IntroductionOne of the most profitable companies at present and a business role model for many, Southwest Airlines (SWA) has a history of success and a bright future ahead. It was founded in 1968 by Rolling King and Herb Kelleher. It initially served three cities, with a revenue of two million dollars. In 1993 the airline served 34 cities, gradually expanding from the southwest to other areas as well (all within the U.S). The revenues grew to almost three billion. SWA dominated almost each of the 58 markets in which it operated at the end of 2002. For thirty two consecutive years the company has been profitable, and for twelve consecutive years it has been listed by the Department of Transportation among the top five of all major carriers for on time performance, best baggage handling and fewest customer complaints. Currently SWA is the fourth largest carrier in terms of customers boarded.
From a marketing perspective, SWA has chosen a differentiating approach based on the strong positioning statement. The promotion has been done mostly through special offers, with a potential to 'miseducate' the loyal customer segment into always going for the best price. The advertising and promotions rely on the 'making flying fun' philosophy, offering incentives like free whisky bottles.
SWA has operated profit for 32 consecutive years in an unstable marketplace. It has operated a good profitable operating margin (5 years average) of 9.27. After the terrorist attacks of 2001 net income fell by 52.9 percent, from 511.1 million dollars in 2001 to 241 million in 2002. However, the company recovered, operating a 442 million net income and a 5.8 billion revenue in the following year. The average growth rate in sales for the last five years is 6.07, compared to the 10.41 industry rate.
1. Current High-level StrategyThe...