topics :: strategy & execution, tags :: organizational culture, strategy execution, swot analysis, swot matrix, tows, weighted swot analysis.

Swot Analysis of "Southwest Airlines (A)" written by Charles A. O'Reilly, Jeffrey Pfeffer includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Southwest Airlines facing as an external strategic factors. Some of the topics covered in Southwest Airlines (A) case study are - Strategic Management Strategies, Organizational culture, Strategy execution and Strategy & Execution.

Some of the macro environment factors that can be used to understand the Southwest Airlines (A) casestudy better are - – there is backlash against globalization, digital marketing is dominated by two big players Facebook and Google, there is increasing trade war between United States & China, talent flight as more people leaving formal jobs, geopolitical disruptions, customer relationship management is fast transforming because of increasing concerns over data privacy, increasing transportation and logistics costs, increasing inequality as vast percentage of new income is going to the top 1%, supply chains are disrupted by pandemic , etc

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Introduction to SWOT Analysis of Southwest Airlines (A)

SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Southwest Airlines (A) case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Southwest Airlines, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Southwest Airlines operates in.

According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.

SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix

SWOT analysis of Southwest Airlines (A) can be done for the following purposes – 1. Strategic planning using facts provided in Southwest Airlines (A) case study 2. Improving business portfolio management of Southwest Airlines 3. Assessing feasibility of the new initiative in Strategy & Execution field. 4. Making a Strategy & Execution topic specific business decision 5. Set goals for the organization 6. Organizational restructuring of Southwest Airlines

Strengths Southwest Airlines (A) | Internal Strategic Factors What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The strengths of Southwest Airlines in Southwest Airlines (A) Harvard Business Review case study are -

Superior customer experience

Diverse revenue streams, analytics focus, operational resilience, highly skilled collaborators, digital transformation in strategy & execution segment, training and development, high switching costs, low bargaining power of suppliers, learning organization, strong track record of project management, organizational resilience of southwest airlines, weaknesses southwest airlines (a) | internal strategic factors what are weaknesses in swot analysis / tows matrix / weighted swot analysis.

The weaknesses of Southwest Airlines (A) are -

Increasing silos among functional specialists

No frontier risks strategy, need for greater diversity, slow to strategic competitive environment developments, high bargaining power of channel partners, high cash cycle compare to competitors, lack of clear differentiation of southwest airlines products, interest costs, skills based hiring, high dependence on existing supply chain, workers concerns about automation, opportunities southwest airlines (a) | external strategic factors what are opportunities in the swot analysis / tows matrix / weighted swot analysis.

The opportunities highlighted in the Harvard Business Review case study Southwest Airlines (A) are -

Creating value in data economy

Increase in government spending, developing new processes and practices, reforming the budgeting process, loyalty marketing, harnessing reconfiguration of the global supply chains, remote work and new talent hiring opportunities, identify volunteer opportunities, better consumer reach, finding new ways to collaborate, buying journey improvements, learning at scale, leveraging digital technologies, threats southwest airlines (a) external strategic factors what are threats in the swot analysis / tows matrix / weighted swot analysis.

The threats mentioned in the HBR case study Southwest Airlines (A) are -

Learning curve for new practices

Technology disruption because of hacks, piracy etc, aging population, backlash against dominant players, regulatory challenges, easy access to finance, shortening product life cycle, consumer confidence and its impact on southwest airlines demand, high level of anxiety and lack of motivation, new competition, instability in the european markets, increasing wage structure of southwest airlines, high dependence on third party suppliers, weighted swot analysis of southwest airlines (a) template, example.

Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers in the HBR case study Southwest Airlines (A) needs to zero down on the relative importance of each factor mentioned in the Strengths, Weakness, Opportunities, and Threats quadrants. We can provide the relative importance to each factor by assigning relative weights. Weighted SWOT analysis process is a three stage process – First stage for doing weighted SWOT analysis of the case study Southwest Airlines (A) is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses mentioned in the initial lists are marginal and can be left out. Second stage for conducting weighted SWOT analysis of the Harvard case study Southwest Airlines (A) is to give probabilities to the external strategic factors thus better understanding the opportunities and threats arising out of macro environment changes and developments. Third stage of constructing weighted SWOT analysis of Southwest Airlines (A) is to provide strategic recommendations includes – joining likelihood of external strategic factors such as opportunities and threats to the internal strategic factors – strengths and weaknesses. You should start with external factors as they will provide the direction of the overall industry. Secondly by joining probabilities with internal strategic factors can help the company not only strategic fit but also the most probably strategic trade-off that Southwest Airlines needs to make to build a sustainable competitive advantage.

