Southwest Airlines Case Study
Southwest Airlines Action Plan
Southwest Airline?s low price fare is one key competitive strategy for its success in the past. Therefore, Southwest?s interests would be best served by adopting the option of keeping prices of all nine routes the same as they were in the 4th quarter of 1994. Even though, this pricing strategy might increase intensity of competition among airline industry rivals and cause squeezing of the profit margin, by keeping the current price Southwest will maintain its signature status as the one who offers the lowest and simplest fares with high quality services. This option should take market share away from rivals, and by keeping the price unchanged and emphasizing service to airports where competition is relatively weak, Southwest will have new sales growth opportunities, and enjoy a dominant market share. Also by examine the load factors where SW is 67.3%, which is higher than the industry average of 64.3%, and selected consolidated data of Southwest from 1990 to 1994, we know that Southwest?s net income is growing at double digits, its long time debt is reducing, and its cost is much lower than its competitors. The positive net income has boosted investment
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