Jacqueline Monrreal
MKT 3300.502.13S
February 1, 2013
Situation Analysis
Southwest Airline Co.
Southwest Airlines is a well-known airline company throughout America. They have
successfully overcome some struggles and succeeded in many ways to improve the company.
The following is a SWOT analysis of Southwest Airlines that indicate the strengths, weaknesses,
opportunities and threats of their business. This analysis will help future stakeholders and
investors make correct investing decisions and also guide the company and the marketing
department to keep Southwest Airlines in the top ten of airlines.
SWOT Analysis for Southwest Airlines
Strengths
Weaknesses
-SWA has opened 3 new destinations in the nation. New Wark, NJ
Greenville-Spartanburg, NC and Charleston, SC. (1)
-New non-stop to destinations in Chicago and Montago Bay and
Jamaica, Dominican Republic. This will be more convenient and a time
saver for travelers.
-They have been known for their excellent customer service and also
have the least amount of customer complaints in the airline industries.
(2)
-Low price airfares nationwide and internationally (3)
-No hidden fees for passengers when they buy airline tickets. (1)
-They care a lot about their employees and customers by rewarding
with tickets, promotions, etc. (2)
-They have had a decrease in RPM (revenue passenger miles) and in
ASM (available seat miles) from 2011 to 2012. (3)
-The increase of fuel leads SWA to not knowing how to manage their
profits in 2010.
-They are 3.75 billion in debt (3)
Opportunities
Threats
-SWA is going “green”. Recycling and saving energy, water, fuel, and
furnisher will limit their spending. (2)
-They have also expanded to Mexico and the Caribbean to attract more
travelers to SWA.(1)
-The “All-New Rapid Rewards” program will help increase sales from
their customers and welcome new customers. (1)
-They have the “Build your own Report” for investors to easily
understand where the company stands for the year. (1)
-Great opportunities for their employees, charities for the communities,
reward program, etc. to better serve who love Southwest Airlines. (2)
-Their competitor Delta, also offer low price airfares.
-Volatile fuel costs are 37% of operating expenses and significantly
impact the profit of SWA and all airlines. (1)
-It is estimated by analyst that there will be 22.2% less of shares in
2013 than in 2012. This will affect the number of stakeholders they
already have. (3)
-Terrorist attacks is a threat to all airlines not only SWA. (4)
-Increased economic fuel more than $200 million. (1)
Industry Analysis:
The airline industry is a competitive business. Southwest Airlines was originated in
Dallas, Texas, Love Field in 1971 (1, web) and has continued to grow. They have to face many
obstacles in order to succeed in this industry. They are one of the top ten airlines of due to the
low price airfares they offer, opening internationally, have a reward program to their loyal
customers, emerging with AirTran Airlines, customer service, and going “green”. There are three
things that the CEO of the SWA mission is Performance, People, and the Planet. (2, web) During
this past year SWA has revenue of $15.7 million and a net income of $178 million, in which
there was a 29.4% of growth in revenues. (3, web). Many more travelers are choosing to travel
through which causes the revenues to increase. Since recession is not as bad as it was before a
few years ago, the demand for air traveling has been increasing gradually. Southwest Airlines
has repaid $628 million in debt during 2011 which also includes the aircraft leases (1, web). For
business people that have to travel through air, the low price of an airfare ticket will attract them
to travel with this Southwest. This company has also expanded internationally to Mexico and the
Caribbean to give their customers more options and reasons to travel with this airline. The
emerging of AirTran to Southwest has allowed them to achieve this goal. “AirTran integration,
All-New Rapid Rewards flyer program, the addition of Boeing 737-800, fleet modernization and
replacement of reservation system believe that will drive more revenue, reduce unit costs and
enable SWA to close the gap between our current versus our targeted financial performance,”
says CEO of Southwest Airlines (1, web).
