Southwest Airlines: In a Different World
Presented by:Avishek Bhattacharya
• Founded in 1967 by Rollin King, Herb Kelleher and
• Started operations in 1971 with three Boeing 737s
after winning the lawsuits against them
• Well known for its Low Fare policy and low cost of
• ‘Airline of the Year Award’ – 2003
• Presently operating in more than 60 countries
with over 500 Boeing aircrafts
• Came up with a famous policy of ‘Employee First,
“If you get your passengers to their
destinations when they want to get
there, on time, at the lowest
possible fares, and make darn sure,
they have a good time doing it,
people will fly your airline.”
A hedge is an investment position intended to
offset potential losses/gains that may be
incurred by a companion investment.
SWA used hedging for the following
• Plan towards profitability.
• Plan cash flows.
• Lower overall fuel expenses.
Multiple types of
aircrafts are used
Single type of aircraft
is used that is boeing
and spoke model
Followed the point
to point Model
Luxurious travel with
lot of in-flight
On an average there
were six cabin crews.
Other Cost Leadership Strategy
Use secondary airports (Less congested)
Operates in mid-sized cities.
Low cost pricing strategy
No complementary meals
High utilization rate of fleet of aircraft.
Other Focus Strategy
• Frequent reliable departures
• Try to make air fares comparable to driving
expenses for shorter routes.
• Exploring North-East markets
• Code-sharing agreements for greater reach.
Bidding and acquiring slots and
gates at LaGuardia
• Airport La Guardia is used by low cost airlines for domestic,
international and transcontinental flights.
• One of the smallest airports in United States of America
• Southwest paid US$7.5 million to acquire certain assets from
bankrupt ATA Airlines in 2008.
• Reason: To acquire the operating certificate and New York’s
LaGuardia Airport landing slots formerly controlled by ATA.
• Southwest got 14 slots, enough to operate seven takeoffs and
seven landings per day at LaGuardia.
• New York's LaGuardia landing slots are the company’s first
entry into the major market.
Strong fleet operations
Dominant market position in North America
Best low fare carrier
Largest airlines in the world in terms of highest number of
passengers per year
Recognized as a great value and excellent services
Flexible working hours even though 82% of employees are
Strong brand image
Highest daily domestic departures than any other
commercial U.S. airline
• Declining profits and margins
• Heavy dependence on passenger revenues
• Heavy dependence on a single producer –
• Conservative growth strategy
• Limited to cities domestically
• Operates its own booking service
• Does not offer segmentation (business flights,
first class, etc.)
Recovery of US Airline Industry
Acquisition of Air Tran Holdings
Recovery of US tourism
Longer flights are being introduced
Traveller traffic is expected to grow by 3.5%
Price fluctuations in petroleum markets
High unemployment and inflation keeps
travellers from flying
• Joint ventures can negatively affect brand
• Exposure to Shaky American Economy