South West Airline Essay

934 Words Aug 19th, 2008 4 Pages
While the major airlines in the United Stated were making a lost of approximately $8 billion, Southwest was the only airline company that was profitable as well as facing a rapid grow-with a 25 percent sales increase in 1992. In 2005, Southwest was the sixth largest airline in United Stated. The success of Southwest is mainly linked to its pricing strategy, it positioned itself as a low-price, short hauls and bare bones operation.

There are numerous distinctive characteristics that had lead to the success of Southwest’s pricing strategy, this report has summarised these characteristics into four key categories and followed by a detailed explanation. These key factors appear to be niche marketing, cost containment, employee commitment
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Southwest has been the lowest-cost carrier in the airline industry, with its operating costs per available seat mile were 15 percent lower than America West; 29 percent lower than Delta; 32 percent lower than United; and 39 percent lower than US Air. Other large competitors are trying to match Southwest’s cut-rate price, but they all end up with huge losses.

There are many aspects of the operation contributed to Southwest’s cost containment. Southwest is the only airline company that using a single aircraft type, fuel-thrifty Boeing 737, it is therefore enables Southwest to reduce costs in training, maintenance and inventory. Specifically, Southwest was successfully achieved a fast turnaround time on the group, with almost 70 percent of its flights have a turnaround time of 15 minutes while other competitors need an hour to turnaround on the ground. With it fast turnaround time, Southwest is better in reaching a higher level of passengers volume as well as higher revenue even though it offering a low fare prices. Additionally, Southwest is saving on its operation costs by taking its passengers to smaller satellite airfields rather than major metropolitan fields.

In customer service areas, Southwest curbed costs but satisfied passengers’ needs at the same time. It offered peanuts and drinks but no meals. Boarding passes are reusable plastic cards since Southwest does not subscribed to centralised

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