Competitor Analysis
Southwest Airlines major competitor is Delta Airline. Delta has been recognized for
having many more destinations nationwide and internationally. They have 319 destinations and
59 countries on six continents, (6, web).They also offer a similar program to the “All-New Rapid
Rewards” flyer program of SWA, they have enhanced the customer experience in the air with
new technology and easier check in procedures when they arrive are ready for travel. (6, web)
Looking at what Delta has been doing with their business, it has motivated SWA to improve
more on their marketing strategies to attract more passengers. One of SWA marketing strategies
is to have a blog called “LUV” to allow customers give feedback about Southwest. For future
Southwest travelers, the blog is a good resource to see what SWA really is about from the current
customer. Delta is different on the aspect. Doing different marketing strategies and improving
them it will help them succeed better than their competitor, Delta Airlines.
Company Analysis
Southwest Airlines has over 40 years of experience (1, web). SWA is motivated by their
customers and their employees that have been loyal to them. There are many opportunities for
the employees to succeed that Southwest has to offer. SWA also have big considerations for their
passengers when it comes to traveling and helping out their communities. For example, “The
All-New Rapid Reward frequent flyer program is off to a tremendous start. The program
exceeded expectation in 2011 with growth in Memberships, co-branded Chase Visa credit card
usage, Member flight activity and premiums paid for points,” (1, web) Southwest will also be
operating with green filter, conserve jet fuel, decrease greenhouse gas emissions, and use
recycled furnish for the interiors of the planes which is called “Evolve” (1, web). They have a
“Carbon Disclosure program Project reporting that it covers effective management of
environmental risk, focusing on greenhouse gas, emissions and climate change strategies,”
(1,web). These opportunities will help Southwest increase their revenue even though fuel price is
increasing. The pilots of the SWA compile work rules for safe efficient operations and being the
leaders of the aviation industry (4, web). This gives passengers a peace of mind knowing that the
pilots are highly trained and know what they are doing. With their high customer service
techniques, strategies to increase revenues and know how to run a business efficiently will have
positive outcomes.
Customers Analysis
Customers are the number one reason why Southwest Airlines is on the top 10 of airlines.
SWA always makes sure that their passengers have an unforgettable experience and reason to
continue choosing SWA as their first choice when air traveling. The blog “LUV” is why to let
their customer express themselves about how they feel and think about Southwest Airlines. They
also send out surveys to their customers to rate their experience at Southwest in order to help
them improve and increase revenue. There was an 81.3 percent of flight arriving on time in the
year 2011 compared to 79.5 percent in 2010. This is an advantage for customers that do not like
having delays when flying. On the LUV blog, there have been many reviews of how appreciative
and grateful they are of SWA serving the communities and offer low-price fares, more
destinations choices with easy check-in and no hidden fees are reasons to continue traveling with
Southwest Airlines. We know that Southwest Airlines will do its best on maintaining low-fares
and exceed in customer service in spite of the rising cost of fuel prices.
Work Cited
1) LUV Investor Relations. N.p., n.d. Web. 2 Feb. 2013.
<http://www.southwestonereport.com/2011/>.
2) Three Passions. One Southwest.. N.p., n.d. Web. 2 Feb. 2013.
<http://www.southwestonereport.com/2011/>.
3) Forbes-Southwest Airlines. N.p., n.d. Web. 2 Feb. 2013.
<http://www.forbes.com/companies/southwest-airlines/>.
4) Chapter 7:National Security . N.p., n.d. Web. 2 Feb. 2013.
<www.rita.dot.gov/bts/sites/rita.dot.gov.bts/file/publication>.
5) Southwest Airlines Pilots: Leaders of the Aviation Industry. N.p., n.d. Web. 2 Feb. 2013.
<http://www.swapa.org/>.
6) Delta: Stats and Facts. N.p., 13 Jan. 2013. Web. 2 Feb. 2013.
<http://news.delta.com/index.php?s=18&cat=47>.