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Southwest Airlines

Founded in 1967 in Texas, Southwest Airlines has been known for having unconventional business practices, including female flight attendants who wore hot pants in the late 1970s. Its unconventionality was born out of the fierce competition in the airline industry. Where other carriers, such as American and TWA focused on nonstop long routes, Southwest offered regional service to a few airports. It is likely that Southwest would have remained just another regional carrier, like AirCal, had it not been for the airline deregulation that occurred in 1978. Since that time, Southwest's unconventional approach has enabled it to gain a large share of the markets in which it participates, improve its load factor to above the industry average, and accomplish both of these feats without resorting to bringing back hot pants. This research examines the success of the airline and the role that deregulation has played in its success.

For nearly the entire history of the commercial airline industry, it was one of the most heavily regulated industries in the country. Government regulations determined which carriers had access to which markets, which routes were approved and not approved, and what rate structures were permitted. Airlines were controlled in much the same way that utilities are controlled today, with companies having to petition for rate increases. As a result, airlines themselves were run in a manner similar to utilities, with large airlines subsidizing money losing routes with their money-making routes.

Entry into the airline industry under regulation was difficult. Not only did prospective entrants have to be able to raise enough capital to purchase or lease aircraft, but the government had to approve the entrance into specific markets. Often, the government would approve attractive new routes only if carriers (either new or proposed) would also take on less profitable rural routes. New companies had difficulties compe...

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Southwest Airlines. (1969, December 31). In LotsofEssays.com. Retrieved 05:27, March 29, 2024, from https://www.lotsofessays.com/viewpaper/1681072.html