SWOT analysis evaluates a firm’s strengths, weaknesses, opportunities, and threats. Strengths place a firm at an advantage over rival firms, while weaknesses act as disadvantages to the firm when compared to others.
Opportunities are chances that present themselves to the company and when the company grabs them, it stands a chance of making more profits. Threats are associated with those factors that can cause trouble for a company such as stiff competition (Hayward, 2002, p141). Southwest Airline is one of the low-cost airlines and a leader in terms of the number of passengers who board it annually.
SWOT Analysis; Southwest Airlines
Southwest Airline has been in operation for along time, and just like other businesses, it has been faced by both challenges and opportunities, which has made it stronger to date. First, the mission statement is simply dedicated to quality customer service, which is attained via warmth, friendliness, pride, and company’s spirit. This has proved to be true as the airline operates with the interest of a customer in mind.
The airline has been associated with a number of strengths; first, it has always been the best low-cost airline in term of fares for passengers. Therefore, most passengers have preferred it.
The airline has always maximized on internet booking, thus making it easier for its customers, and acting as a way of marketing itself. The airline pays its pilots handsomely compared to other airlines, hence motivating the pilots to fly at least an extra hour as opposed to other airlines (Mouawad, 2010). This has made it possible for the airline to make almost 3,100 flights in a day.
It is evident that the Southwest Airline has its employee’s interest at heart, thus proving difficult for them to be poached by other airlines. In addition, the airline has a unique culture, that of entertaining its passengers, thus encouraging them to fly with Southwest again.
The well utilization of Boeing 737 has made it unique as it only uses this model of airplane. Its main concentration on short trips has yielded to cutting of costs, thus benefited the airline. Nevertheless, the airline has been using one type of airplane, Boeing 737 that incurs minimum maintaining expenses.
The airline is associated with a number of weaknesses. First, it is limited to sixty cities. This is a major challenge for the airline due to the mergers formed by United Airline and Continental Airline, thus being capable of offering passengers access to the world.
The airline has not been able to defend its territory in the costs leadership, as some other airlines are imitating it, for instance, Jet blue airline that is determined to attain cost leadership. Concentration on domestic flights has made it vulnerable to other airlines, like delta, which provide international flights.
Different unions have been formed by the airline employees, thus proving challenging to the management. The use of a single model of plane could limit its efforts to minimize on petrol consumption. The airline does not rely fully on booking agencies, as compared to other airlines, hence being at a disadvantage in regard to customers who prefer booking tickets through agencies.
However, the airline does not offer the services provided by other airlines like airport lounges, reserved seat assignments, video or audio programming and First Class cabin, and video/audio programming (Dan & Charisse, 2010). In addition, the airline has been easily imitated by other airlines, thus giving room for more competition. Southwest also relies on only one manufacturer of its plane, Boeing Manufactures.
The airline’s effort to acquire Air Tran is a gate pass to international flights, as longer flights will be introduced. The enhancement of internet booking services acts as a marketer for the airline once it starts operating abroad. In addition, the expansion of its operations to other cities increases its returns. The airline can further enrich its customer services with an aim of maintaining and retaining those customers. Moreover, the new advancing technology will yield to the airline offering new outstanding services to their customers.
Southwest Airline faces stiff competition from other airlines, for instance, Jet-blue, which rivals Southwest Airline on being the lowest cost provider in the industry (Box & Saxton, 2003 p4). Due to the recent oil decrease in oil prices, the airline is facing a major blow, since it saved millions when the fuel prices were high; however, it is forced to pay higher for the fuel, until the price rises.
Therefore, the airline’s operation cost is likely to increase; however, it faces a challenge of either increasing its fares or not making profit at all. In addition, its airplanes, like all the others airplanes, are prone to terrorist attacks, which could lead to many losses and lack of faith from its customers. Another threat that faces airlines is the risk of accidents; such cases tarnish the image of an airline, as most will imply the accident is caused by recklessness or pilot exhaustion due to long hours of flying.
The above SWOT analysis elaborates the factors behind Southwest Airline success and areas that could need improvements for the airline to continue enjoying a competitive advantage. Due to the continuing increase in fuel, the airline should minimize their costs, by avoiding any major investment, such as purchasing an airplane. However, the airline should continue focusing on its customers through quality services, in order to maintain and attract customers.
Dan, K & Charisse, J. (2010) “Southwest will buy Air Tran in merger of low-cost rivals; USA today. Retrieved from http://www.usatoday.com/money/industries/travel/2010-09-27-southwest-airtran-merger_N.htm.
Box, T. Saxton, S. (2003). Jet blue: a new challenger. Retrieved from http://soba.fortlewis.edu/miller_l/OpsMng/jetblue.pdf.
Hayward, P. (2002). GCSE Leisure and Tourism for Edexcel.
Heinemann Vocational Series. NY: Heinemann Publishers. Retrieved from http://books.google.com/books?id=KkU1_kHntvAC&pg=PA141&dq=WHAT+IS+A+SWOT+ANALYSIS&hl=en&ei=vKEuTqSQJ4m3hAe0q8RP&sa=X&oi=book_result&ct=result&resnum=1&ved=0CCsQ6AEwAA#v=onepage&q=WHAT%20IS%20A%20SWOT%20ANALYSIS&f=false.
Mouawad, J. (2010). The New York Times; business day. Retrieved from http://www.nytimes.com/2010/11/21/business/21south.html?pagewanted=1&_r=2&sq&st=nyt&scp=5.