Southwest Case Write-Up

A large part of Southwest's success in the airline industry has been their market strategy. They have taken many measures to differentiate themselves from their competition and to maximize their revenue. Some strategies that Southwest has implemented to obtain these goals has been flying into airports that are underutilize, but close to metropolitan areas, and not using a central hub. Southwest makes sure to avoid major airports such as LAX as they will have much greater competition and expenses at the airports. In addition, Southwest does not use a hub and spoke system in order to cut down on delays of connecting flights, but more importantly in that it would go against their business model. Southwest focuses on frequent on-time departures that are low cost and relatively short-haul. It is estimated that the average flight time is 65 minutes and that 80% of their customers fly non-stopjavascript:activate_paper(155280) to their final destination. Having a hub and spoke system would limit the amount of flights going to certain cities, encourage connecting flights, and most importantly, would only be cost effective for long flights that go throughout the country. Another pivotal strategy that Southwest implements is cutting costs. By using fuel-efficient 737 planes and turning around flights in 15 minutes, Southwest's costs are significantly less than most of their competitors. Furthermore, Southwest is able to cut costs by booking many of their customers directly rather than using a travel agent. Also, they use much more simpler, and thus cheaper operating systems to cut costs. Rather than having a complex seating system, Southwest does not give out seating assignments until the passenger checks in where they are given a reusable plastic ticket with their seat number. Also, Southwest's frequent travelers program is much simpler in that it works with the number of flights you have taken rather than miles. Because Southwest has low costs, they can offer lower fares than many of their competitors. Southwest in turn attracts customers under the pretense of low prices through deals such as the same rates to fly anywhere in the state and that bags fly free. This, in addition to their advertising campaign give people the allusion that Southwest is always cheaper, when in fact that may not always be true. Also, Southwest banks on the fact that the rates that they offer appear to be lower than they actually are, because it does not include any of the extra expenses, such as tax, that will be added on.