Case Study (Including Swot) Southwest Airlines

HISTORY

Southwest Airlines was originally founded as Air Southwest Company in 1967 by Rollin W. King and Herbert D. Kelleher. The company incorporated as Southwest Airlines in Texas, and began customer service on June 18, 1971. The airline was started with a simple idea: if you get your passengers to their destination when they want to get there, on time, at the lowest possible fares, and make sure they have a good time doing it, people will fly your airline.

In 1971 Southwest began service between Dallas, Houston, and San Antonio. By 1974 Southwest had flow 1 million passengers. In 1977 Southwest carried it's five millionth passenger, and the New York Stock Exchange began listing Southwest stock as "LUV." In 1979 flying Southwest was made faster and easier by the introduction of self-ticketing machines in 10 cities. The same year service to New Orleans from Dallas commenced, making New Orleans the first city Southwest offered travel to outside of Texas. In 1985 Southwest chose the Ronald McDonald House as their primary charity. 1988 was a big year for the airline, Southwest and Sea World of Texas began working together to help promote tourism in Texas. The "New Friends," campaign Southwest was made the official airline of Sea World of California. The same year Southwest won the first Triple Crown, which consists of Best On-Time Record, Best Baggage Handling, and Fewest Customer Complaints. 1990 put Southwest at the billion dollar revenue mark and becomes a "Major" airline. The following year Southwest celebrated their 20th anniversary. In 1994 Southwest merged with Morris Air. 1995 marks the start of Ticketless Travel system wide for the airline. On May 5, 2000 Southwest held their first annual Phoenix LUV Classic Golf Tournament and Party; the proceeds from this event went to benefit the Ronald McDonald House. In 2002 Southwest begins the gradual retirement of reusable plastic boarding cards and teams with IBM to offer nearly 250 airport self-service check-in kiosks. The project is part of a nationwide effort to reduce the amount of time Southwest customers spend in line and to improve the airport experience following the 9/11 terrorist attacks. Southwest formed a partnership in 2003 with the A&E Television Network to film a real-life, behind the scenes look at the drama surrounding commercial air travel. The same year Air Transport World selected Southwest Airlines as the Airline of the Year, and the airline's Rapid Rewards Program received first place awards for Best Customer Service, Best Bonus Promotion, and Best Award Redemption at Inside Flyer magazine's 15th annual Freddie Awards. In 2004 Southwest shared with the world its 31st consecutive year of profitability and began offering online boarding passes via southwest.com. Southwest Airlines is currently the United States' most successful low-fare, high frequency, point-to-point carrier. Southwest now flies to 62 cities in 32 states.

MISSION STATEMENT

The mission of Southwest Airlines is a dedication to the highest quality of customer service and to deliver that service with a sense of warmth, friendliness, individual pride, and Company spirit. Southwest provides short haul, high frequency, point-to-point, low-fare air transportation to 58 cities and 32 states within in the United States. High quality customer service has been Southwest's motto from the start. This mission has lead to programs, which have served to make the customer's experience with Southwest as convenient and care-free as possible. Southwest's efforts have helped them to gain an excellent reputation within the air transportation industry.

Southwest also has a mission statement to their employees. Southwest's mission is to stay committed to providing employees a stable work environment with equal opportunity for learning and personal growth. Employees are encouraged to use their personal creativity and innovation for improving the effectiveness of Southwest Airlines operations. Above all, Southwest employees will be provided the same concern, respect, and caring attitude within the organization that they are expected to share externally with every Southwest customer. Southwest has also offered profit sharing to employees. Southwest's mission to its employees has to be viewed as a strong point, where the organization attempts to reach out the individual and make their experience as employees rewarding and enjoyable. This practice is sure to create a positive attitude in the workplace and thus increase productivity.

STRATEGIC INITATIVES

Through this time period, we can see that Southwest Airline's profile shows the three complementary qualities that characterize an effective strategy: focus, divergence and convincing marketing.

To maintain focus, the company emphasizes just three factors: friendly service, speed, and frequent point-to-point departures. By concentrating in this way, Southwest has been able to price against car transportation; it doesn't commit resources to meals, lounges, and seating choices. By contrast, Southwest's traditional competitors invest in all the airline industry's competitive factors, which make it much more difficult for them to match Southwest's prices. Across-the-board investing is often a sign that competitors' moves are setting a company's agenda.

The value curves of innovators' strategies always stand apart which makes their strategy divergent from others. They might eliminate or substantially reduce investments in certain factors, or they might dramatically increase investments in others. Sometimes they even create new factors, thereby changing the industry's overall profile. Southwest, for instance, pioneered point-to-point travel between midsize cities; previously, the industry operated through hub-and-spoke systems. We can see through their annual Balance sheet some differences between 2004 and 2005 in their investments. For example, they increased the investment on flight equipment and their short-term investments assets decreased.

The last point to analyze in regards to Southwest's strategy is their compelling marketing. It must not only deliver a clear message but also advertise an offering truthfully, or else customers will lose trust and interest. That is what Southwest did by sponsoring many events or programs. Southwest believes that their strategy is strong enough to successfully support truly honest marketing; their operation is firmly grounded in their mission statement.

FINANCIAL POSITION

In financial respects, Southwest is at the forefront of the airline industry. Over

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