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A unique take on Southwest Airlines Strategy

Anyone who has studied business management either as a degree or as an elective would have definitely studied Michael Porter’s 5 Forces framework. This framework was first published in Harvard Business Review in 1979. The model is very much relevant in 21st-century business as well due to its deep 360-degree view of a business.

One of the 5 forces is called “Barriers to Entry” and more often than not either Oil & Gas or Airline industry would serve as an apt example of an industry with very high barriers to entry due to its high Capex and Opex requirements.

But wait, then with so many barriers to entry, why do airlines still bleed red? There are many reasons for this, but one of them is stiff competition with low-cost carriers, the 5th, and the framework’s central force (competition among the players).

Before we move on, the below is an interesting tweet response from Anand Mahindra, on being asked to buy the ailing “ Jet Airways ”.

Remember the quote: “If you want to be a millionaire, start with a Billion dollars and then start (buy) an airline!” https://t.co/dYRdwup3kK — anand mahindra (@anandmahindra) June 29, 2019

The US Airline Industry

Following the 9/11 attacks, the US airline industry has been through rough weather. 20+ airlines have filed for bankruptcy protection under Chapter 7. 60+ airlines have filed for bankruptcy protection under Chapter 11. This list also includes the top 3 out of 4 airlines namely, American Airlines, United & Delta Air Lines, however they were able to exit the bankruptcy within a few years.

The landscape has been constantly changing with a high volume of mergers and acquisitions, resulting in changing market share statistics.

The graph above covering the period January to December 2020 showcases that the top 4 airlines constitute approx. 65% of the market share.

In this story, we are focusing on Southwest Airlines that was founded on the notions of the low-cost carrier but with its unique strategy has been profitable for the last 45 years in a row.

The takeoff strategy of Southwest Airlines

Southwest Airlines Co. , typically referred to as Southwest, is one of the United States’ major airlines and the world’s largest low-cost carrier airline. The airline was established on March 15, 1967, by Herb Kelleher as Air Southwest Co. and adopted its current name, Southwest Airlines Co., in 1971, when it began operating as an intrastate airline wholly within the state of Texas first flying between Dallas, Houston and San Antonio.

Most airlines back in the 1960s followed the most popular “Hub and Spoke” model for their operations.

Hub and Spoke model – As the name suggests, there is a defined hub from where the flights originate, and the destinations are the spokes.

The benefit of a hub and spoke model is that it has fewer routes, but the major drawback of this model is its rigidity, and if there is a slight change in the airline routing due to weather, etc., it can have cascading consequences to the other planned flights.

Point to Point model – Southwest, being a low-cost carrier, focused more on the point to point model and bought significant process improvements, in a way mastered it to achieve very high operational efficiency.

In the point-to-point model, each flight is a single journey. The origin and destination are connected via a single non-stop flight. The point-to-point model offers more travel options and flexibility as compared to the hub and spoke model.

For passengers undertaking further journeys, they will have to collect the baggage and recheck them for leg 2 of their journey. This model has considerably led to saved travel hours and done away with the necessity for connecting flights.

Key Differentiating Factors in Southwest Airlines Strategy

Southwest airlines is the third largest airline in the United States of America and arguably the biggest in the low-cost carrier segment across the globe.

So, was the operational efficiency gained due to the change in the flight operations model the only reason why Southwest airlines is the #1 low-cost carrier in the world?

NO, let’s understand what differentiated Southwest airlines strategy from its counterparts.

Customer Eccentricity

For Southwest, they keep the customers at the center of their business operations. They offer certain benefits to flyers which are not offered by other airlines, like

Southwest allows two checked-in bags, free of cost, unlike many of its competitors.
Flight change thirty minutes prior to the departure is allowed by Southwest.
Southwest offers free in-flight entertainment like Live TV, Movies, use of whatsapp and imessage. It offers Wi-Fi services at very nominal rates.

