Southwest Airlines Corporation
Analysis
1. What is Southwest’s strategy? What is the basis on which Southwest builds its competitive advantage?
In 2004, it boasted a fleet of 417 Boeing 737 jets and provided service to 60 airports in 31 states throughout the United States. Southwest was well entrenched as the nations low-fare, high customer satisfaction airline. Southwest had the lowest operating-cost structure in the domestic airline industry and consistently offered the lowest and simplest. A common fleet significantly simplifies scheduling, operations, and maintenance. Training costs for pilots, ground crew, and mechanics are lower, because there's only a single aircraft to learn. Purchasing, provisioning, and other operations are also vastly simplified, therefore lowering costs.
Southwest tries hard to different way. For example, not assigning seats in its flights helps to reinforce its image that it gets passengers to their destinations when they want to get there, on time, at the lowest possible fares. By not assigning seats, Southwest can turn the airplanes quicker at the gate. If an airplane can be turned quicker, more routes can be flown each day. That generates more revenue, so that Southwest can offer lower fares. About 60% of Southwest’s passenger revenue was generated by online bookings via southwest.com. That southwest.com was the number one airline website by revenue and Nielsen/Net Rating identified it as the largest airline site in terms of unique visitors.
2. How do Southwest’s control systems help execute the firm’s strategy?
Southwest consistently sought out ways to improve its efficiencies and pass on the cost savings to its passengers. In 2004, Southwest had reduce the headcount per a ...