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Southwest airlines swot

This document analyzes Southwest Airlines and provides recommendations to address profitability issues. It begins with an introduction to Southwest Airlines and outlines the problem of a 34% drop in earnings due to increased competition from other low-cost carriers. It then performs a SWOT analysis and concludes that low prices alone are not enough for a competitive advantage and that Southwest should adopt a target pricing strategy to redefine its product offering. The recommendations suggest ways for Southwest to differentiate itself, such as adding new classes of service and larger aircraft while continuing its focus on low costs and good customer service.

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AIRLINES SWOT & Pricing Analysis
INSIGHTS Introduction Case analysis problem statement Why the problem occurs; SWOT analysis Conclusion Recommendations
Introduction  Founded In March 9, 1967  Provides scheduled air transportation  Serves approximately 100 destinations in over 40 states  Operates a total of approximately 704 Boeing 737 aircraft  180 weekday departures to over 50 nonstop destinations  Current average fair is $49 dollars.
Case analysis “40 Years of Profitable Service: A Case Study on Southwest Airlines and Target Pricing” This case is taken from “THE WIGLAF JOURNAL” magazine written by ‘Tim.J Smith’ a Ph.D. chief editor. He stated, only low prices alone are not enough to gain a competitive advantage. First of all, we need to identify that why after 40 years of profitable service there is sudden 34% drop in southwest airline earnings.
PROBLEM STATEMENT “In 2010, southwest airlines were facing profitability crises due to low prices, and why they need to redefined the product concept through target pricing to win the market profitably”
Why the problem occurs? So the only reason is Competition from 'ultra low-cost carriers’ by American, delta and united airlines. They starts offerings ULCC discounts. As one of the original "low-cost carriers," Southwest has long battled major rivals like American, Delta and United. But the growth of a new breed of ULCC discounters -- airlines like Spirit and Frontier -- is opening up a second front of competition for Southwest. Tammy Romo, chief financial officer, said average fares were down $7 during July, August and September. The airline carried 4% more revenue passengers compared to the same period a year earlier, but the fare decline reduced the yield per passenger nearly 5%.
SWOT analysis Southwest tries to be the low price leader. It focused on four main strategies:  Being low-cost  Employee-driven  Future-minded  Differentiated However, they are facing more competition today with other low cost carriers like Jet Blue. Take a look at the Southwest Airlines SWOT analysis below.
 More departures than any other US airlines  High capacity usage (few unfilled seats)  Dominates the short haul segment of the airline industry  Is one of the most profitable airlines, while many other airlines are unprofitable  Low-cost, efficient operations equates to low fares/great value  SWA has only one basic type of aircraft/reduces training times INTERNAL ANALYSIS-strengths
EXTERNAL ANALYSIS-OPPORTUNITIES  Growth of Hispanic population and the elderly generation - potential markets  Overall air travel is predicted to increase pretty rapidly this decade  International markets are not yet served by Southwest  New technology - opportunities for new services and products  Better use of the Internet for marketing, ticketing, etc.  Longer flights are a growing market  New plane technology, such as the Dreamliner, will increase air travel
 Fuel price increases could reduce air travel  Decline of leisure travel due to terrorism and/or a depressed economy  New government regulations could make air travel more costly  Cost will likely rise since there is not many more areas for cost- cutting  High-speed rail could someday hurt short and medium length air travel  Increased competition would likely hurt industry profitability EXTERNAL ANALYSIS-THREATS
CONCLUSION EXISTING PRICING STRATEGIES During past 40 years they were following two kind of pricing strategies. Cost-Based Pricing Product >> Cost >> Price >> Value >> Customers In contrast, value-based pricing begins by seeking to understand the value customers demand and the price they are willing to pay to achieve that set of benefits. Only after the price is determined does the firm then work to uncover means to produce the product at a cost below the willingness to pay of its customers. Value-Based Pricing Customers >> Value >> Price >> Cost >> Product In the marketing orientation of the firm, the firm exists only to serve a customer need profitably. If it cannot serve that need profitably, the firm should choose not enter that industry or consider exiting the industry if it is already in it.
RECOMMENDED PRICING STRATEGY “To gain its dominancy back and win the market profitability it needs to redefine the product concept through target pricing. Because only low prices alone are not enough for a competitive advantage.” Target pricing In keeping with the marketing orientation of the firm, the price of a product will guide the definition and development of the product. This is sometimes known as target pricing, where the price becomes the target and the product is then designed to fit that target profitably.
RECOMMENDATIONS CON…. Removed Included or Added Reduced reservations flexibility: Reservations primarily made directly Southwest Airlines as they eschewed working with travel agents. Simplicity in Pricing: Flat rate of $49 per leg of the journey. Also reduced the cost of price management, as no yield management system was needed initially. No connections between airlines: Southwest Airlines would not transfer baggage between flights. Higher convenience in terms of on-time arrivals. With a simplified fight route between lesser used airports, Southwest was able to operate more reliably. No long-haul flights: Southwest Airlines customers could only take Southwest between a city-pair, not across the country nor even across state lines initially. This greatly reduced cost of compliance with CAB rulings, as Southwest’s operations were not subject to interstate commerce rulings. Higher convenience in flight frequency: With point to point flights, Southwest could offer service between Houston and Dallas with the same plane roughly every 2.5 hours. No in-flight meals: Southwest Airlines only offered peanuts and beverages. Fun: Friendly flight attendants provided jokes, costumes, and made flying comfortable with warm and caring service. No seat assignments: First come, first seated. Faster boarding times leading to faster flight turnarounds. No first class: One-class service. More seats: With one class of service, Southwest Airlines could put 137 seats in a 737 versus 128 in a United Airlines 737. No frills. None valued for a 30 minute flight.
FURTHER RECOMMENDATIONS Following marketing recommendations, including pricing recommendation, we would make to south west as a moves into the next decade? Add more classes (like Economy plus etc.) Increase its Fleet by Adding Airbus 320 with capacity of 150 passengers, which is a new technology. Increase advertising and promotion Budget. Introduce internet facilities. Bags Fly Free‛ program Operating larger aircraft can be more profitable operating the aircraft efficiently. Continue to cut costs and minimize commitments Providing best Service than competitors To read full article; visit daamarketer.com
Southwest airlines swot