All these have resulted in Southwest being the airline with the least number of complaints, according to the Department of Transportation of the United States of America.

Only one type of aircraft

Many airlines have different types of aircraft in their fleet, but not Southwest. Southwest operates by using only Boeing 737 aircraft. It saves a lot of money by:

Training cabin crews and support staff on only one type of aircraft.
Maintenance of inventory of spare parts for one aircraft type.
In case of breakdown, alternate aircraft can be arranged immediately.
Its policy of not assigning seats helps tremendously as customers can take any available seat when boarding the aircraft, thereby reducing the boarding time. In the case of alternate aircraft also, this policy hugely benefits the airline reducing the turnaround time.

Right recruitment policies

Southwest stresses a lot on the customer experience and hence it is very imperative for the airline to hire the right kind of people. Southwest focusses on hiring people who have an attitude for serving customers.

Employees undergo various pieces of training which also includes cross-training. Training is heavily centered around team building and collaboration.

The Southwest Airlines case study is a lesson in cultural strategy. An organization built on the fundamentals of customer eccentricity, effective processes, and a dedicated team is meant to achieve success and overcome challenges. This model of exceptional customer service can help a business earn an impeccable reputation in the industry. That’s what makes the Southwest model uniquely priced, yet one profitable in this cruel airline industry.

Southwest’s ability to be different and not follow the herd—not to mention becoming America’s largest airline—can be traced in large part to the Airline Deregulation Act. Thanks to this act, Herb and Rollin realized their Vision and the traveling public benefits on every flight, every day. Gary Kelly, Chairman & CEO, Southwest Airlines

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Southwest Airlines SWOT Analysis

Table of Contents

This article conducts the Southwest Airlines SWOT analysis by identifying the key business strengths, weaknesses, opportunities and threats. The article provides information about Southwest Airlines’ internal and external business environment. Policy makers and strategists can read the article to gain insights into airline’s business strategies, and overall industry environment. Researchers and students can also read the article to know how internal and external environment influences the business strategies of successful brands like Southwest Airlines in real world.

1. Introduction

Southwest Airline is world’s 2 nd biggest airline by market value. With 121 destinations across U.S, Central America, and Mexico, Southwest Airlines is known for its low-cost pricing, extremely efficient operations, and innovative logistics solutions.

This article presents SWOT analysis of Southwest airlines. The SWOT framework provides insights into the key strategic factors that determine Southwest airline’s competitive positioning, and future prospects.

2. Company overview

3. southwest airlines swot analysis.

Southwest Airlines strategies encompass a comprehensive approach to leverage its core strengths, address the weaknesses, capture available opportunities, and mitigate threats, securing competitive positioning in the global airline sector.

3.1. Southwest airlines strengths

3.1.1. high market share.

Southwest airlines holds second largest market share in U.S airline industry, as shown in following graph:

Source: Zippia.com

3.1.2. High customer satisfaction

Southwest airlines is known for satisfying its customers through superior customer service. Following graph shows how company has maintained high customer satisfaction over time:

Source: Statista

3.1.3. Economical prices

Southwest airlines offers super cheap fares. Customers can get cross-country tickets for as low as $49.

Price Comparison: Southwest Airlines Hawai'i Ticket Prices vs. Competitors : Maui Now

Source: Southwest price comparison

Above chart shows Southwest Airlines charges lower than Hawaiian airlines on all selected routes. However, Southwest’s prices on some routes are higher than Alaska airlines.

3.1.4. Strong financial performance

Southwest Airlines is experiencing strong revenue growth. Although, pandemic hit its revenue hard (2020) alike other airlines, but within two years, South-west has exceeded the pre-pandemic growth pace, as depicted in following graph:

Source: Macrotrends.net

3.1.5. Excellent customer service

For second year in a row, Southwest airlines ranked #1 in customer satisfaction for basic economy and economy.

Based on customer satisfaction index of 827, Southwest airlines is declared North America’s best airline in 2023- CNBC .

