DISCOVERY

Southwest Airlines SWOT Analysis

An In-Depth SWOT Analysis of Southwest Airlines
 Southwest Airlines swot analysis

1. Background of Southwest Airlines

1.1. General Overview of Southwest Airlines

Company Name

Southwest Airlines

CEO

Gary C. Kelly

Company Type

Airlines Service

Year Founded

1967

Annual Revenue

The US $21.965 billion (2018)

Founder

Herb Kelleher, Rollin King

Headquarters

Dallas, Texas, United States


1.2. Introduction to Southwest Airlines

For the SWOT analysis Southwest Airlines, it is crucial to know about its past and future planning. Southwest Airlines is one of the major airlines of the U.S.A. It is also famous as the world's largest low-cost carrier airline. It schedules services to 111 destinations not only in the U.S.A. but also in ten additional countries. The company began operating as an intrastate airline in Texas, Dallas, San Antonio, and Houston in 1971.

At present, the company has 60,000 employees, and it operates nearly 4000 departures a day during its peak season. As per the records of 2018, Southwest airlines carried a maximum number of domestic passengers.


1.3. Development Timeline of Southwest Airlines

1971

Southwest Airlines began flying

1978

Herb Kelleher took charge as interim C.E.O.

1979

Service began in New Orleans

1982

Services expanded to California

1993

Services at East Coast, Florida. Long Island

2001

James Parker as chairman

2004

Gary Kelly replaced Parker

2008

$10.2 million civil penalty issued against the company by the Federal Aviation Administration.

2009

Began services in Minneapolis and planned to expand to Boston, New York, and Milwaukee.


2. SWOT Analysis of Southwest Airlines

The Southwest Airlines SWOT analysis can find out the strategies that can help the company to strengthen its position and maximize revenue. It identifies the effects of competition and weaknesses as per the culture and organizational structure. The company can work on business diversification to gain stability in the market.

2.1. SWOT Analysis of Southwest Airlines in Detail

Strength:

In SWOT analysis, 'S' actually stands for strength. It is always essential to determine the strength of Southwest Airlines. It helps in boosting up the company's motivation towards success. Companies must know what their strengths are for stable growth:

  • Marketing Strategy: The company is praised for its enticingly warm L.U.V. culture. They offer low-cost flights to attract customers;
  • Company Profits: As per Forbes ranking, the company was ranked #2 for the best employers in the U.S.A. in 2019. It has shown remarkable profits for 47 consecutive years. It is at 4th position as per the world's most valuable airline brand;
  • Service Strategies: The company uses Boeing 737s exclusively as the choicest aircraft type. It maintains a point-to-point effective service strategy, which saves time. The company has a high capacity of Available Seat Miles. It has huge market share dominance. The industry generates huge revenue with a large number of operations.
Weakness:

For any company, it is pretty common to have some weaknesses. The companies need to find strategies that can remove those weaknesses. When a company is in a competitive market, any weakness can impact its growth against its competitors. The company can plan some long-term plans to change those weaknesses into their strengths. Southwest Airlines also has some weaknesses. For example:

  • Product Diversity: The company faced criticism for its lack of diversification. The dependency on single revenue may lead to economic turmoil and uncertainty within the sector;
  • Lack International Routes: The company does not operate international flights. Complete dependency on the domestic market alone may cause losses to its revenue;
  • Revenue Loss: Significant dependency on Boeing 737s resulted in a revenue loss.
Opportunities:

A company must consider the opportunities that they can get to survive the high market competition. They must set their policies as per those opportunities to ensure their growth in the future. They should also consider the condition of the market while working on their opportunities. Here are some opportunities for Southwest Airlines:

  • Globalization: The company should aim to expand globally. The recent inception of services to Hawaii shows the ray of hope for developing services to the other emerging economies;
  • E-Commerce: The recent past has improved the e-payment booking process by adding Apple Pay and PayPal to its mobile app, website, and in-flight WiFi purchase page;
  • New Technology: It must use the scope to exploit new technologies and adapt them to cope with the internet era. The biometric boarding kiosks may help speed up the security process;
  • New Flight Routes: Millennials are entering the workforce. It must now shift to long-distance flights from short hauls.
Threats:

All the companies that survive in a competitive market must have some threats that can stop their growth. Other competent opponents' market conditions change of taste of the customers can be prevalent threats. Similarly, a famous brand like Southwest Airlines also has some threats:

  • Global Recession: The threats of Southwest Airlines are severe concerns that the firm must not overlook. Threats cause severe impediments to a company's growth and future success. The global recession has caused massive unemployment. The operation of the company is under threat for the same;
  • Revenue Loss: Boeing 737 Max issues need modernization initiatives and a proper growth plan to avoid revenue loss due to cancellation. If they continue with this aircraft for a long, the customers may alter their airline choice;
  • Incidents: The incidents of terrorism make passengers threatened, and they avoid air travels which hamper the airline industry and the economy as a whole;
  • Fierce Competition: It has to compete with Delta Airlines, American Airlines, and Spirit;
  • Regulations: Any negative report will enhance the safety risks. The airline industry's stringent regulations threaten the company.

Southwest Airlines SWOT analysis

Source:EdrawMax Online


3. Key Takeaways

The Southwest Airlines SWOT analysis points out the fact that the company has numerous scopes to perform better. Undoubtedly, the company is one of the most revered names in the airline industry in the U.S.A. Still, Southwest Airlines can maintain its success in the financial sector by adopting a few measures:

  1. It should diversify the revenue sources to avoid any major catastrophe for the airlines;
  2. It should increase the number of aircraft models without depending on Boeing 737s alone;
  3. Faced up with the fierce competition, how to stand out seems far more important for many corporates. Only the innovative technology, expand market share, and improve the service quality, the Southwest Airlines may grow in adverse environment.

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