Southwest Airlines is one of the biggest and most successful airlines in the United States. But how did it get to where it is today? And what makes it so successful?
A SWOT analysis is a great way to answer these questions. SWOT stands for Strengths, Weaknesses, Opportunities, and Threats. Let’s take a closer look at SWOT analysis of Southwest Airlines company.
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An Overview of Southwest Airlines
When it comes to low-cost airlines, Southwest Airlines stands out because of its low pricing. Southwest Airlines made money from the time it started in 1967 until 2022, thanks to its reputation for being cheap and having good business practices.
The epidemic, on the other hand, caused a precipitous decline in Southwest’s profitability, resulting in the company’s first and only loss in more than 50 years of business. What, then, was the secret to Southwest’s unbroken run of success? What steps did it take to turn things around after seeing profits fall by 59%?
In this short article, we are going to walk you through some of Southwest’s strengths, weaknesses, opportunities, threats, and other internal factors that have been responsible for the development of the company.
Southwest Airlines SWOT Analysis In-Depth Discussion
Southwest Airlines Strengths
Cheaper price
Due to Southwest Airlines’ low-cost flights, many of its clients have become long-term consumers. Passengers may book one-way flights for as little as $45 using the Low Fare Calendar provided by the airlines. For many years, aircraft has been the top low-cost carriers in the world.
LUV Culture
Increasing client loyalty may be accomplished by treating each and every one of your customers like a member of the family. Southwest nailed it when it comes to making customers feel like part of a firm, and that is why its customers keep increasing every time.
The Best Employer
Southwest Airlines is one of the top places to work in the United States. This year’s Forbes list of America’s Best Employers ranks Southwest Airlines as the nation’s second-best employer.
The World’s Most Admired Company
Southwest Airlines placed at number 11 on Fortune’s list of the world’s most respected companies in 2019. This has earned the company the global reputation it has today.
Consistently Profitable
Entering into a business is mostly motivated by the desire to make a lot of money over time. It encourages corporate expansion and research and development (R & D) by allowing companies to accumulate resources.
For the 50th year in a row, Southwest Airlines was profitable in 2022. It’s a remarkable achievement, given how competitive the airline sector can be.
Market Share Dominance
Airlines, with their heavy reliance on lobbying, are a good example of an industry where being the dominant player in the market is advantageous. Those in positions of power can use their influence, supremacy, and financial resources to influence lawmakers to pass legislation that furthers their goals.
After American Airlines (17.6 percent) and Delta (16.8 percent), Southwest Airlines is ranked 3rd and has 16.8 percent of the United States domestic market share from February 2019 to January 2020. (17.5% of the total).
Single type of aircraft (Boeing 737s)
Southwest Airlines has only flown Boeing 737 aircraft since its inception.As of December 2019, there are 747 Boeing 737s in service.
Southwest Airlines has used a single type of aircraft as a low-cost approach. It simplifies training (pilots, employees, and ground crew), scheduling, maintenance, flight operations, and aircraft usage.
Powerful and Efficient
Airline capacity is assessed in terms of the number of seats available in ASMs (Available Seat Miles). Higher ASM implies more seats and tickets for longer distances, which improves profitability.
ASMs rose from 120.58 billion to 157.25 billion between 2011 and 2019, making Southwest Airlines one of the only national airlines with an absurdly high capacity.
Weaknesses
Route Structure
Point-to-point flights in the United States are well served by Southwest Airlines. However, its rivals have more broad domestic and international distribution networks than it does.
Southwest will be serving 107 destinations by the end of 2020. Unlike United Airlines, Delta and its alliance partners offer service to 900 locations worldwide through 140 partnerships.
Commercial Partnerships
Several of Southwest’s rivals have established commercial ties with each other. Southwest’s rivals are able to offer their customers more locations because of these connections.
Passenger Amenities
Southwest’s policy position restricts passenger amenities to Boeing 737 capabilities. Other airlines fly planes that can carry more passengers and have superior amenities.
For example, Southwest does not offer first or business-class tickets on their flights.
Supply Chain
Boeing supplies Southwest with replacements. Supply chain constraints are caused by a reliance on a single supplier. Southwest is only dependent on Boeing, which could be a problem since it is taking a long time to fix the grounded Boeing 737 MAX fleet.
Limitations on Cost-Reduction Possibilities
Southwest had a competitive advantage in the airline sector before the epidemic. However, after the epidemic, several airlines adopted similar procedures to keep their flights running smoothly. To put it another way, the Southwest lost its edge. To make matters worse, the business is having difficulty identifying new ways to cut costs.
Opportunities
Southwest Airlines has a lot of room to grow by increasing its routes and improving its airplanes. Along with this, Southwest may alter its cost structure to better compete with ultra-low-cost carriers by providing higher levels of service.
Listed here are some of Southwest’s possibilities:
Expand Routes
Flight routes have been rearranged as a result of the epidemic. Southwest Airlines has a lot of room to grow its network in the new world order.
Upgrade Fleet
It’s not just the airline sector that’s been hit hard by the downturn. Boeing and Airbus have also been heavily hurt by the economic downturn.
These businesses are on the lookout for ways to better manage their cash flow. The best moment for Southwest to buy new planes is now, given the airline’s current financial situation.
Make New Decisions on Costs
The aviation sector is currently on the mend after suffering a major setback.
As a result of its swift recovery, Southwest Airlines is in the ideal position to take bold decisions during this recovery period. This includes rethinking how it charges for things so it can compete with airlines that charge very little.
Bringing in New Features
Due to intense competition and a rigorous business model, Southwest was forced to provide fewer services to its customers.
The corporation expects increased competition in the future. Southwest Airlines can change its planes to give passengers more amenities before the competition heats up.
Southwest Airlines’ Threats
Intense Competition
Southwest Airlines is up against stiff competition from the likes of Delta, American, United, Spirit, and Alaska Airlines, all of which operate in the United States.
Furthermore, Southwest Airlines views ground transportation such as autos, buses, and trains as a type of rivalry in the airline sector.
Global Recession
Due to unpredictable times, economies throughout the world are unstable, including South East Asia, Europe, Africa, the United States, and Australia.
Southwest’s services are at risk because of the high unemployment rate in the US and the approaching prospect of a recession.
Issues with the Boeing 737 MAX
Southwest Airlines’ expansion and upgrade plans rely heavily on Boeing’s Max aeroplane.
Southwest’s business has been severely hampered as a result of the worldwide grounding of Boeing 737 Max planes. If the issue persists, the airline might be greatly affected by reducing its profitability.
Negative Publicity
According to a government assessment, the company has been flying planes without verified maintenance documents for more than two years and has exposed nearly 17 million passengers to safety dangers.
Final Thought About Southwest Airlines SWOT
When it comes to domestic service in the United States, Southwest Airlines is highly rated. The company would be wise to put resources toward going global in order to speed up their expansion efforts.
Additionally, it will immensely benefit from forming partnerships with other popular airlines. Southwest Airlines has significant opportunities that will facilitate its profitable expansion. If you have any queries or suggestions on SWOT analysis of Southwest Airlines, please make use of the comment section.
Resources Used For This Analysis
- https://www.swamedia.com/pages/corporate-fact-sheet
- https://www.forbes.com/sites/greatspeculations/2016/09/14/factors-that-have-strengthened-southwests-domestic-presence/#7de564b22cbe
- https://www.boldmethod.com/blog/lists/2014/09/11-little-known-facts-about-southwest-airlines/
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