3.1.6. Free baggage policy

Southwest airlines offers generous free baggage policy. It accepts first two checked bags for free (provided they do not exceed 62 inches, and 50 lbs).

3.1.7. Best employer 2022

In 2022, Southwest airlines was ranked among the best employers for women in Forbes’ list. It ranked #3 in airline industry, and #23 overall.

3.1.8. Extensive route network

Southwest airlines has an extensive route network with 121 destinations across 11 countries. It is considered among the largest airlines of USA based on its route network.

3.1.9. High customer loyalty

Southwest airlines earns a net promoter score of 62 , which is above than the airline industry average of 43 (net promoter score is a measure of customer loyalty).

3.1.10.Innovation performance

In 2023, Fortune ranked Southwest airlines as one of the USA’s most innovative companies- PR Newswire .

3.1.11. Largest fleet

Southwest airlines has the largest fleet of Boeing in the world. The fleet standardization reduces the training and maintenance costs, and drives operational efficiency.

3.2. Southwest airlines weaknesses

3.2.1. loosing operational premium.

Southwest is losing its operational advantages. It may lose its valuation premium to larger peers, deteriorating the stock price even further.

Source: Seeking Alpha

3.2.2. Holiday season meltdown

Southwest airline flight cancellation rate has tripled in last decade. Southwest airlines is struggling to win back the customers’ trust after holiday season meltdown in December 2022, when 16,700 Southwest flights were cancelled, leaving 2 million stranded. The situation got exacerbated when company did not handle its apology well.

Following chart compares the flight cancellations by all major airlines, with Southwest airlines having highest cancellations:

Source: CNN

3.2.3. Poor on-time performance

Southwest airlines has lowest on-time percentage in nearly a decade, as depicted in following graph:

Source: CNN Business

3.2.4. Tech problems

As per The New-York Times , Southwest airlines’ network failure has raised concerns over system’s strength. After the holiday season meltdown (costing $1 billion), Southwest airlines faced hour long outage, raising concerns over resiliency of IT infrastructure.

3.2.5. Employee union problems

Southwest airlines is facing protests from flight attendants and pilots, and company is struggling to reach a contract agreement with both union groups.

In 2022, Southwest airline pilots lost 35,000 off days , as they were forced to work on their off days.

3.2.6. Limited service options

Southwest airlines offers no inflight entertainment, and offers no premium class, which limits its target market to only budget conscious customers.

3.2.7. Over-reliance on US market

Southwest airlines excessively relies on the domestic market, and has limited presence at international stage. According to Statista , Southwest Airlines’ competitors are more profitable as they have more international destinations.

3.3. Southwest airlines opportunities

3.3.1. growing demand for budget airlines.

Due to prevailing economic uncertainty, demand for low-cost airlines is constantly growing:

Low Cost Airlines Market: Global Industry Trends, Share, Size, Growth, Opportunity and Forecast 2023-2028

Source: Research and Markets

The 8.9% CAGR growth rate paint a positive picture for Singapore airlines.

3.3.2. In-flight entertainment

The in-flight entertainment market will grow from $2.6 billion (2022) to $6.13 billion (2032):

In-Flight Entertainment Market by Size, Trends | Share Report 2032

Source: Market Research Future

Southwest airlines may consider offering premium class with in-flight entertainment services to capture this opportunity.

3.3.3. Sustainable aviation

Due to consumers’ growing environmental consciousness, there is constant growth in the sustainable aviation fuel market size:

Sustainable Aviation Fuel Market Size, Share, Report 2023-2032

Source: Precedence Research

Southwest airlines may invest more on the sustainable technologies to position itself as an environment friendly airline.

3.3.4. Expansion of cargo division

The rapid expansion of the global e-commerce industry offers growth prospects for the global air cargo market, as depicted in following graph:

Source: Yahoo Finance

Southwest airlines may expand its cargo division to capture this lucrative opportunity.

3.3.5. Health and wellness initiatives

As customers have become more conscious of their health, wellness and hygiene, Southwest airlines may introduce healthier in-flight meal options and fitness facilities to set differentiation basis.

3.3.6. Revenue diversification

Southwest airlines may diversify the revenue by exploring non-traditional options, like- engaging in travel related partnerships, and offering in-flight advertising etc.

