Southwest Airlines
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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 ro
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sus 371 for American Airlines pilots, and 60 percent more passenger miles per flight attendant. These figures enabled the company to realize profits during years in which the industry as a whole was suffering.
In addition, the company has a 70 percent average load factor in an industry that averages 63 percent, and operating costs per passenger mile are 22 percent less than the industry average. It has one of the youngest fleets in the industry (6.9 years compared with an industry average of 12.9), and the best on-time and baggage handling records in 1992. Each of these factors contributes to the company's financial and marketing success.
Southwest's success has come about because it is providing a product that the market wants, no-frills regional air travel, at a price that is attractive. Despite its no frills orientation, the company maintains strong customer satisfaction and high levels of customer service, encouraging repeat business. When the airline enters a new market, such as Baltimore, its fares are as much as 85 percent less than those of its higher-priced competitors, attracting passengers quickly and forcing the competition to either match the price or lose market share. In its target markets, Southwest has pos
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Approximate Word count = 1870
Approximate Pages = 7 (250 words per page)
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