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Southwest Airline Case Study

From Southwest Airlines (A. C. Inkpen and V. DeGroot, “Southwest Airlines, Thunderbird, 2002)

Introduction

Southwest Airline was established by Herb Kelleher and Rolling King in 1967. After successfully winning the legal battles, in 1971, the
company started its operation in the state of Texas with three Boeing 737s. The company put great efforts in order to prevent southwest for
flying. Moreover, southwest airline started its flying operation in three cities of Texas. At the beginning, the company had only three aircrafts
with 25 employees. Initially the company started its flying operations from Dallas Older Love field to Hobby Airport as these both airports are
near to downtown as compared to other multinational airports. Moreover, Southwest airline is considered as the most profitable airlines
that provides its travelers a high-quality airline services with low-fare, point-to-point carriers and high frequency. The company was also
known as ‘discount airline’ in 1973. The uniform of flight attendant has developed to polo shirts and khakis in 1996.

The management team of airlines has analyzed that the company has two types of customers, which include price sensitive leisure travels,
convenience, and time oriented business travels. In order to serve its services to both the groups, the company has established an innovative
two-tiered pricing strategy structure for these travelers. Moreover, the company pricing strategy for all the trips is entirely different from
other carriers. They charge fairs as per the distance, destination, and fleet size. As compared to other airline companies fleet size, Southwest
airlines is considered as the third largest airlines company in the world who provide its travelers a best possible services through that its build
brand loyalty among the customers. Therefore, Southwest Airline is considered as the major player in the airline industry who performs all
operations under the symbol of LUV on NYSE.

Strategy : Marketing - Finance 06/12/2021 04:55:09

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objective of SOUTH AIRLINES

The primary objective of Southwest airline is to provide its travelers a high-quality services, which is delivered with friendliness, a sense of
warmth, company spirit and individual pride. The company currently provides its customers a point-to-point carrier’s service with low fare
services among 59 airports (58 cities) in the US

PROBLEM STATEMENT

Southwest Airline has faced many challenges in the airline industry. One of the major problems that Southwest has faced includes convincing
passengers that its low fares are not just introductory promotions. Moreover, Southwest airlines have two issues at hand:

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The first problem that the company faced is that how the company should maintains its strategic coherence and long term sustainable
position in the market.

The second problem for the company is that they need to find the best possible expansion strategies between the three options of routes.

There are two important factors that made southwest airlines popular in the market. These factors are low fare prices, and customer service
Champ. By offering cheap fares ticket the company; attract many travelers to more locations. After analyzing the performance analysis of the
company, the management team evaluated that if the company wants to maintain its core values in the airline industry then it is necessary
for the company to modernize IT in its department, as it is imperative for the success of the company. On the other hand, the company also
faced issues in its application development and infrastructure. The company’s website Southwest.com needs re engineering due to this,
many critical issues company has to face in the highly competitive market. After analyzing, the financial report of the company it is evaluated
that the company generates approximately 80% of its revenue from its official site

However, due to the lack of skilled workers the company has faced financial losses in the airline industry.

Identify reasons for deteriorating performance. How to ensure a better future for the company ?

What would be the solutions ?

Strategy : Marketing - Finance 06/12/2021 04:55:09