3.3.7. Mobile marketing

Many global airlines have started investing on the mobile marketing to connect with customers through smartphones.

Following graph shows the rising number of active airline mobile app users:

Source: Sensor Tower

Southwest airlines may increase investment on the mobile app marketing to drive the customer engagement.

3.3.8. Personalized experience

Airline consumers’ preferences for a personalized experience have grown with time. Southwest airlines may invest more on the data analytics and other technologies to better understand the consumers’ expectations, and tailor their marketing strategies accordingly.

3.4. Southwest airlines Threats

3.4.1. rising fuel prices.

Rising fuel prices have become a serious cause of concern for airlines. Following graph shows the fuel costs as a percentage of expenditure from 2011 to 2021:

Southwest airlines may consider optimizing routes and investing more on the fuel efficient aircrafts to reduce the influence of rising fuel prices.

3.4.2. Intensifying competition

The competition in the global airline industry is getting intense, shrinking the profit margins of existing players, as they fight for the bigger share in a saturated marketplace. Southwest Airlines competitors mainly include- major carriers like American, Delta, and United Airlines, as well as other low-cost airlines like JetBlue Airways and Spirit Airlines.

3.4.3. Boeing 737 issues

Southwest airlines has the largest fleet of Boeing 737. However, company’s operations have badly affected with grounding of Boeing 737 max. As per Reuters , the manufacturing problems in the Boeing 737 max has become a headache for Southwest airlines.

Click here to know more about Boeing 737 safety issues

3.4.4. Growing video conferencing

Video conferencing trend has hit 21 times higher than pre-pandemic level, as depicted in following graph:

Videoconferencing app usage 'hits 21 times pre-Covid levels'

Source: AV Magazine

Growing video conferencing trend is directly threatening the airline industry by reducing the need for business travel. Southwest airlines must timely respond to this threat by diversifying its services, and offering more integrated travel solutions.

4. Recommendations

Southwest airlines may invest on eco-friendly technologies and sustainable aviation to position itself as an eco-conscious carrier.
Explore non-traditional revenue diversification opportunities (like in-flight advertising etc.) to reduce the dependence on only ticket sales.
Expand the cargo division to leverage the expansion of global e-commerce industry.
Introduce inflight meals and offer wellness amenities in response to growing health and wellness trends.
Offer premium, and in-flight entertainment opportunities to expand the market reach.
Invest more on the mobile marketing to drive the customer engagement.
Use data analytics to better understand customers, and offer personalized experience.
Optimize the routes and invest on fuel-efficient aircrafts to handle the rising fuel costs.
Expand the international presence to reduce the dependence on the domestic market.

5. Conclusion

In conclusion, Southwest Airlines has several key strengths that it can leverage to exploit the available opportunities. Its core strengths include a high market share, economical prices, customer satisfaction, and strong financial performance. Its key weaknesses include- tech problems, limited service options, and over-dependence on the U.S market. Southwest airlines needs to address the challenges posed by rising fuel pricing, and intensifying competition to ensure its survival in the global airline market.

Click here to read ‘ Boeing SWOT Analysis 2023’

6. References

Southwest Airlines Co. ’s operating revenue 2022 | Statista . (2023, August 29). Statista.

Statista. (2023, August 31). Net income of Southwest Airlines 2010-2022 .

McMahon, C. (2023, May 12). 20 Southwest Airlines Statistics [2023]: Passengers, revenue, and facts . Zippia.

ACSI : Southwest Airlines U.S. 2023 | Statista . (2023, November 17). Statista.

Price Comparison: Southwest Airlines Hawai ‘i Ticket Prices vs. Competitors | Maui Now . (2019, March 4). | Price Comparison: Southwest Airlines Hawai‘I Ticket Prices Vs. Competitors.

Fernandez, C. (2023, May 16). The best North American airlines in 2023 for every budget—from first class to economy. CNBC .

Field, J. (2023, March 17). Best Employer in America by Forbes: Southwest Airlines . Aviation Source News.

Company Overview . (n.d.).

Company Overview . (n.d.-b).

Schwartz, H. (2023, August 26). Southwest Airlines : losing its “Operational premium” compared to larger peers. Seeking Alpha .

