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Submitted by dantjohnston on March 10, 2007
Category: Business
Words: 1457 | Pages: 6
Views: 240
Popularity Rank: 60,111
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Threats to the success of Southwest Airlines
Threats
Southwest Airlines is the only U.S. carrier to be profitable every year since 1972.
Southwest's business model of targeting new cities where the competition is weak and
the costs are low has been very prosperous for the company. But in this post 9-11
environment, with the additional security procedures at airports, increased fuel costs,
labor unions demanding more from management, and other external factors on the
industry as a whole. It will be tough on Southwest to continue to turn a profit, and
continued success won't be so easy.
Opportunities for growth
Southwest Airlines, however, is not without weaknesses. No matter how successful,
Southwest Airlines serves only 29 states and cannot compete against the bigger
companies that serve nationally or even internationally. Furthermore, Southwest Airlines
does not utilize a hub system that allows for bigger competitors to reach further out.
The old strategy of focusing on good climates and smaller less congested airports has
contributed to Southwest's low costs. Expanding to more northern routes will be subject
to weather and the weather conditions can effect the airlines ability to maintain on-time
performance and can significantly effect down-line operations such as paying people
while they cannot service a plane. A schedule based on quick turn around, leaves little
room for any type of flight delays. "This puts a limit on growth because there are only a
finite number of markets that can satisfy these criteria" (Jackson & Randall, 2006, p.
650).
Moving into Denver is one of the bigger risks...
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