ECP 5705 – Economics of Business Decisions.docVIP

ECP 5705 – Economics of Business Decisions SOUTHWEST AIRLINES: A Strategic Analysis of Past, Present and Future Performance SECTION I - INTRODUCTION Southwest Airlines brings new meaning to the phrase “time flies when you are having fun.” For the past 32 years they have managed to breathe life and creativity into the airline industry by utilizing a unique approach that incorporates low fares and offering the “highest in customer service satisfaction.” What started out as a small three-jet airline has now grown to be one of the largest airlines in America, servicing more than 65 million passengers a year to 59 cities (60 airports) all across the country and doing it more than 2800 times a day. Now an industry leader, Southwest airlines proudly proclaims that it is “the only shorthaul, low-fare, high-frequency, point-to-point carrier in America.” Southwest Airlines is the brainchild of Rollin King and Herb Kelleher. They began the airline with the idea that if you can “get your passengers to their destinations when they want to get there, on time, at the lowest possible fares, and make darn sure they have a good time doing it, people will fly your airline.” That has proven to be sage advice. As the name suggests, the airlines started with service only in the state of Texas. Their maiden voyage was June 18, 1971 with flights to Houston, Dallas and San Antonio and by 1973, Southwest had had its first profitable year. In 1974, Southwest carried its one-millionth passenger and in 1976 began service to other cities in Texas: Austin, Corpus Christi, El Paso, Lubbock and Midland/Odessa. By 1977, Southwest carried its five-millionth passenger and was listed on the New York Stock Exchange as “LUV.” In 1978 there were some organizational shifts. Herb Kelleher replaced Lamar Muse, the interim President, CEO and Chairman of the Board. Howard Putnam was eventually unanimously elected as the new President and Chief Executive Officer. Kelleher stayed on as the permanent Chairm