Southwest Airlines 2002 : An Industry Under Siege.

STUDY CASE

I- Introduction II- ProblematicIII- Keys of the success until 2001IV- After the 11 September 2001V- Goal of a new strategyVI- Conclusion

SUMMARY

Southwest Airlines Co., is an American low-cost airline based in Dallas, Texas.

Southwest Airlines traces its roots to the March 16, 1967 incorporation of Air Southwest Co. by Rollin King and Herb Kelleher to provide service in the state of Texas.

The airline was established in 1967, adopting its current name in 1971.

INTRODUCTION

SWOT ANALYSIS

Strengths Weaknesses

Opportunities

Threats

• « Low price » tickets

• Good relation with airports

• Good relationships between the members of the company

• Strong company’s value and culture

• Attack of the 11-09 2011

• The absence of assigned seats

• Possibily of diversification

(Expansion with new roads)• Use

connecting flights (interline tickets)

• Many competitors (entrance of low cost company)

• Taxes• Security

after the attack

• But how Southwest Airline has been as profitable during more than 30 years ?

• And how the airline company has to manage to fight to stay profitable and keep some important growth after the

events of 2001 ?

PROBLEMATIC

Acquisition :

Muse Air / TranStar Airlines – acquired 1985, divested 1987

Southwest paid US$60.5 million in stock and cash for Muse Air when Muse was on the verge of collapse in 1985.

Morris Air – acquired 1993

Southwest acquired Morris Air, a competing airline based in Salt Lake City, Utah, in 1992, paying US$134 million in

stock.

KEYS OF SUCCESS UNTIL 2001

• Product : Low cost tickets

• Price : Cheap

• Place : All over the USA (East, West, North, South)

• Promotion : Frequent-flier program (Example : « Fly eight flights, get one free)

The goal of those operations are to attract more and more consumers.

GOOD CONTROL OF THE MARKETING MIX

The company keep limitating her price and the time thanks to :

• Route system• Absence of meal during the flights ( in short only)• Limited amount of checked luggage• Same unifortm for the « hotesse »• A quick bording system• Multitasking of employees

OTHERS IMPORTANT POINTS

The disaster shocked the entire world. But more than

nothing, he touch the American Aviation and Air

companies. They had to take a new direction always

based more and more on the reassurance and security of

its customers.

AFTER 11-09 2011

To acquired new others company :

- It can help the company to became more famous,

competitive.

• ATA Airlines – acquired 2008

Southwest paid US$7.5 million to acquire certain assets from bankrupt

ATA Airlines in 2008.

 

• AirTran Airways – acquired 2011

On may 2, 2011 Southwest Airlines completed the acquisition of

AirTran Airways.

To increase the price of the tickets :

- On including meal in all the flights with can justify the new price of a tickets.- Just on increasing the

price of the tickets

To create new roads :- Those creations will allowed the company to became more attractive,

to find new clients.

POSSIBILITIES

ANSOFF'S PRODUCT / MARKET MATRIX

About long flights around the USA :

The average miles per flight has steadily increased over

the years and that it has proved to be very popular

with customers and frequent fliers therefore

they should focus on that.

WE ARE HERE!

The goals of a diversification of the production is to

• Succeed in the long term• Maximize the profit

• Expend the market (on opening new flights)• Keep competitive

GOALS

Even if the company has succeed during a long time, she has to diversify their services and so maximize the profit on creating new road and on increasing the price of tickets to match the gap due to taxes.

On June 5, 2011 Southwest Airline became the largest airline in the United States based upon domestic passengers carried with a net income of US$ 178 million in 2011.

CONCLUSION