Southwest Airlines SWOT and IFE Matrix Strategic Analysis

Introduction and Company Background

Southwest Airlines began as an ambitious company by offering flights from Love Field Airport in Dallas to Houston and San Antonio. It started modestly with just three planes and three Texan destinations, and currently owns hundreds of planes and flies millions of people to many cities. Even though Southwest was operating in a sector of the economy known at that time for its bankruptcies and huge financial losses, the firm reported its 38th straight profitable year in 2010 (The Saylor Foundation, 2014).

The company started its operations in 1971 at Dallas Love Field Airport after winning a four-year court case against two local airlines — Texas International Airlines and Braniff, both of which are now defunct. The two firms argued before a Texas court that there was insufficient demand to sustain three intrastate airlines. The legal battles, and later the bruising pricing wars between Southwest and those two firms, forced Southwest to create a new operating model that eventually helped the airline survive and thrive. The firm introduced affordable fares and a lively advertising campaign based on the "Luv" theme, which helped it develop a reputation for fun and cost-effectiveness (Johnson & Hall, 2009).

The firm grew from three airplanes to become the largest domestic airline in the United States, achieving 38 straight years of profitability. Since its inception, the firm has placed greater emphasis on customer satisfaction rather than on automation as the key to its business success. However, by 2002 its then-Chief Financial Officer and later CEO Gary Kelly acknowledged that automation would be crucial to meeting the firm's strategic goals. Based on this realization, the company began developing a solid IT foundation. This automation infrastructure was introduced to support key processes, including the sector's first-ever paperless ticketing system and web application (Afshar, Saeb, Tadros, Mehra, & Gautam, 2010).

What caused Southwest Airlines to succeed where other airlines have not? Historically, the company has differed from others in the industry in several significant ways. Many large U.S. airlines operate on a "hub and spoke" system, routing their passengers via a hub airport on their way to other cities, and Southwest is no exception. The firm has, however, managed to become more efficient than its competitors. While many large airlines operate a variety of different airplane models, Southwest utilizes only one type of jet: the Boeing 737. This enables the airline to service its fleet easily and efficiently. Maintenance mechanics and flight engineers need only to learn how to work on one type of jet, in contrast to their counterparts at other airlines who must develop technical expertise across multiple aircraft types. Also, unlike its rivals, the firm does not offer assigned seats in advance, which contributes to greater operational efficiency (The Saylor Foundation, 2014).

Southwest Airlines also maintained the lowest operating-cost model in the domestic airline industry and consistently offered the lowest air fares. Its customer service ranked among the best in the industry. By 2001, the airline had more than 35,000 employees and recorded approximately $5.6 billion in operating revenues from a 68.1% passenger load factor. Its trading abbreviation on the securities exchanges was LUV, which symbolized both the airline's headquarters at Dallas Love Field Airport and its relationships with clients and staff (Govindarajan & Lang, 2002).