d Southwest operations in an increasingly competitive and challenging environment.
Company and Industry History: Southwest Airlines began in Texas in 1972, directing its resources to what they felt to be an unserved price-sensitive frequent flyer market comprised of customers willing to give up æfrillsÆ and drive to lesser-used or bypassed airports from which Southwest could operate cheaper and more easily. It is important to note that as both Southwest expanded, the company resisted the lure to stray from the formula that had made them successful û short hauls, frequent flights, defined markets. Their respective management/marketing strategies bring each airline advantages of high yields, which they use to cover their high cost of service/product production. The airline stuck to its strategy and emphasized sound, determined, market-oriented management (Holstein, 1998).
The aviation industry continues to face times of continuing transition. Although airlines have had financial and operating problems, Southwest Airlines has stood in strong contrast to carriers who reported losses, mounting debt burdens and deteriorating finances leading many to bankruptcy. It has continued to trade profitably through the deregulation and recession eras and expanded significantly. It has maintained healthy financial conditions with a continuing low ratio of debt to equity, although exposed to the same macroeconomic and market conditions of less successful carriers. One crucial reason for its success was its market orientation. The company was very well led and managed, with a clear long-term strategy that identified potential markets and made in
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