Southwest Airlines Case Study Example | Topics and Well Written Essays - 750 words

Southwest Airlines - Case Study Example The challenges are: recession, intense competition, intensified airline regulations, uncertain weather conditions in new markets, and labor demands. The recommendations are: determine a succession plan, expand slowly to underserved markets, and strengthen the culture committee. Southwest Airlines is an example of a low-fare/no-frills airline with a point-to-point service strategy. It focuses on the southwest region of the U.S., where weather is more stable and delays are less frequent. The Airline Deregulation Act of 1978 intensified competition because of the absence of government regulation in setting fares, allocating routes, and controlling entry and exit points. Instead of encouraging truly free competition, the Act benefitted large carriers who â€Å"cherry-picked† lucrative routes (Ginsberg & Freedman, p.260). A Porter’s 5-forces analysis reveals that the airline industry has intensive rivalry, high supplier power, low substitute, high buyer power, and high threat of new entrants. The strengths of Southwest are its good safety reputation, efficient services, low costs, strong corporate culture, strong customer and employee focus, and strong leadership. The weaknesses of the company are lower load factor, relatively low employee product ivity, slow expansion rate, dependence on the charismatic leadership of Kelleher, and reliance on passenger revenues. The opportunities are booming U.S. airlines industry, positive expansion in the US airfreight industry, underserved markets, increasing technology efficiency, and sympathetic business passengers. The challenges are recession, intense competition, intensified airline regulations, consolidation, uncertain weather conditions in new markets, and labor demands. The main problems of Southwest are: 1) it lacks succession planning; 2) it has a slow market expansion rate, because of its limited point-to-point service strategy; and 3) if Southwest changes its service