Attractiveness of U.S. Airline Industry
At the moment, the U.S. airline industry remains attractive both for investors and companies which want to enter this market. However, it suffered from several critical problems in its past. First of all, the increased price for fuel preconditioned extra spending and the high cost of services suggested by the industry (Inkpen 252). It decreased its attractiveness and stipulated a particular worsening of its performance.
Moreover, numerous financial crises along with the deterioration of passengers buying capacity lowered the level of income and cultivated the appearance of certain economic problems (Inkpen 252). However, the industry managed to recover because of the high demand for its services and numerous passengers who used its different airline companies at that moment. Now, it could guarantee a stable level of income for companies that want to function in the given sphere. This fact also stipulates high rivalry and a need for an efficient marketing strategy to preserve leading positions.
Southwest Airlines’ strategy
Regarding the high competition peculiar to the sphere, Southwest Airlines had to create an appropriate strategy to survive. For this reason, it started to do things differently. First, it provided people with air travels suggesting low fares (Gittell 25). In such a way, people who would not normally fly might start thinking about using the companys services (Freiberg and Freiberg 53). Additionally, Southwest is the only significant airline company that operates without hubs (Gittell 34).
It offers short-haul journeys and uses a point-to-point flight connection (Freiberg and Freiberg 49). It helps to reduce the price for suggested services and attract customers. Moreover, short flights mean more hauls per day which increases the profitability of the company. There are also no reserved seating or offered meals as the company is not sure how many passengers will buy tickets for the next flight (Inkpen 258). In general, the given strategy might be considered advantageous one as it helps the company to survive and remain profitable.
Reasons for Southwests Success
Several factors precondition the companys strategy success. First, it remains unique. Instead of using typical patterns that might guarantee stable incomes and that are used by the majority of airline companies, Southwest Airlines prefers to adhere to its own one which presupposes the focus on a particular audience to engage individuals in flights and create the basis for the further development (Inkpen 253). Second, the strategy the company uses promotes utilization (Gittell 77).
It means that all processes guarantee the best possible outcomes while the level of spending remains low. It is a central aspect of the companys profitability. Finally, the company remains successful because it has its target audience that would hardly use services suggested by other firms because of their price. Under these conditions, Southwest Airlines encompasses several critical aspects related to work with customers and process management to remain successful.
The unique character of the strategy created by the company makes its imitation almost impossible. The fact is that at the very first stages of its development, the company determined its primary goals and target audience. For this reason, it evolved in the way that helped to align improved cooperation with a particular sort of passengers and carve out the niche of short flights. In such a way, the companys strategy rests on a successful combination of factors that impacted the airline industry at a precise moment and strategic planning which contributed to the elaboration of the most efficient approach. In case a particular company wants to imitate this strategy today, it will face numerous challenges because of the leading Southwest Airlines positions and devotion of its target audience to the company.
The current strategy used by Southwest Airlines could be considered sustainable. Regarding the fact that sustainability is a continued development without a deterioration over a long term, the approach focused on the provision of flights to people who might experience financial problems demonstrates good perspectives (Gittell 123). According to recent researches, the demand on flights will continue to increase due to the globalization and other factors (Inkpen 261).
At the same time, financial capabilities of people are different, and not everyone can afford using services of traditional airline companies. Under these conditions, the number of passengers will remain high, and it promotes the high sustainability of the company. Additionally, the current strategy does not presuppose significant reconsiderations to meet new peoples requirements as it is focused on provisioning particular services to a certain category of passengers. That is why Southwest Airlines sustainability remains high.
Companys global expansion could be considered a disputable question as it is focused on short-haul flights. The reconsideration of its nature will demand additional spending and creation of new facilities to create the technological base for international routes. At the same time, people who use the companys services might also need cheap overseas flights. That is why Southwest should try to run internationally as there are potential passengers who might use these new services. Traditionally, the cost of these trips is high; however, suggesting a lower price for tickets it might attract new customers and guarantee the companys further rise.
Freiberg, Kevin, and Jackie Freiberg. Nuts!: Southwest Airlines’ Crazy Recipe for Business and Personal Success. Crown Business, 1998.
Gittell, Jody. The Southwest Airlines Way. McGraw-Hill Education, 2005.
Inkpen, Andrew. Southwest Airlines 2011. Thunderbird School of Global Management, 2011.