Southwest Airlines in 2003

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Case Details:

Case Code : BSTA054
Case Length : 19 Pages
Period : 2004
Organization : Southwest Airlines
Pub Date : 2004
Teaching Note :Not Available
Countries : USA
Industry : Airlines

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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Excerpts

Background Note

Early History
Rollin King, a San Antonio entrepreneur who owned a small commuter air service, and his banker John Parker developed the idea of starting an airline company called Air Southwest Co. (later Southwest Airlines Co.) in 1967. Seeing the increasing potential of intrastate air travel, they decided to provide the best service with lowest fares to short haul, frequent flying and point to point travelers. Herb Kelleher, who was the legal advisor to King's air service, later joined them. The trio decided to commence their operations in the State of Texas connecting Houston, Dallas and San Antonio...

Business Strategy | Case Study in Management, Operations, Strategies, Business Strategy, Case Studies

Deregulation of the US Airline Industry and beyond

After the deregulation of the US airline industry in 1978, Jim Wright, a senator passed a regulation called 'The Dallas Love Field section of the International Air Transportation Competition Act of 1979 (popularly known as Wright Amendment). The regulation prevented any airline originating at Love Field from serving one or more points outside Texas and its four adjoining states - New Mexico, Arkansas, Louisiana, and Oklahoma...

Operations

Southwest's business model aiemd providing safe, reliable, short duration air service at the lowest possible fare. With an average aircraft trip of roughly 400 miles, the company benchmarked its costs against ground transportation. But Southwest believed that cost leadership should not lead to dilution of service.

As Kelleher once explained : "It's easy to offer great service at high cost. It's easy to offer lousy service at low cost. What's tough is offering great service at low cost, and that's what our goal is. To do it, we have to watch every penny...

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