Inserts Inserts The Southwest Airlines 16 February The Southwest Airlines Founding Southwest was not an easy matter for the original team of investors who included its legendary CEO, Herbert Kelleher. Kelleher was a lawyer when one of his clients, Rollin King, proposed the opening of a new, “low fare, no-frills airline to fly between major Texas cities” (Hartley 283). It was not until three years later, in 1971, that Southwest started operations after a protracted legal battle with “Braniff, Texas International, and Continental over the right to fly” (Hartley 287). From that point onward, Southwest set off to establish itself as the most competitive airline for short haul flights.
Kelleher became the president and CEO after the firing of the founding CEO. Southwest succeeded in getting a large market share and went on to become the only airline to return a profit for over thirty years in a row. During the period, some airlines collapsed, many filed for bankruptcy while the rest made losses year on end. Southwest perfected the three-thronged strategy composed of containment of operating costs, employee commitment, and pursuing a very conservative growth effort (Hartley 289).
Kelleher retired from the company in June 2001. After September 11, the company and the airline industry in general experienced fresh challenges. There was an increase in regulatory requirements regarding aircraft safety and maintenance. In addition, new players using strategies similar to Southwest’s low fare, no frills approach started to catch up and to eat into Southwest’s market share (Grossman). A much-publicized lapse in its maintenance practices in 2008 reduced public goodwill and support for the airline. Southwest finds itself in an increasingly competitive business environment caused by change of business strategy by old rivals, and the entry into the market by new players.
The low cost flight niche is not absolutely under Southwest’s control though it remains the largest American airline by passenger numbers (Grossman). It appears as though Southwest is about to saturate the short haul routes so it is expanding towards more trans-continental flights. It has carried with it some of the business practices it perfected for short haul flights such as no booking of seats, and serving only snacks in its flights.
The range of snacks is larger compared to the ones served in the short haul flights (Gittell 234). Southwest started out on a program of installing in-flight Wi-Fi in all its planes scheduled for completion in the first quarter of 2012 (Grossman). This is due the demand for internet by many of its passengers. There is a possibility that it will have to provide some things such as sandwiches and in-flight entertainment for its transcontinental operations. Southwest has not yet started out on international flights but it will turn the current international flights in AirTran, to Southwest, which will give it an international presence.
Again, this is the result of a need to expand its services because the competition is becoming stiffer in the short haul flights. A few of the discount carriers, buoyed by years of restructuring and cost cutting, and also as a result of learning from the efficiencies of the operations of the Southwest airlines, are giving Southwest a run for its money. They include JetBlue Airways, AMR Corporation, and Continental (Grossman).
Works Cited Gittell, Jody Hoffer. The Southwest Airlines Way: Using the Power of Relationships to Achieve High Performance. NewYork, NY: McGraw-Hill Professional, 2005. Grossman, David. "Low-cost Airlines Face New Competition - Each Other. " 25 August 2009. USA Today. 16 February 2011 . Hartley, Robert F. Southwest Airlines: Success is Finally Contested. Michigan: Wiley, 2009.