Southwest Airlines 2002: an Industry under Siege
Southwest Airlines is the largest airline measured by number of passengers carried each year within the United States. It is also known as a ‘discount airline’ compared with its large rivals in the industry. Its first flights were from Love Field in Dallas to Houston and San Antonio, short hops with no-frills service and a simple fare structure. The airline began with one simple strategy: to get the passengers to their destinations when they want to get there, on time; at the lowest possible fares; and to make sure they have a good time on board. This approach has been the key to Southwest’s success. Currently, Southwest serves about 60 cities (in 31 states) with 101.9 million total passengers carried (in 2007) and with a total operating revenue of $9.9 billion. Southwest is traded publicly under the symbol “LUV” on NYSE and according to Money magazine it has been the nation's best-performing stock from 1972 through 2002. It has been in the top ten of FORTUNE's Most Admired Companies for six consecutive years (1998-2004) - a characteristic shared only by Berkshire Hathaway, General Electric, and Microsoft. According to the company’s website, the Dallas – based carrier is the lone profitable airline throughout the worst seven-year period in the history of the industry.
1. How does SWA make money when the other airlines do not?
2. What are the most important contributors to SWA’s success?
Southwest Airlines has achieved remarkable performance by almost any standard and achieved it within an industry that is undergoing major change. All major carriers in the industry experience big problems. Many of them have not only reported large losses but also have field for bankruptcy. United ...