Southwest Airlines Business Strategy
Business Strategy – BAD 4013 – SUMMER 1999 Case Study Southwest Airlines I. Strategic Profile and Case Analysis Purpose The mission of Southwest Airlines is dedication to the highest quality of customer service delivered with a sense of warmth, friendliness, individual pride, and company spirit. Twenty-seven years ago, Rolling King, owner of floundering commuter airline, and Herb Kelleher, King’s lawyer, got together and decided to start a different kind of airline that would provide a short-haul, low-fair, high-frequency, point-to-point service in the United States. The company began service on June 18, 1971 with flights between Dallas, Houston, and San Antonio (“The Golden Triangle” as Herb called it). Southwest Airlines is the fourth largest customer airline carrier in the United States. They use all Boeing 737 jets in order to save money on training and maintenance. The average age of company’s fleet is only 8.4 years. The average trip length is 451 miles with an average duration of about one hour and 23 minutes. Southwest Airlines averages more than 2,400 flights per day, almost twice the industry average. The average one-way airfare is $75. Southwest Airlines flies to 54 cities in 28 states. Southwest Airlines is recognized as the industry leader in focused low-cost airfare by introducing new strategic competencies such as ticketless travel and selling seats through Internet sites. Southwest Airlines is also known as “Southwest Spirit” which represents their unique organizational culture. The case questions whether Southwest Airlines should expand their operations to Northeast. Actually, they already began new services to Manchester in New Hampshire on June 7, 1998 and to Islip in New York on March 14, 1999. So, our critical question for Southwest Airlines is whether they should expand their operations overseas, especially to Europe since it is the second largest emerging market for the airline industry next to the United States, or whether it should remain