Southwest Airlines explains its Christmas holiday meltdown to congress . (2023, February 9). ABC7 Los Angeles.

Chokshi, N. (2023, January 26). Southwest lost $220 million because of holiday meltdown. The New York Times

Southwest Airlines passengers by airport 2022 | Statista . (2023, August 31). Statista.

Ltd, R. a. M. (n.d.). Low Cost Airlines Market: Global industry Trends, share, size, growth, opportunity and Forecast 2023-2028 . Research and Markets Ltd 2023.

Market Research Future . (n.d.). In-Flight Entertainment Market By Size, Trends | Share Report 2032 .

Sustainable Aviation Fuel Market Size, Share, Report 2023-2032 . (n.d.).

Yahoo is part of the Yahoo family of brands . (n.d.).

Sensor Tower. (n.d.). Top U.S. airline apps set new record of 9.4 million monthly active users .

Aviation industry – fuel cost 2023 | Statista . (2023, July 17). Statista.

Singh, R., & Insinna, V. (2023, April 17). Boeing’s latest production problem compounds operational headache for US carriers. Reuters .

Redirect notice . (2021, May 8).

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An Understandable Yet Perfect Southwest Airlines Case Study SWOT Analysis

Southwest Airlines is one of the most common airlines in the industry, especially in the US. The company can provide exceptional customer service, making them a good airline for passengers. Also, consumers can book their flights at affordable prices. With this, they get an advantage over other airlines. We will discuss its SWOT analysis since we are talking about Southwest Airlines. It is to determine various factors that may affect the company's performance. So, if you want to study more about the topic, read the post about Southwest Airlines SWOT analysis .

Southwest Airlines Co – Strategy, SWOT and Corporate Finance Report

Published: March 2023
Report Code: ML1046687SA

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Southwest Airlines Co – Strategy, SWOT and Corporate Finance Report, is a source of comprehensive company data and information. The report covers the company's structure, operation, SWOT analysis, product and service offerings and corporate actions, providing a 360˚ view of the company.

Key Highlights

Southwest Airlines Co (Southwest Airlines) is a provider of passenger airline services. The company provides point-to-point flight services with direct nonstop routing in various central hub cities. It also offers high-frequency short-haul routes supported with the long-haul nonstop service between markets such as San Diego and Baltimore, Los Angeles and Nashville, Houston and New York LaGuardia, Oakland and Baltimore, Phoenix and Las Vegas and California and Hawaii in the US. It also offers various ancillary services such as upgraded boarding, EarlyBird Check-In, and transportation of pets and unaccompanied minors. Southwest Airlines is headquartered in Dallas, Texas, the US.

– Large number of easy-to-grasp charts and graphs that present important data and key trends

Reasons to buy

Table of contents, list of tables.

Table 20: Southwest Airlines Co: Strategy and Operations

List of Figures

Figure 7: Southwest Airlines Co: Private Equity and Ownership Volume by Deal Type (2019 – YTD*2023)

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Southwest Airlines Case Study

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Southwest Airlines:

The company southwest Airlines Co’s overall CEO is Gary Kelly, while the founders are Herb Kelleher & Rollin King. The organisation was founded in Year 1967, where the company was known as Air Southwest and 1971 for Southwest Airlines. The Products and Services of the organisation behaviour of southwest Airlines are Business Select Flights, Express Bag Drop, Southwest Airlines Charter, Fly By Priority Lane Access, Early Bird Check-In, Business Travel and Groups, Southwest Airlines Cargo, P.A.W.S., and Southwest Gift Cards. Moreover, the main competitors of the organisation are Delta Airlines, American Airlines, Spirit, United Airlines, JetBlue, Skywest, Alaska, Frontier and Republic.

Current financial positon of Southwest Airlines

The headquarters of the organisation is at Dallas, Texas, U.S. The Number of Employees the organisation maintains for the year of 2020 is at 60,800. The revenues of the organisation for the year ending Dec 2019 are at $22.4 Billion, while the profits are at the levels of $2.3 Billion. During the pandemic the overall financial conditions of the organisation mainly declined, as the flights from all over the world were cancelled. Hence, the organisation faced tragic conditions in 2020, which lead to losses during the year.

