Introduction
Southwest Airlines is one of the oldest and most distinguished Airlines in America, which operates in over 50 states and even offers international flights to some extent. The airlines’ market share is more than 17% of the total shares in the airline industry in the U.S. The airline was founded in 1967 by the name Air Southwest and was named Southwest Airlines in 1971. Let us know ‘Southwest Airlines SWOT Analysis’.
Southwest Airlines SWOT Analysis
The airline is widely successful and known to be the world’s largest low-cost airline. In 2019, Southwest Airlines employees were around 65,000 and completed nearly 3800 flights daily. Unfortunately for the airline, it suffered huge losses during the pandemic, and for the first time since its 50+ years of operation, the airline’s annual revenue was in negative values. But to the amazement of every competitor in the market, Southwest airline is already back on its feet and has increased its revenue by an enormous amount of 75% with net cash of almost $5 billion.
This article sheds light on a well-researched SWOT analysis of Southwest Airlines, comparing the strengths of the airline with its weaknesses and highlighting different opportunities to take advantage of for improvement of the company and the threats presented to them from within the Airline business environment. So, let’s get started.
Southwest Airline’s strengths
Low Costs:
The airline has held the title of the most affordable and best low-cost airline for years, and this remains the number one reason for Southwest Airlines’ massive number of loyal customers. Passengers can book one-way flight tickets for lower than $50 by using the low-fare calendar. The company takes pride in serving the people with the lowest flight costs and still earning huge profits every year while still staying on top of the airline business. This is a massive achievement in itself.
Only using the Boeing 737s:
Since the company was founded in 1967, Southwest Airlines has operated exclusively by using the Boeing 737 aircraft. This strategy has been very effective in maintaining lower costs of flight tickets and operations as well. A single type of aircraft means easy and low-cost training for the pilots and staff members and efficient flight operations, management, maintenance, and utilization of aircraft.
Constant profits:
The success of a business is defined by the number of profits it can make, and the primary goal of starting a business is to achieve maximum profits. Southwest Airlines has given a new meaning to running a successful airline business by producing earnings for 47 consecutive years since its founding till the start of the pandemic in 2019, which is a remarkable feat dreamt of by all businesses alike. The brand value of Southwest airlines is $6.6 Billion, ranking fourth among the most valuable airlines in the world.
Southwest Airline’s Weaknesses
Depending only on the Boeing 737s:
While it can be seen as a strength, it is without a doubt also a disadvantage to only use one type of aircraft for all the operations of the airlines. Out of the 750 Boeing planes, Southwest Airlines has 31, leading to a severe supply chain bottleneck that often ends in the company having to ground a few of the aircraft until spare parts arrive and repairs can be started.
In addition, in 2019, the Federal Aviation Authority (FAA) ordered all Boeing 737 aircraft to the ground after two fatal accidents, from which Southwest Airlines suffered enormous losses for the obvious reasons mentioned above.
Furthermore, only using a small aircraft like the 737 means that there are no opportunities to upgrade the aircraft and provide additional services for the passengers, for example, first class and business class seating facilities during flights.
Shortage of international flights:
Southwest airlines mainly operate within the 40 states of the U.S. and only offers limited options for international destinations. Compared to some significant airline competitors, almost all of them have wide-scale global operations. Meanwhile, Southwest depends on domestic flights within the country and entirely relies on the U.S. market to be profitable.
Cost of operations:
Southwest airlines take pride in its low-cost flight tickets, but the inflation rate after the pandemic has been higher worldwide. High fuel prices mean that each flight has become less profitable than before, the reason being that the airlines already operated while keeping profits lower than other airlines, and the cost-to-profit ratio has now gone even lower than before.
Opportunities for Southwest Airlines
Diversification:
As we have mentioned above, exclusively using the Boeing 737s is not the best option in current times when the competition is high, and other airlines offer far more privileges and services to customers. Southwest should invest in upgrading its fleet and bringing in some new aircraft like the Boeing 747s, which will result in attracting a more comprehensive range of new customers in addition to the already loyal customers of the airline.
Expanding Routes:
After the pandemic ended, many airlines were shut down and are out of business, meaning that there is a gap in the market to fill. Southwest should take this opportunity and expand its operations internationally on a newer and broader scale than ever before. Taking this bold step will surely increase traffic and revenue alike.
Threats for Southwest Airlines
Competition:
The airline market in the United States is no less than saturated, meaning that there is a lot of competition between the top airline companies. Some of the companies are American Airlines, Delta, United, and Alaska. The disadvantage for Southwest airlines is that they only operate domestically while most of the competition operates internationally on a large scale.
Incidents and Negative publicity:
Another disadvantage of exclusively using the Boeing 737 aircraft is the negative effect on the company if there are any unfortunate incidents with any of the aircraft. Customers may end up getting frightened, which ultimately spells a massive loss for the company using only the specific type of aircraft.
Conclusion
The Southwest Airlines SWOT analysis explains that the company is indeed one of the best in the airline industry in the U.S. and has made a name for itself by serving its customers. However, the fact is that the company is still lacking on various fronts and can be significantly improved by taking a few crucial steps, like diversifying its fleet and expanding the routes on which they operate. There are a lot of opportunities to take advantage of, and they must take a few bold steps to stay relevant as one of the top airlines is in the United States, and their competitors are also some of the bests in the world.
FAQs
- How do I cancel my flight?
Ans. You can cancel your flight by calling the helpline. You have the option of getting a refund or adding the amount to your travel fund, which you can use later to buy a new flight ticket.
- How expensive is Southwest Airlines?
Ans. Southwest is one of the lowest-costing airlines in America; you can buy tickets starting from only $45 for a one-way flight.
- When does my travel fund expire?
Ans. The travel fund given by the airline for the cancellation of your flight expires on the same date the original ticket will expire.