PESTEL Analysis of Southwest Airlines

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COMMENTS

Southwest Airlines SWOT Analysis (2024)
This Southwest Airlines SWOT analysis provides critical insight into the company's strategies, operations, and market position, making it essential for stakeholders, investors, and competitors. Southwest Airlines, founded in 1967 by Herb Kelleher and Rollin King, has transformed the aviation landscape with its low-cost, point-to-point service ...
SWOT Analysis of Southwest Airlines
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Here is a SWOT analysis for Southwest Airlines: A SWOT analysis is a strategic planning tool used to evaluate the Strengths, Weaknesses, Opportunities, and Threats of a business, project, or individual. It involves identifying the internal and external factors that can affect a venture's success or failure and analyzing them to develop a ...
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A meticulous SWOT Analysis of Southwest Airlines. Southwest Airlines's strengths. Strong financials-Southwest Airlines has abundant financial resources with its revenue in 2021 increasing by a huge margin of 74.5% to $15.8 billion.Further, the company had net cash of $4.8 billion which can help it overcome negative situations and exploit new opportunities (Southwest 2022).
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Southwest Airlines is a renowned American low-cost carrier that has revolutionized the airline industry with its unique business model and customer-centric approach. In this blog article, we will delve into the intricacies of Southwest's business model, highlighting its key strengths, weaknesses, opportunities, and threats through a SWOT analysis.
Southwest Airlines: Point-To-Point Business Strategy Case Study
A short description about the Southwest Airlines. Southwest Airlines (initially known as Air Southwest) launched its first flight in 1971. Its founders were Herb Kelleher and Rollin King. By then, the company only served three cities within US (Houston, San Antonio, and Dallas) and had not expanded its operations beyond the country.
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Weighted SWOT analysis process is a three stage process -. First stage for doing weighted SWOT analysis of the case study Southwest Airlines (A) is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses ...
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Abstract. Southwest Airlines is a leading low-cost airline based at Dallas International Airport in the US. It was founded by Herb Kelleheri in 1967 (Ondracek et al., 2021).It is one of the world ...
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An Understandable Yet Perfect Southwest Airlines Case Study SWOT Analysis. Jade Morales Aug 04, 2023 Knowledge. Southwest Airlines is one of the most common airlines in the industry, especially in the US. The company can provide exceptional customer service, making them a good airline for passengers. Also, consumers can book their flights at ...
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Southwest Airlines Case Stud1 SWOT Analysis
Southwest Airlines Case Stud1 SWOT Analysis - Read online for free.
Southwest Airlines Co
Overview. Contents. Tables. Figures. Southwest Airlines Co - Strategy, SWOT and Corporate Finance Report, is a source of comprehensive company data and information. The report covers the company's structure, operation, SWOT analysis, product and service offerings and corporate actions, providing a 360˚ view of the company. Key Highlights.
Southwest Airlines Case Study
Current financial positon of Southwest Airlines. The headquarters of the organisation is at Dallas, Texas, U.S. The Number of Employees the organisation maintains for the year of 2020 is at 60,800. The revenues of the organisation for the year ending Dec 2019 are at $22.4 Billion, while the profits are at the levels of $2.3 Billion.

Southwest Airlines SWOT 2024 | SWOT Analysis of Southwest Airlines

Southwest Airlines’ Strengths

2. Lower Cost

3. Best Employer

4. World’s Most Admired Company

5. Consistently Profitable

6. Brand Value

7. Single Aircraft Type (Boeing 737s)

8. Effective Service Strategy

9. High Capacity

10. Effective Management

11. Market Share Dominance

12. Thousands of Flights

Southwest Airlines’ Weaknesses

2. Dependent on the US Market

3. Overdependence on Boeing 737s

Southwest Airlines’ Opportunities

2. Improve booking process

3. Expand on Freight Business

4. Exploit New Technologies

5. Offer Long-distance Flights

Southwest Airlines’ Threats

2. Boeing 737 Max Issues

3. Negative Publicity

4. Intense Competition

5. Increase in Fuel Price

6. Incidents of Terrorism

7. Stringent Regulations

8. Uncertain Times (Economic Shock)

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